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Funds 103: Earnings from Mutual Funds

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1.
A return of capital is a type of what?
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None of the above. Returns of capital are merely your own money returned to you.
2.
A mutual fund may assume that you want a dividend reinvestment plan when you open an account.
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True. Reinvestment may be a default if you do not select an option.
3.
Total return includes capital gains distributions.
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True. Capital gains distributions are dividends.
4.
The number of mutual fund shares that investors own determines how much of a dividend is passed on to them.
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True. Dividend payments vary according to number of shares owned.
5.
Which of the following is not a dividend?
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The sale of a mutual fund share. When individual shareholders sell their shares, these shares are not dividends.
6.
A capital gain on a share held for five years will be taxed at a lower rate than a share held for four months.
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True. Once you have held a share for more than one year, your capital gains tax drops.