Question 8 of 8
When are capital gains realized from a mutual fund investment?
A
Periodically as current income
B
Only when the investor sells the investment
C
At the time of calculating the Net Asset Value (NAV)
D
When the scheme declares a dividend
Correct Option:
B
Explanation
Capital gains from a mutual fund investment are realized only when the investor redeems or sells the units. Any increase in the NAV before redemption is an unrealized gain and becomes taxable, if applicable, only upon sale or redemption.
