Series 7 practice questionhardTax Implications 693
When mutual fund shares are sold, cost basis may be determined using approved methods such as:
- Aface value only
- Byield to maturity only
- CFIFO, specific identification, or average cost if available✓ Correct answer
- Dthe highest historic market price
Explanation
Why C — FIFO, specific identification, or average cost if available
Mutual fund investors may use approved cost basis methods, subject to rules and elections. The method selected can affect the gain or loss reported on sale.
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