Basics Beginner: Investment Earnings

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.
What is your one-year return on investment if you buy a stock for $50, receive a dividend of $3, and sell it for $55?
Choose wisely. There is only one correct answer.
16 percent.
2.
What are a security's increases in value called after they are sold?
Choose wisely. There is only one correct answer.
Capital gains. They are capital gains after they are sold, but paper profit while they are still held.
3.
If you experience a capital loss after selling an investment, and the loss exceeds the $3,000 that you are allowed to take a tax deduction on, what happens to the excess amount?
Choose wisely. There is only one correct answer.
You can carry it over to the next year and deduct it. Losses over $3,000 can be carried over to future years.
4.
Imagine that a share of your Fund X rises from 20 dollars per share to 30 dollars per share. How much of a capital gain have you made on it?
Choose wisely. There is only one correct answer.
10 dollars, but only if you have sold it. Until they have been sold, shares that rise in price will only be profits on paper.
5.
Zero coupon bonds pay out all of their earnings in the form of capital gains.
Choose wisely. There is only one correct answer.
False. Zero coupon bonds do not make interest payments or coupon payments; however, their gain in value to maturity and par value is considered accrued interest.