Choose wisely. There is only one correct answer to each question.
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1.
Which statement below is true?
You should review your asset location framework every few years. You should review your framework every few years, as tax treatments of investments can change over time.
2.
Why would exchange-traded funds be good choices to be held in taxable accounts?
They limit capital gains payouts. This is a feature that is built in to them.
3.
Tax-wise, bonds are a good fit for tax-sheltered accounts rather than taxable accounts because their payouts are taxed at your ordinary income tax rate.
True. For tax purposes, it probably makes sense to keep bonds in tax-sheltered accounts because of their relatively high tax rates.
4.
If you're holding cash in an emergency fund, makes sense to place it into _______.
A taxable account. If you're holding cash for near-term income needs or as an emergency fund, it makes sense to hold it in a taxable account because you may need access to the cash quickly and without penalty.
5.
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.
