Basics Beginner: Investment Earnings

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1.
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.
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.
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.
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.
5.
Mutual fund dividends are passed to investors from ______.
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The earnings of the securities in a fund. The fund passes earnings from its portfolio in the form of dividends to its shareholders.