Basics Beginner: Investment Earnings

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1.
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?
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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.
2.
Zero coupon bonds pay out all of their earnings in the form of capital gains.
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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.
3.
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.
4.
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.
5.
If you have a capital gain (that is, earn a profit) on an investment that you held for three years, it will be considered a _______.
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Long-term capital gain. Investments that are held for longer than a year and then sold for a profit will earn long-term capital gains.