Automatic Reinvestment Plans

question 117

Multiple Choice

Automatic reinvestment plans

• A) are a good way to avoid taxes on dividends and capital gains.
• B) may involve exceptionally high transaction fees.
• C) do not allow for the purchase of fractional shares.
• D) are an excellent way to accumulate wealth through disciplined investing.

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Definitions:

Common Stock

A type of equity security that represents ownership in a company, with rights to vote and share in dividends.

Statement of Financial Position

Another term for the balance sheet, detailing a company's financial status including assets, liabilities, and equity at a specific point in time.

ROA

Return on Assets; a profitability ratio that measures how efficiently a company can manage its assets to produce profits during a period.