Choose wisely. There is only one correct answer to each question.
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1.
Cash investments are taxed at ordinary income rates, meaning it's wise to put them in tax-sheltered accounts to cut down on your tax burden. But you might want to contradict that advice because _______.
Both of the above. Sometimes practical needs just outweigh tax needs.
2.
Stock investors can exert more control over capital gains than bond investors by simply holding on to their stocks.
True. Given that bonds have to mature at some point, you can hold onto stocks longer than you could with many bonds.
3.
Mutual funds with a lot of turnover are best for _______.
Tax-sheltered accounts. Mutual funds with a lot of turnover generally generate a load of capital gains that investors cannot control, and are therefore best suited to tax-sheltered accounts.
4.
What is asset location?
How investors distribute their investments between tax-sheltered and taxable accounts. Asset location refers to how investors divvy their investments between tax-sheltered and taxable accounts.
5.
Which investments do an effective job of restraining capital gains distributions?
All of the above. All of these investments are structured in such a way as to keep the lid on capital gains distributions.
