The XYZL mutual fund distributes realized capital gains of $1.50. What is the effect of this distribution?
Investors will reduce the adjusted cost base of their holdings in the fund.
Each investor will have to report taxable income of $1.50 per share.
The net asset value per share will drop $1.50 as a result of the distribution.
The mutual fund will have to declare taxable income of $0.75 per share.
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