The following quotes are taken from Phillip D. Parker (Associate General Coun- sel of the SEC), "Market Value Accounting-An Idea Whose Time Has Come?" in Elliot P. Williams (ed.), Managing Asset/Liability Portfolios (Charlottesville, VA: Association for Investment Management and Research, 1991), published prior to the passage of FASB 115: "The use of market value accounting would eliminate any incentive to sell or retain investment securities for reasons of ac- counting treatment rather than business utility." Explain why this statement is correct. (Note that in historical accounting a loss is recognized only when a secu- rity is sold.)

AppendixLO1