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QUESTION #5 (10 Marks) Briefly explain the reinvestment feature offered by most mutual funds. What is the potential tax issue at year-end if the investment

QUESTION #5 (10 Marks)

  1. Briefly explain the reinvestment feature offered by most mutual funds.
  2. What is the potential tax issue at year-end if the investment income from the mutual fund is reinvested into additional units.
  3. Describe three types of transactions that would result in a change to the funds adjusted cost base (acb) to the investor.

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