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To determine your profit or loss in a fund, _______.

Subtract the cost basis from the current selling price

Subtract the current selling price from the cost basis

Add together the cost basis and the current selling price

Subtract the cost basis from the current selling price. The difference is the amount the government taxes.

Calculating cost basis according to different methods results in _______ among the various methods.

No differences

Very small differences

Huge differences

Varying differences

Varying differences. The differences will vary based on a number of factors, and no easy judgment can be made without them.

The double-category averaging method for calculating cost basis is only applicable if _______.

You have both short- and long-term gains

You made a lump-sum investment and haven't added to it since

You want to sell your entire position in the fund

You have both short- and long-term gains. In this method, shares are divided into short-term and long-term gains and are then averaged for cost basis. If you have no short-term gains, you're basically using the single-category averaging method--you have only long-term gains.

What is cost basis?

The amount you pay the IRS when you sell shares

The price you paid for a security, including commissions and other expenses

Your fund's annual costs

The price you paid for a security, including commissions and other expenses. You use cost basis, the price you paid for a security, to determine your profit or loss when you sell shares.

In the single-category averaging method for calculating cost basis, _______.

You sell the first shares you bought

You divide the total cost you paid for your shares by the total number of shares you own and get an average cost basis for each share

You ask the fund to sell shares you paid the most for but have held for at least one year

You divide the total cost you paid for your shares by the total number of shares you own and get an average cost basis for each share. If you sell the first shares you bought, you're using FIFO. If you ask the fund to sell shares you paid the most for but have held for at least one year, you're using the specific-shares method.