Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!

Get a certificate for this quiz
Enter your name to generate a certificate that you can save or print immediately. Optionally, add your email address to have a copy of the certificate emailed to you.


Review your answers below to learn more.
1.
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.
2.
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.
3.
All investment earnings are taxed the same way.
Choose wisely. There is only one correct answer.
False. Long-term capital gains are usually taxed at a lower rate than other forms of income, and most municipal bonds' interest payments are tax-exempt (tax-free).
4.
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.
5.
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.