IFIC Mutual Funds Licensing Practice Exam · Question
An investor's initial investment was $10,000 for 500 units. They later received a Return of Capital (ROC) distribution of $500. Subsequently, they purchased an additional 200 units for $5,000. What is the investor's new Adjusted Cost Base (ACB) per unit?
Initial ACB is $10,000 for 500 units, or $20 per unit. The ROC ($500) reduces the total ACB to $9,500. The purchase of 200 units for $5,000 increases the total
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Question: An investor's initial investment was $10,000 for 500 units. They later received a Return of Capital (ROC) distribution of $500. Subsequently, they purchased an additional 200 units for $5,000. What is the investor's new Adjusted Cost Base (ACB) per unit?
Answer options: ✅ $20.71
- $21.43
- $20.00
- $22.14
Correct answer: $20.71
Explanation: Initial ACB is $10,000 for 500 units, or $20 per unit. The ROC ($500) reduces the total ACB to $9,500. The purchase of 200 units for $5,000 increases the total ACB to $14,500 and total units to 700. The new ACB per unit is $14,500 / 700 = $20.71.
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