Taxes and Private Wealth Management Concept Checkers Q3, Reading 11

T

theCFAway

New member
Joined
Jun 1, 2011
Messages
0
Reaction score
0
Is there a mistake on the solution for this question? It is asking you,
3. An investor is evaluating various assets and strategies for her portfolio. Based
solely on tax effects, determine which of the following investments would most
likely be favored in a Heavy Interest Tax Regime.
A. Growth stocks with high turnover.
B. Bonds with periodic payment of interest.
C. Value stocks held for a long period of time.
The answer is C, but i picked A because growth stocks tend to pay lower dividends so wouldn’t that be better during a heavy interest tax regime?
 
Heavy interest tax regime has flavor treatment for both dividend and capital gain so difference btw A&C is long term hold or high turnover. High frequence trading pay more tax i think
 
High turnover generates more taxes than dividends , which are typically only 2-4% per annum for most stocks
 
You must log in or register to reply here.
Back
Top