What is the primary difference between the growth and dividend reinvestment options in mutual funds?

The growth option offers higher returns. The dividend reinvestment option provides regular income. The growth option reinvests dividends, while the dividend reinvestment option distributes them. The dividend reinvestment option is taxed differently than the growth option.

How does the dividend reinvestment option impact the Net Asset Value (NAV) of a mutual fund?

The NAV increases as more units are purchased. The NAV remains unchanged. The NAV decreases to adjust for the dividend distribution. The NAV fluctuates based on market performance.

Which investment option is generally considered more tax-efficient, growth or dividend reinvestment?

Dividend reinvestment, as taxes are only paid upon selling units. Growth, as dividends are not declared and therefore not taxed. Both options are equally tax-efficient. Tax efficiency depends on the individual investor's tax bracket.

For investors seeking long-term capital appreciation, which mutual fund option is typically recommended?

Dividend option Growth option Dividend reinvestment option A combination of dividend and growth options