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An individual buys $100,000 of stock. The individual holds the stock for 2 years and then sells it at the end of the 2nd year.
An individual buys $100,000 of stock. The individual holds the stock for 2 years and then sells it at the end of the 2nd year. The stock grows by 11 percent each year. The tax rate is 20 percent. Part 1) Consider a tax system in which half of realized capital gains are taxable. What tax amount is due on these financial assets at the end of the 2 years?
Part 2) Consider a tax system in which half of realized and unrealized capital gains are taxable. What is the annual net (of taxes) rate of return on these assets?
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