Under Current Tax Law, the Longer an Investor Waits to Sell

question 15

True/False

Under current tax law, the longer an investor waits to sell an inflated stock, the lower is the present value of the tax liability.

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Definitions:

Noncumulative Preferred Stock

A type of preferred stock where dividends are not accumulated if they are not declared.

Par Value

The face value of a bond or stock as stated by the issuer, which does not necessarily reflect its market value.

Preferred Stock

A category of corporate ownership that ranks above common stock in terms of asset claims and earnings, usually providing fixed dividend payouts.