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.
Companies that pay dividends do not by nature generate capital gains.
Choose wisely. There is only one correct answer.
False. Stocks can both pay dividends and appreciate in value, which can produce capital gains upon their sale. Good dividends can attract additional buyers, which results in appreciation of a stock's value.
2.
Well-established, low-growth companies generally produce high capital gains.
Choose wisely. There is only one correct answer.
False. High-growth companies generally produce high capital gains.
3.
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 _______.
Choose wisely. There is only one correct answer.
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.
4.
Which of the following choices is not a way that earnings are paid to bondholders?
Choose wisely. There is only one correct answer.
Dividends. Dividends are paid to stockholders but not to bondholders.
5.
Mutual fund dividends are passed to investors from ______.
Choose wisely. There is only one correct answer.
The earnings of the securities in a fund. The fund passes earnings from its portfolio in the form of dividends to its shareholders.