Question
. Calculate the average annual rate of return Marcelino would receive if he purchases shares in an Internet stock at $ 24 per share, holds
. Calculate the average annual rate of return Marcelino would receive if he purchases shares in an Internet stock at $ 24 per share, holds the shares for 5 years, and sells them for $ 70 . (Hint: Find the holding period return and divide by the number of years in the holding period.) The annualized rate of return is nothing %. (Round to two decimal places.) What is his after-tax rate of return if he is in the 25 percent marginal tax bracket? The tax due is $ nothing . (Round to the nearest cent.) The after-tax rate of return is nothing %. (Round to two decimal places.) 5. What potentially significant disadvantage does Marcelino face if he sells his stock after only 10 months, for $ 70 per share, and incurs a short-term capital gain? Unlike a long-term capital gain that could be taxed at a rate as low as 15% (for taxpayers in the 25% and higher tax brackets in 2012) or 0% (for taxpayers in the 10% and 15% tax brackets in 2012), short-term capital gains are subject to the full marginal tax rate. While this may not be a significant factor for Marcelino as a college student, the difference in capital gains tax rates can be dramatic for individuals in high marginal tax brackets. Is the statement above true or false? True False
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