Answered: Invest in a mutual fund for 5 years,…

Invest in a mutual fund for 5 years, earns 7% pretax per year with no annual distributions. when selling it at the end of the 5 years. what kind of tax should be paid.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Invest in a mutual fund for 5 years, earns 7% pretax per year with no annual distributions. when selling it at the end of the 5 years. what kind of tax should be paid.

Expert Solution

Step 1

Mutual funds are the investments that comprise of a combination of debt and equity with a view to ensure optimum returns to the investor.

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