Series 65 - Section 2 Test Prep Qs
Investors who buy shares on the exchange (the after-market) must be provided with a copy of the prospectus for a specific period from the effective date. For a non-listed IPO
90 days
When is a statutory (final) prospectus used? A. Only for underwriting variable annuities and variable life insurance B. Only for sales of investment company securities in the primary market C. For all new issues D. Only for new issues of stocks and bonds
C - For all new issues Statutory (final) prospectuses are required for the sale of any new issue in the primary market, including, stocks, bonds, investment company securities, and variable products.
If a wealthy client dies, what should the client's investment adviser do? A. Find out if the estate is taxable and the amount due B. Determine the investment objectives of the beneficiaries C. Identify the beneficiaries D. Make a liquidity determination
C - Identify the benficiaries When a client dies, an investment adviser should identify the beneficiaries of the estate. Once the beneficiaries have been identified, the adviser should then gather information so that it's able to provide suitable advice.
Which of the following statements is NOT TRUE regarding a SEP-IRA? A. An employer makes contributions to an employee's SEP-IRA. B. An employer is not required to make annual contributions. C. Employees are immediately vested for any contributions that are made to the account. D. Employees are permitted to make contributions to the account.
D. Employees are permitted to make contributions to the account. A simplified employee pension plan (SEP-IRA) does not allow employees to make contributions. Instead, SEPs are funded by employer contributions only and these contributions are elective (discretionary).
A registered representative has a client who owns a small business. The business produces strong cash flow during the holiday season, but negative cash flow the rest of the year. This may indicate a need for which of the following choices in the client's portfolio? A. Capital preservation B. Current income C. Tax relief D. Liquidity
D. Liquidity Because the client may need access to capital when the cash flow from the business is negative, the portfolio should have some investments that are liquid. Money-market instruments might be suitable for this portion of the portfolio.
The last dollar of income earned each year is taxed at the:
Marginal tax rate Income is taxed at progressively higher rates. The first dollar earned is taxed at the lowest bracket, or rate, while the last dollar earned is taxed at the appropriate rate, or marginal tax rate. The effective tax rate is the average of the taxes paid at different rates.
Civil Liabilities under the '33 Act
The cost of the security PLUS interest MINUS any income received
A broker-dealer receives an order from a client to purchase 1,000 shares of ABC stock. Before executing the order, the broker-dealer purchases the same security for its own account at a price that would have satisfied the client's order. The broker-dealer's transaction is considered:
Trading ahead This question is an example of trading ahead of a client's order and is a prohibited practice. This violation occurs when a broker-dealer accepts an equity security order from a client and rather than immediately executing the order, the broker-dealer trades the security on the same side of the market for its own account at a price that would have satisfied the client's order.
Civil Statute of Limitations under the '33 Act
Three years from the occurrence or one year from the discovery, whichever comes first CIVIL ACT IS ONE YEAR FROM DISCOVERY, USA IS 2
Criminal penalties for willfully violating any provision of the USA
Three years in prison, or $5000 fine, or both - However, if an agent had no knowledge of the rule violated, he may avoid a prison sentence Five-year statute of limitations
What state has jurisdiction: mail or telephone
Two states at most: The state from which it originates and the state to which it was directed (For mail, not the state to which it may be forwarded)
Criminal Penalties for violating the '33 Act
Up to $10,000 prison up to 5 years
Securities Exchange Act of 1934: Insider Requirements / Limitations
A company's officers and directors, and any owners of more than 10% of the company's equity securities Must register within 10 days (Form 3) Trades are reported within two business days (Form 4) May not keep short-swing profits (profits earned on stock held less than six months) No short selling
Securities Exchange Act of 1934: Insider Trading Penalties
Criminal: $5mil fine and or 20yrs imprisonment Civil: SEC may sue for three times the damage (treble damage)
The state has how many days after an appeal to hold a preliminary hearing
15
Net long-term capital gains are taxed as ordinary income at the individual's tax bracket, up to a maximum of:
20% When an investor has both net long-term gains and net short-term losses, these two figures must be netted. If the result is a net long-term capital gain, it is taxed as ordinary income at the individual s tax bracket, up to a maximum of 20%.
Investors who buy shares on the exchange (the after-market) must be provided with a copy of the prospectus for a specific period from the effective date. For an IPO of a security to be exchange listed
25 days
Investors who buy shares on the exchange (the after-market) must be provided with a copy of the prospectus for a specific period from the effective date. For a non-listed follow-on offering
40 days
An individual has how many days to appeal an action that's taken against their registration
60
Which of the following entities pays federal income taxes? A. C Corporation B. S Corporation C. Sole proprietorship D. Trust
A - C Corporation In the U.S., a C Corporation is taxed separately from the owners of the business. After the C Corporation has paid income taxes, it can pay their shareholders a dividend; however, this payment is then taxable to the shareholder (i.e., double taxation). Both S Corporations and sole proprietorships are not taxable entities. In other words, all of their income passes through and is taxed to the owners (i.e., single taxation). Taxation of trusts is more complicated, but in some instances, income from a trust is only taxable to the beneficiary. Since C Corporations are always taxed, it's the best answer to this question.
A 19-year-old high school graduate who lives in State A has decided to attend college in State B. Her parents have been funding her college education through a Section 529 savings plan. Which of the following statements is TRUE concerning the tax considerations on her withdrawals for her education expenses? A. They may be withdrawn without federal tax liabilities B. They are federally taxable since she is attending an out-of-state school C. Her parents must pay federal tax on the withdrawals D. The withdrawals will be exempt from state income taxes
A - They may be withdrawn without federal tax liabilities Under federal law, 529 plan contributions are made with after-tax dollars and any earnings grow tax-deferred. However, any withdrawals that are used for educational purposes (e.g., room, board, books) are considered qualified and tax-free at the federal level. These provisions are available regardless of whether the beneficiary attends an in-state or out-of-state school.
Gift Tax and Basis
Avoided on gifts of up to $10,000 per person, per year, but adjusted for inflation (currently $17,000) Recipient's basis is the lesser of donor's basis or current market value - If securities have appreciated, original cost is used and holding period begins when purchased by the donor - If securities had depreciated, market value is used and holding period begins on the day after the date of the gift
Which investment is permitted to be held inside an IRA? A. Real estate that's used for investment purposes B, Commercial real estate that's used to operate the IRA owner's business C. The IRA owner's vacation home D. The IRA owner's primary residence
A. Real estate that's used for investment purposes Real estate that's used only for investment purposes may be held in an IRA. Since the IRA owner "uses" his primary residence, vacation home, and the commercial real estate for his business, they're NOT permitted to be held in an IRA.
Under the USA, which of the following choices is considered an offer of securities? A. An investor purchased bonds and received a warrant as a bonus B. An investor receives additional shares due to a stock split C. An investor receives a stock dividend D. An investor receives a tender offer
A. An investor purchased bonds and received a warrant as a bonus According to the Uniform Securities Act, any security that an investor receives as a bonus for purchasing another security is considered an offer of that security. The USA specifically states that receiving shares due to a stock dividend or other corporate action (e.g., stock split) is never considered an offer or offer to sell that security. A tender offer is an offer to buy a security from existing shareholders.
What is the biggest advantage of investing in a general partnership? A. Income is only taxed once B. Each partner has limited liability C. Each partner shares equally in the partnership's profits D. It is easy to dissolve or liquidate the partnership
A. Income is only taxed once Partnerships are tax-advantaged investments since the income they generate is taxed only once. A partnership's income passes through to its partners and is, therefore, taxed at each partner's level. In general partnerships, since there are no limited partners, limited liability is not an available feature. Also, profits are not automatically split equally among the partners.
Under the Uniform Securities Act, the securities registration documentation for which of the following offerings must be filed with the Administrator? A. Securities that are sold under the provisions of Regulation A of the Securities Act of 1933 B. Bonds issued by a municipality C. A Canadian bank that's listed on the Toronto Stock Exchange D. Securities issued by a bank that's organized under the laws of the United States
A. Securities that are sold under the provisions of Regulation A of the Securities Act of 1933 Both municipal bonds and bank-issued securities are exempt securities. Transactions involving securities that are listed on the Toronto Stock Exchange are exempt transactions and, like exempt securities, are not required to file registration documents with the Administrator. Although Regulation A securities are exempt from registration with the SEC, there's no exemption for Regulation A securities under the Uniform Securities Act. As a result, securities that are sold under Regulation A are required to be registered at the state level with the Administrator(s).
As a group, limited partners may: A. Sue the general partner B. Sell assets to pay creditors C. Manage the day-to-day operations of the partnership D. Hire new employees
A. Sue the general partner Limited partners are not permitted to be involved in management and could not sell assets to pay a creditor (a management decision). They do have the right to inspect the books, as well as sue and/or remove the general partner.
A client of an investment adviser representative has just died. If the client did not have a will, from whom may the investment adviser representative accept instructions? A. The intestate Administrator B. The deceased client's adult child C. Any person with a legally executed power of attorney D. The deceased client's spouse
A. The intestate Administrator If an individual dies without a will and the assets of estate exceed the estate's liabilities, the estate is considered intestate. A probate court will appoint a person to act as the administrator of the estate and distribute the estate's assets to the beneficiaries. A power of attorney is void after a client dies.
Define an "agent"
An agent is a person who sells securities, regardless of how they're compensated. If a person provides investment advice, he would be required to register as an investment adviser representative (IAR), not as an agent. Agents of issuers are not required to register if the securities being sold are exempt securities (e.g., municipal bonds) or the transaction is exempt (e.g., issuers selling it securities to underwriters). Ex: A person who executes trades on behalf of a broker-dealer without receiving commissions
Regulation D - private placement
An offering to no more than 35 non-accredited investors, but an unlimited number of accredited investors, such as: - Institutions, officers or directors of the issuer, or - Individuals who have a net worth of $1 million OR annual income of $200,000 in each of the last two years ($300,00 for spouses) Disclosure made through an Offering Memorandum
Form 10k
Annual financial report filed with SEC
While examining a client's investment profile, an IAR determines that the client is able to tolerate a high degree of risk and does not anticipate the need to access invested funds for the next 25 years. What is the best investment allocation for the client's portfolio? A. 40% debt, 50% equities, and 10% money-market instruments B. 95% equities and 5% money-market instruments C. 25% bonds, 25% equities, 25% money-market instruments, and 25% real estate D. 65% bonds and 35% equities
B - 95% equities and 5% money-market instruments An investor who has a long time horizon and is willing to tolerate high levels of risk may allocate a large percentage of her portfolio to stocks (equities). The only answer that has a more than 50% of the portfolio allocated to equities is the one that suggest 95% equities and 5% money-market instruments.
An investment adviser representative was recently reviewing a financial plan with a client. The client stated that she wants to leave money for an ex-partner after her death. The individual also stated that she does not want to inform her family of this decision. What's the best way to achieve the client's goal? A. Take out a life insurance policy and designated the client's estate as the beneficiary, thereby avoiding probate B. A transfer on death designation C. Leave some assets unassigned and let the probate court award the money to the ex-partner D. Update the client's will and include her updated designation
B. A transfer on death designation A transfer on death (TOD) designation is the best option since TOD beneficiaries receive property without the need for probate. Leaving property (e.g., a life insurance death benefit) to a beneficiary as stated in a will would notify other family members about the designation. Allowing the probate court to award some assets to the ex-partner is also risky because there's no guarantee that the court will follow the decedent's wishes.
In a phone conversation, an agent of a broker-dealer is told by the customer that she wants to sell some of her stock. The customer then leaves for a vacation and cannot be reached. When is the execution of this order not in violation of the Uniform Securities Act? A. If the customer provides only the specific stock to be sold B. If the customer permits her agent to determine the time and/or price of execution without providing written power of attorney C. If the customer provides the dollar amount she wants sold, but doesn't specify which stock to sell D. If the customer doesn't provide the number of shares to be sold
B. If the customer permits her agent to determine the time and/or price of execution without providing written power of attorney If a customer provides the action (i.e., buy or sell), the amount (i.e., number of shares), and the assets (i.e., specific stock), then an agent of a broker-dealer may determine the time and/or price of execution without obtaining written power of attorney from the customer. In this question, an agent choosing the number of shares or the specific stock to sell would be a violation of the USA since the client didn't provide written authority to do so.
Two siblings are interested in jointly buying real estate on a beach. Both siblings have their own children and want to leave the property to their children after their deaths. What's the best type of ownership for the sibling's real estate? A. Joint tenants in entirety B. Joint tenants in common C. Community property D. Transfer on death
B. Joint tenants in common Joint tenancy in common (JTIC) permits multiple owners of the same property. In addition, JTIC permits each owner to assign their own beneficiaries to their ownership in the jointly owned property. In this question, the siblings want to leave their interest in the real estate to different individuals (i.e., their own children); therefore, JTIC is the best type of designation. Joint tenants in entirety and community property are only available to married couples and not available to siblings. Transfer on death permits multiple beneficiaries, but is not a type of joint ownership.
A company was offering its employees a deferred compensation plan, but the company has recently ceased business due to insolvency and has no plans to re-open. Which of the following statements is TRUE about employees of the company who have plan benefits? A. Since the plan is qualified, ERISA will pay the employees their benefits. B. Since the plan is non-qualified, employees have unsecured claims for their benefits in bankruptcy. C. Since the plan must follow ERISA guidelines, the employer is required to keep the plan's assets at an independent custodian, and employees will receive their full benefits. D. The employees will not receive the benefits under any circumstances.
B. Since the plan is non-qualified, employees have unsecured claims for their benefits in bankruptcy. Deferred compensation plans allow employees to withhold some of their compensation until they retire. However, if the employer declares bankruptcy, the deferred compensation benefits are an unsecured liability of the employer. Employees become general creditors of the bankrupt company.
In order to determine the suitability of a potential investor for a limited partnership, which of the following forms would the client complete? A. The partnership agreement B. The subscription agreement C. A private placement memorandum D. The certificate of limited partnership
B. The subscription agreement Many states require potential partners to complete a subscription agreement, in order to determine their suitability as it relates to income, net worth, investment experience, and an understanding of investment risk. A certificate of limited partnership is filed by the general partner when setting up the partnership. The partnership agreement discloses the rights and duties of the partners. A private placement memorandum is given to investors in a private placement, in lieu of a prospectus.
Broker-Dealer W is participating as an underwriter in the distribution of municipal securities issued by the city of Albuquerque, New Mexico. If the offering is oversubscribed, which of the following business practices would be considered unethical by Broker-Dealer W? A. Selling the securities to nonresidents of New Mexico B. Selling the securities to retail investors who were residents of New Mexico C. Selling part of their allocation to employees of the broker-dealer D. Selling part of their allocation to institutional investors
C - Selling part of their allocation to employees of the broker - dealer. It is considered an unethical business practice by a broker-dealer to fail to make a bona fide offering of securities when acting as an underwriter or member of a selling group in the distribution of securities. Selling part of an oversubscribed offering to employees of the broker-dealer may be considered a failure to make a bona fide offering. Clients should receive an allocation on an oversubscribed offering prior to employees of Broker-Dealer W. Municipal securities can be suitable for: - Nonresidents of a state - Retail investors, whether or not they are residents of the state - Institutional investors
An IAR is assisting an executor with an account in which the prior owner has died. Who has authority to take action in the account? A. A family member who has durable power of attorney B. The administrator of intestate succession C. The fiduciary of the estate D. The investment adviser representative (IAR)
C - The fiduciary of the estate. When a person dies with a will, she has named an executor who will act as a fiduciary for the estate. If a person dies without a will, a court will appoint an administrator to act as a fiduciary for the estate. Notice that the question mentions the term "executor," which makes fiduciary the best response. Durable powers of attorney don't remain in effect after a person dies.
What type of broker-dealer executes orders for retail customers on a registered securities exchange?
Clearing broker. Clearing brokers are broker-dealers that execute trades on an exchange for their own account as well as accounts of investors. After a trade is executed, the clearing broker will communicate (i.e., clear) with the counter-party and then deliver securities or cash (i.e., settle the trade).
When can an agent of a broker-dealer and a client share in an account? A. If the agent and client are family members B. If the client has $1,000,000 in net worth C. If the agent is exposed to risk that's proportionate to his investment in the account D. The only requirement is for the agent's supervisor to approve the arrangement
C. If the agent is exposed to risk that's proportionate to his investment in the account In order to share in a client's account, an agent needs to obtain approval from the client and a supervisor of the broker-dealer. In addition, the agent can only take profits in proportion to his investment in the account.
When is an IA or IAR permitted to publish a testimonial regarding the adviser? A. Never B. If the permission of the author of the testimonial is obtained C. If the testimonial appeared on an independent social media site over which the IA or IAR has no control D. If the testimonial is from a former client
C. If the testimonial appeared on an independent social media site over which the IA or IAR has no control An IA or IAR is permitted to publish testimonials if (1) they are shown as they originally appeared on an independent third party social media site, (2) are unedited, and (3) the IA or IAR has no direct or indirect influence or control over the independent site.
Mary had two children, Donald and Sarah, who each had three children of their own. Donald and his spouse died in an accident. Mary's will calls for a per stirpes distribution. If Mary predeceases the remaining family members, the result would be: A. Donald's three children receive 75% of the estate, while Sarah receives 25% of the estate. B. Donald's three children receive 50% of the estate, while Sarah and her three children split the other 50% of the estate. C. Sarah receives 50% of the estate, while Donald's children split the other 50% of the estate. D. Sarah's children split 25% of the estate, while Donald's three children receive 75% of the estate.
C. Sarah receives 50% of the estate, while Donald's children split the other 50% of the estate. In a per stirpes distribution, each branch of a family receives an equal share of an estate. In this question, Donald and Sarah represent the two branches of Mary's family. After Donald's death, his surviving children now represent his branch, with Sarah still representing the other branch. Due to Donald's death, his three children will split the 50% of the estate, that would have been inherited by him, while Sarah is entitled to the other 50% of the estate since she is still living.
The Administrator of State A believes that an agent who's registered in State B is operating in State A without being registered. State A's Administrator wants to begin investigating the agent by requesting records from State B. Which of the following statements is TRUE regarding State A's investigative authority? A. The Administrator of State A must notify the Administrator in State B that it's conducting an investigation. B. Both Administrators must notify the SEC of the potential rule violation. C. The Administrator of State A may begin its investigation without notifying the Administrator of State B. D. The Administrator of State A must coordinate its investigation with the Administrator of State B.
C. The Administrator of State A may begin its investigation without notifying the Administrator of State B. Administrators have broad inspectorial powers and may subpoena records or witnesses from other states. Although many Administrators will coordinate their investigations with Administrators from other states, there's no requirement to inform another state's Administrator of an ongoing investigation.
A disadvantage of investing in a general partnership versus a limited partnership is: A. Flow-through tax treatment of gains and losses B. General partners have limited liability C. Limited partners have unlimited liability D. General partners have unlimited liability
D - General partners have unlimited liability All general partners have unlimited personal liability for debts of the partnership. They also participate in management decisions and may bind the partnership, e.g., through contracts. Limited partners have no personal liability nor may they participate in management.
What financial arrangement exists when a market maker or exchange pays a broker-dealer for the routing of the broker-dealer's customer orders? A. Soft dollar arrangement B. Spoofing C. Layering D. Payment for order flow
D - payment for order flow Payment for order flow (PFOF) is a practice in which a market maker or exchange pays a retail broker-dealer for sending (i.e., routing) its customer orders. Payment for order flow is a legal business practice, but the broker-dealer that holds the customer accounts must disclose its PFOF practice when customer accounts are opened and periodically thereafter.
A trustee would most likely NOT consider which of the following factors when managing a trust's assets? A. The value of the assets B. The general condition of the economy and the stock market C. The current rate of inflation D. The beneficiaries' normal trading practices in their own brokerage accounts
D - the beneficiaries' normal trading practices in their own brokerage accounts
Who typically does not supply the property to create a trust? A. The settlor B. The grantor C. The maker D. The beneficiary
D - the beneficiary The terms settlor, grantor, and maker are synonymous. The person who supplies the assets to place in a trust may also be referred to as the donor or trustor. When taking your examination, you may see these terms used interchangeably. The term beneficiary of the trust refers to whom the trust will benefit
Which of the following statements is TRUE regarding an offering of common shares? A. An initial public offering of common stock is exempt from both state and federal registration requirements. B. A secondary offering of common stock is exempt from both state and federal registration requirements. C. An initial public offering is exempt from state registration requirements, but must register under federal law. D. A secondary offering of common stock that's listed on a registered securities market is exempt from registration.
D. A secondary offering of common stock that's listed on a registered securities market is exempt from registration. Secondary offerings of exchange-listed stocks are considered federal covered securities and are therefore exempt under the Uniform Securities Act. Initial public offerings (IPOs) are subject to both state and federal registration requirements. When registering with the state Administrators, issues of IPOs typically use registration by coordination.
While meeting with a client, an investment adviser representative (IAR) is asked if she is registered. The client also questions the IAR as to whether being registered indicates that she is qualified to be an IAR. According to the Uniform Securities Act, how should the IAR respond? A. The IAR should tell the client that only qualified representatives may use the IAR designation B. The IAR should tell the client that if she was unqualified the state would have revoked her registration C. The IAR should tell the client that she will always act in an ethical and honest manner because she is an IAR D. The IAR should tell her client that being registered does not equate to the Administrator considering her to be capable or qualified to act as an IAR
D. The IAR should tell her client that being registered does not equate to the Administrator considering her to be capable or qualified to act as an IAR Being registered does not signify that an individual has all of the necessary skills to be an effective agent or investment adviser representative (IAR). The Administrator has no qualification requirements and being registered does not guarantee that an individual will act ethically
Which of the following is a consequence of being a general partner? A. To absorb losses, but not profits B. To call all meetings to order C. To contribute 10% of total capital D. To accept a personal obligation to repay creditors of the partnership
D. To accept a personal obligation to repay creditors of the partnership A general partner has unlimited financial liability which includes obligations to both secured and general creditors. General partners share in both the profits and losses that are generated by the partnership.
If a client is interested in purchasing a stock that has a high P/E ratio and a low dividend payout ratio, what type of stock should an IAR recommend? A. A value stock B. A growth stock C. A cyclical stock D. A defensive stock
Growth stocks generally have high price/earnings (P/E) ratios and low dividend payout ratios. These companies tend to retain most of their earnings in order fund their continued expansion. A company's dividend payout ratio is the percentage of its earnings that are paid to investors. On the other hand, two characteristics of value stocks are low P/E ratios and high dividend payout out ratios (or high dividend yields). Cyclical stocks are simply stocks of companies whose values follow the business cycle (e.g., automotive, manufacturing). Defensive stocks are stocks of companies that are resistant to recession (e.g., utilities, cosmetics, pharmaceuticals).
which state has jurisdiction: television or radio
THE STATE IN WHICH THE CAMERA OR MICROPHONE IS LOCATED
Investors who buy shares on the exchange (the after-market) must be provided with a copy of the prospectus for a specific period from the effective date. For an exchange-listed, follow-on offering
No requirement
Which state has jurisdiction: newspaper or magazine
ONE STATE OR NO STATE: THE STATE IN WHICH IT'S PUBLISHED, UNLESS MORE THAN TWO-THIRDS OF CIRCULATION IS OUTSIDE THE STATE
Securities Exchange Act of 1934: Insider Trading Act of 1988
Prohibits any person with material, non-public information from using it to make a profit or avoid a loss
Form 10Q
Quarterly report filed with the SEC (3 per year)
Exempt Transactions
Rule 147 - Intrastate Regulation D - private placement
An individual must begin to receive distributions from a traditional IRA by April 1 of the year following the calendar year in which she reaches the age of:
Withdrawals from an IRA must begin by no later than April 1 following the calendar year in which the individual reaches the age of 73 (in 2022, the age was 72).
An investment adviser's computer system was hacked and customer data was compromised. At the time of the breach, the firm was in the process of establishing procedures which required password and data protection. Is the firm at fault?
Yes, since a cyber preparedness policy should have been in place As with individuals and other businesses, investment advisers are potentially vulnerable to hackers. IAs are required to implement a policy that includes encryption, anti-virus, anti-malware programs, as well as employee training.
An agent of a BD and a client can share in an account if
the agent has proportionate risk in the account
Marginal Tax Rate
the rate of tax paid on the last dollar earned
Effective Tax Rate
average rate of tax paid total amount of taxes paid / amount of taxable income
Failing to update an IAR's Form U4 is:
unethical
Tax rates: short-term capital gains
realized if an asset is held for one year or less prior to its sale Taxed at the same rates as the client's ordinary income
Capital Losses
realized if an asset is sold and its proceeds are less than its basis Capital losses are first used to offset capital gains without limit If losses remain, a maximum of $3,000 can be used to offset ordinary income
Private 457 plans
retirement plans for non-governmental employers and there are restrictions regarding participant eligibility. Participants in a private 457 plan may include members of a union, hospital workers, and employees of charitable organizations.
Form 8k
filed to report events which may affect the corporation or its shareholders (i.e., bankruptcy, merger) filed within 4 business days
Tax Rates: Dividends
maximum of 20%
Tax rates: long-term capital gains
realized if an asset is held for more than one year Taxed at a maximum rate of 20%