Choose wisely. There is only one correct answer to each question.
0%
Keep studying!
Review your answers below to learn more.
1.
The confirmation statement sent to investors after a dividend reinvestment states all but which of the following?
An investor's capital gains. Capital gain information arrives in a different notice.
2.
Ordinary dividends are earned when a mutual fund sells securities for a profit.
False. Capital gains dividends are earned in this way, but ordinary dividends are distributions of interest or dividends from the fund's holdings.
3.
You earn capital gains from your mutual fund shares when you sell them for a profit.
True. Capital gains result from selling your assets that have risen in value.
4.
The number of mutual fund shares that investors own determines how much of a dividend is passed on to them.
True. Dividend payments vary according to number of shares owned.
5.
A mutual fund with a 5 percent total return and a 7 percent dividend yield will have _______ 2 percentage points in its net asset value.
Lost. Total return – yield = net asset value. In this example, net asset value has dropped.
6.
Returns of capital are generally taxed at your ordinary income tax rate.
False. They are generally not taxed at all. However, if the return of capital exceeds the amount of after-tax dollars invested (basis), then they can be taxed as a capital gain.