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1.
What would be your return on investment if you bought a $1,000 bond that had an 8 percent annual coupon rate and you sold the bond one year later for $950?
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3 percent.
2.
What are a security's increases in value called after they are sold?
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Capital gains. They are capital gains after they are sold, but paper profit while they are still held.
3.
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?
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16 percent.
4.
Well-established, low-growth companies generally produce high capital gains.
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False. High-growth companies generally produce high capital gains.
5.
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.