The Initial Cost of Investing in Mutual Funds Depends in Part

question 207

Multiple Choice

The initial cost of investing in mutual funds depends in part on

• A) whether the fund is a load or no-load fund.
• B) the risk tolerance of the companies in the fund.
• C) the tax rate on capital gains.
• D) the imposition of government tariffs.

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Definitions:

Itemized Deductions

Specific expenses allowed by the IRS that taxpayers can subtract from their adjusted gross income to reduce taxable income.

Escrow Account

A financial account held by a third party on behalf of the two main parties in a transaction, often used to safely hold funds until the completion of contractual obligations.

Charitable Contribution

Financial or material donations made to qualified organizations, which may be deductible from taxable income if itemizing deductions.

Adjusted Gross Income

An individual's total gross income minus specific deductions, used as the basis for calculating taxable income on federal tax returns.