Taxes and Investing

Q U E S T I O N   1 :
What is capital gains tax?
	a)	The required payment on any realized investment earnings not held in a tax-deferred retirement account.
	b)	Tax on any investments held for at least a year and then sold for a profit.
	c)	Payment on any investment that an individual holds in a retirement account.
	d)	Tax on government securities.
Q U E S T I O N   2 :
Under what circumstances are mutual fund investors subject to tax bills from their holdings?
	a)	If the fund ends the year with a net gain on its transactions, holders must pay taxes on the annual distribution.
	b)	Only if the fund returns more than 28% are investors are subject to normal tax laws.
	c)	Those fund holders in the highest tax-bracket must foot the entire tax bill.
	d)	Mutual funds are tax-free holdings.
Q U E S T I O N   3 :
Which of the following is not a way for mutual fund investors to minimize their tax bills?
	a)	Avoid investing in a fund right before it is scheduled to pay its annual distribution.
	b)	Buy funds that don't turn over their holdings very frequently.
	c)	Buy index funds.
	d)	Buy and sell mutual funds before they can stick you with a bill.
Q U E S T I O N   4 :
Why is a tax-advantaged retirement account so much more lucrative than a regular investment account?
	a)	Because you leave your money in a retirement account longer.
	b)	Because employers always match contributions to retirement accounts.
	c)	Because not only do you not pay taxes, but you earn compounded gains on that money for as long as it's in the account.
	d)	The best mutual funds are available through retirement accounts.
Q U E S T I O N   5 :
What distinguishes a Roth IRA from a traditional IRA?
	a)	Contributions to a Roth are taxed, but withdrawals at retirement age are not.
	b)	Roth contributions aren't taxed, but earnings on those contributions are.
	c)	Roth IRAs allow contributions of up to 10% of one's salary, as opposed to the traditional limit of $2,000 per year.
	d)	Corporations match contributions to Roths.
Q U E S T I O N   6 :
What is the maximum federal tax rate on long-term capital gains?
	a)	15%
	b)	Depends on the investor's tax bracket
	c)	20%
	d)	28%
Q U E S T I O N   7 :
An investor holds Stock A for five months before selling it for a $1,000 gain. He is in the 30% tax bracket. What is his tax bill on that investment?
	a)	$300
	b)	$200
	c)	0
	d)	$280
Q U E S T I O N   8 :
An investor has held a stock for 359 days and has made a 20% return on her investment. She hears that the stock may drop a percentage point or two during the next couple of weeks before leveling off. She is in the 39% tax bracket. What should she do?
	a)	Sell the stock immediately and then buy more in one week.
	b)	Buy more immediately.
	c)	Hold the stock for at least a week more to avoid short-term capital gains.
	d)	Sell the stock immediately to take advantage of short-term capital gains.