All categories

3 years ago

An investment's time horizon affects the after-tax rate of return on investments taxed annually. true or false

Business

2 answers:

Arturiano [62]3 years ago

7 0

Answer:

False, the investment's time horizon doesn't affect the after-tax rate of return on investments taxed annually.

Explanation:

The investment's time horizon is the time someone is going to maintain it's position on a certain investment before they need the money in a liquid state. They are defined by the individual investment strategy and they are relative to those times. For example, a longterm investment is an investment with a long term horizon and that it is focused on a big reward. It doesn't take into account the type of investment project, it could be a stock, lend, credit, real state, etc. And the period of time on the investment capital would be named investment time horizon.

Yuki888 [10]3 years ago

5 0

True. Because of the time value of money taxes paid in the future have a reduced economic burden on the tax payer. Since most investments are taxed only when you cash out, the longer the investment's time horizon, the greater the after-tax rate of return.

You might be interested in

Which one of the following is an unintended result of the Sarbanes-Oxley Act? Multiple Choice More detailed and accurate financi

Evgesh-ka [11]

Answer:

Increased responsibility for corporate officers

Explanation:

A review of eight thousand public companies, on the study of the impact of the Sarbanes-Oxley Act (SOX) of 2002 revealed that SOX increased directors' workload and risk, and increased demand by mandating that firms have more outside directors.

It was also revealed that both broad-based changes and cross-sectional changes (by firm size) occurred because Board committees meet more often post-SOX and Director and Officer insurance premiums have doubled.

6 0

3 years ago

If I currently sell 10,000 units, and my use of Formula 1 indicates that I will need to sell 500 additional units to justify my

devlian [24]

Answer:

It represents a 5% change to the marketing mix.

Explanation:

The change = 500/10,000 x 100 = 5%.

Company A's change in a variable can be compared with another index, by expressing the change (addition) as a percentage of the index. For instance, the sale of 10,000 units is an index. The additional 500 units that is needed to be sold represent the change. In percentage terms, the change can be divided by the index and then multiplied by 100.

6 0

3 years ago

Now assume a risk-free rate of interest of 4%, an expected rate of return on the global market portfolio of 8% and a global beta

never [62]

Answer:

7.6%

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below

Expected rate of return = Risk-free rate of return + Global Beta × (Global Market rate of return - Risk-free rate of return)

= 4% + 0.90 × (8% - 4%)

= 4% + 0.90 × 4%

= 4% + 3.6%

= 7.6%

The (Global Market rate of return - Risk-free rate of return) is also called global market risk premium

7 0

3 years ago

A firm has a debt-equity ratio of .64, a cost of equity of 13.04 percent, and a cost of debt of 8 percent. Assume the corporate

raketka [301]

Answer:

11.41%

Explanation:

The cost of equity of an all-equity firm can be derived from the below formula:

Levered Cost of Equity = Unlevered Cost of Equity + (Unlevered Cost of Equity - Cost of Debt) * (1 - tax) * Debt-Equity Ratio

Levered Cost of Equity=13.04%

Unlevered Cost of Equity=the unknown(let us assume it is U)

cost of debt=8%

tax rate=25%

debt-equity ratio=0.64

13.04%=U+(U-8%)*(1-25%)*0.64

13.04%=U+(U-8%)*0.75*0.64

13.04%=U+(U-8%)*0.48

0.1304=U+0.48U-0.0384

0.1304+0.0384=1.48U

1.48U=0.1688

U=0.1688/1.48

U=11.41%

7 0

3 years ago

Does anybody know the answers?

stepan [7]

I only know the answer to question 4, which is quantitative and qualitative. I’m sorry!

7 0

3 years ago