Choose wisely. There is only one correct answer to each question.
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1.
When selling stock, you can sometimes reduce your capital gains if you sell only certain shares and not others.
True. If the shares were bought at different prices, you can specify that shares bought at higher prices be sold, which can then lower your capital gains.
2.
Contributions to variable annuities grow tax-deferred until you take them out at retirement.
True. That is one of their big attractions.
3.
How do tax-managed funds limit shareholders' tax burdens?
They avoid dividend-paying stocks, they hold securities for a long time, and they sell losing stocks to offset gains in winning stocks. Tax-managed funds use a variety of strategies--not just one--to limit taxes.
4.
What are exchange-traded funds?
Index funds that trade on an exchange. ETFs are generally index funds that trade like stocks on an exchange.
5.
Municipal bonds offer tax breaks; however, they often pay lower interest rates than taxable bonds. In these cases, what factor would decide whether an investor would choose a municipal bond over a taxable bond?
Her tax bracket. The higher her tax bracket, the more likely the municipal bond would actually work in her favor.
