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1.
What are exchange-traded funds?
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Index funds that trade on an exchange. ETFs are generally index funds that trade like stocks on an exchange.
2.
Which statement is true?
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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.
What is the tax attraction of variable annuities?
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Contributions grow tax-deferred until retirement. Gains are then taxed as income upon withdrawal.
4.
Imagine you're a tax-sensitive investor. Which is the better bond for you?
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It depends on your tax bracket. Investors in high tax brackets may benefit more from a muni--even if it has a lower yield--due to the tax break.
5.
When selling stock, you can sometimes reduce your capital gains if you sell only certain shares and not others.
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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.