When You Own a Mutual Fund, You Are Liable for Paying

question 44

True/False

When you own a mutual fund, you are liable for paying taxes on dividends and capital gains, even if these are reinvested in your account and you never actually receive a cheque for them.

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Definitions:

Securities Act

Refers to laws that regulate the issuance and trading of securities, such as stocks and bonds, to protect investors from fraud and ensure transparency in the financial markets.

Due Diligence Defense

A legal defense used in securities law where the accused party argues they conducted a comprehensive and reasonable investigation prior to an alleged wrongdoing.

Private Placement Exemption

A regulatory exception that allows companies to sell securities directly to a limited number of qualified investors without the need for a public offer.

SEC

The Securities and Exchange Commission, a U.S. federal agency responsible for enforcing federal securities laws and regulating the securities industry.