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1.
Which is a benefit of capital losses?
They can cancel out capital gains, and to the extent that losses exceed gains, you can deduct a net loss of up to $3,000 from your taxable income.
2.
Which statement is true?
Funds with exceptionally low turnover rates tend to be tax efficient. High-turnover funds aren't necessarily less tax efficient than low-turnover funds. A fund with a 200% turnover rate can be just as efficient as a fund with a 50% turnover rate. But funds with 0% to 20% turnover rates tend to be tax-efficient.
3.
Municipal bonds are popular with investors because they are free of ______ tax.
Federal and sometimes state. Muni bonds are free of federal and sometimes state taxes. This can sometimes make them more attractive than bonds that pay higher interest rates. It depends on your tax bracket.
4.
To save tax money as a stock investor, you should avoid two things. What are they?
Dividend-paying stocks and selling shares. While the former may be easy, the latter could be a challenge over time.
5.
Variable annuities (VAs) are a kind of hybrid between mutual funds and _______.
Insurance. Variable annuities are essentially mutual funds wrapped in an insurance package.
