Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Question
Project # 2 FIN 345 The following information is provided to you about the performance of a particular stock investment that involved purchasing 1,000 shares of the stock on Jan 1 and selling the stock at the end of the last period: Event or $ Dividend Market Price buy 0.6 Date 1-Jan 15-Mar 30-May 15-Jun 0.4 15-Sep 0.4 15-Dec 0.4 31-Dec sell 3 for 11 Tax Rates are as follows: 100 102 100 35 36 34 37 • The capital gains rate is 20% • The investor's personal income tax rate on dividends is 15%. Create a spreadsheet to answer the following questions: 1. What is the unadjusted before-tax holding period rate of return? 2. What is the time-weighted before-tax rate of return? 3. What is the unadjusted after-tax holding period rate of return? 4. What is the time-weighted after-tax rate of return? Final Step: Calculate the difference between Question #4 (time-weighted after-tax rate of return) and Question #3 (unadjusted after-tax holding period rate of return).
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Transcribed Image Text:Project # 2 FIN 345 The following information is provided to you about the performance of a particular stock investment that involved purchasing 1,000 shares of the stock on Jan 1 and selling the stock at the end of the last period: Event or $ Dividend Market Price buy 0.6 Date 1-Jan 15-Mar 30-May 15-Jun 0.4 15-Sep 0.4 15-Dec 0.4 31-Dec sell 3 for 11 Tax Rates are as follows: 100 102 100 35 36 34 37 • The capital gains rate is 20% • The investor's personal income tax rate on dividends is 15%. Create a spreadsheet to answer the following questions: 1. What is the unadjusted before-tax holding period rate of return? 2. What is the time-weighted before-tax rate of return? 3. What is the unadjusted after-tax holding period rate of return? 4. What is the time-weighted after-tax rate of return? Final Step: Calculate the difference between Question #4 (time-weighted after-tax rate of return) and Question #3 (unadjusted after-tax holding period rate of return).
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Step 1: Introduction
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Step 2: Computation of the unadjusted before-tax holding period return
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Step 3: Computation of the time-weighted rate of return
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Step 4: Computation of the unadjusted after-tax holding period return
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