All Courses > Portfolios > 500
Portfolios 505: What Goes Where? The Art of Asset Location

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
Stock investors can exert more control over capital gains than bond investors by simply holding on to their stocks.
Choose wisely. There is only one correct answer.
True. Given that bonds have to mature at some point, you can hold onto stocks longer than you could with many bonds.
2.
In general, which investments below are not good choices for tax-sheltered accounts?
Choose wisely. There is only one correct answer.
Non-dividend paying stocks. Long-term capital gains, which is what you have when you sell a stock that you've held for at least a year, are taxed at a much lower rate than is bond income or dividends.
3.
If you're holding cash in an emergency fund, makes sense to place it into _______.
Choose wisely. There is only one correct answer.
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.
4.
Investing from a tax perspective often contradicts its practicalities. One example of why is that _______.
Choose wisely. There is only one correct answer.
Investors often hold long-term stocks in tax-sheltered accounts even though those stocks are taxed at low capital gains rates. From a tax perspective, it doesn't make sense to do this. But practical reasons override that.
5.
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.
Choose wisely. There is only one correct answer.
True. For tax purposes, it probably makes sense to keep bonds in tax-sheltered accounts because of their relatively high tax rates.