Question

Name 4 types of distributions from MF trusts:

A. Dividend, capital gains, interest, return of capital
B. Interest, dividends, stock splits, return of principal
C. Stock dividends, stock splits, capital gains, return of capital
D. Return of principal, interest, stock dividends, stock splits

Answer 1

The four types of distributions from MF trusts are dividends, capital gains, interest, and return of capital.

Step-by-step explanation:

The four types of distributions from mutual fund (MF) trusts that an investor might receive are dividends, capital gains, interest, and return of capital. To expound,

• Dividends: These are direct payments made by a firm to its shareholders out of its profits.
• Capital Gains: This occurs when a shareholder sells a stock for more than the purchase price.
• Interest: Income received from debt investments within the mutual fund.
• Return of Capital: Distributions that are not derived from the fund's earnings or profits. Instead, they are a return of the investor’s original investment in the fund.

Therefore, the correct answer to the types of distributions from MF trusts is A. Dividend, capital gains, interest, and return of capital.