Basics Beginner: Investment Earnings

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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?
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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.