When You Own Shares in a Mutual Fund You Make

question 73

Multiple Choice

When you own shares in a mutual fund you make money in which of the following ways?

• A)As the value of all of the securities held by the mutual fund increase,the value of each mutual fund share also increases.
• B)If a fund receives interest or dividends from its holdings this income is passed on to share holders.
• C)If the fund sells a security for more than it originally paid for it,the shareholders receive this in the form of capital gains.
• D)You receive a portion of the commissions that the fund manager charges for trades.
• E)Only A,B and C are correct.

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Definitions:

UCC

Stands for Uniform Commercial Code, a comprehensive set of laws governing all commercial transactions in the United States.

Adjusted Cost

The net cost of an asset after adjustments for various factors such as depreciation or amortization.

Realized Capital Gains

The increase in value of an investment, when converted to cash.

Taxable Difference

The amount by which taxable income exceeds tax deductions in a given period, impacting the amount of tax owed.