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1.
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?
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You can carry it over to the next year and deduct it. Losses over $3,000 can be carried over to future years.
2.
Well-established, low-growth companies generally produce high capital gains.
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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 _______.
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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.
4.
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.
5.
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.