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100
Funds 103:
Earnings from Mutual Funds
Test your knowledge
Choose wisely. There is only one correct answer to each question.
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Review your answers below to learn more.
1.
A mutual fund with a 5 percent total return and a 7 percent dividend yield will have _______ 2 percentage points in its net asset value.
Choose wisely. There is only one correct answer.
Gained
Lost
Neither gained nor lost
Lost. Total return – yield = net asset value. In this example, net asset value has dropped.
2.
Reinvested dividends are tax-free because they don't reach the investor.
Choose wisely. There is only one correct answer.
True
False
False. As long as they are earned, they will be taxed no matter where they end up.
3.
The number of mutual fund shares that investors own determines how much of a dividend is passed on to them.
Choose wisely. There is only one correct answer.
True
False
True. Dividend payments vary according to number of shares owned.
4.
Mutual fund dividends are passed to investors from ______.
Choose wisely. There is only one correct answer.
Fees collected from investors
The earnings of the securities in a fund
IRS dividend accounts
The earnings of the securities in a fund. The fund passes earnings from its portfolio in the form of dividends to its shareholders.
5.
A capital gain on a share held for five years will be taxed at a lower rate than a share held for four months.
Choose wisely. There is only one correct answer.
True
False
True. Once you have held a share for more than one year, your capital gains tax drops.
6.
A return of capital is a type of what?
Choose wisely. There is only one correct answer.
Earning
Income
Mutual fund share
None of the above
None of the above. Returns of capital are merely your own money returned to you.
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DONE