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Investment Funds in Canada (IFC) Exam

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Investment Funds in Canada (IFC) Exam Questions and Answers

Questions 1

Zofia has held units of the ABC Monthly Income fund for many years and has reinvested all distributions by purchasing additional units. During this period, she received $2,500 in reinvested dividends. She originally purchased $10,000 of fund units, and after several years, the portfolio value rose to $15,000. What is the tax consequence if Zofia decides to sell her units?

Options:

A.  

The capital gain will be $5,000.

B.  

The NAVPS will be increased by the amount of the cumulative distributions.

C.  

The cumulative distributions will be taxed separately as an investment dividend when she sells her units.

D.  

The adjusted cost base would be $12,500.

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