Funds Beginner:
Earnings from Mutual Funds
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1.
The confirmation statement sent to investors after a dividend reinvestment states all but which of the following?
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The price at which the reinvested dividends bought new shares
The number of shares bought by the reinvested dividends
An investor's capital gains
The amount of the dividend payment
An investor's capital gains. Capital gain information arrives in a different notice.
2.
You earn capital gains from your mutual fund shares when you sell them for a profit.
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True
False
True. Capital gains result from selling your assets that have risen in value.
3.
How does a mutual fund increase its value?
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It sells its shares on the market.
It receives the dividends, interest, and capital gains from the securities in its portfolio.
It levies fees.
It increases the number of its shares.
It receives the dividends, interest, and capital gains from the securities in its portfolio. The fund then passes these earnings to shareholders.
4.
Ordinary dividends are earned when a mutual fund sells securities for a profit.
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True
False
False. Capital gains dividends are earned in this way, but ordinary dividends are distributions of interest or dividends from the fund's holdings.
5.
Because it is a sum, a total return is positive.
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True
False
False. If there has been a substantial loss in net asset value, the sum may be negative.
6.
A return of capital is a type of what?
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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