Choose wisely. There is only one correct answer to each question.
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1.
What is your basis composed of?
Both of the above. Your basis is the combination of cash paid plus any dividends reinvested that have already been taxed.
2.
When should you think about selling at least part of an investment immediately?
If it's throwing your asset allocation of out whack. The more this investment is messing up your asset allocation, the more benefit you'll gain (in terms of risk control) if you sell at least some of your investment.
3.
When might you consider waiting to sell an investment?
If you've held the security for less than one year. You must pay ordinary-income taxes--which range from 10% to 35%--on investments you've held for less than a year.
4.
Your basis in an investment is a combination of cash paid plus any dividends reinvested that have already been taxed.
True. In a nutshell, basis is all the money you've put into an investment. When you sell the investment, you subtract this basis from the proceeds to arrive at your capital gain.
5.
What is tax-loss selling?
Selling investments that you've lost money in to offset the gains you're taking on winning investments. Tax-loss selling is a way for investors to manage the amount of taxes that they pay on their investments today.
