Question

1. The tax on long-term capital gains is 15%, and the tax on regular income is 35%. Eighty percent of the dividend qualifies for long-term capital gains treatment; the remainder is regular income. The investor held the stock for more than a year, so he receives long-term capital gains on the price appreciation. What is the after-tax total rate of return (price appreciation plus dividend minus taxes?? State your answer in dollars and cents.

2. What will be the next major innovation in finance? Explain

Answer 1

Assuming Total Income be 100$
Tax on Long Term gains = 15%
Tax on regular income = 35%
80% income is long term income that means
$100*80%= 80$ is from Long term Gains
Rest 20% i.e 20$ is regular income
Particulars	In $
Income	100
Tax on Long term Gains ($80*15%)	12
Tax on regular income ($20*35%)	7
Total Income after Tax	81
Return on money invested	81%

Return on Money invested=((Total income after Tax)/ Amount invested)*100

2. Financial innovation has come via advances over time in financial instruments and payment systems used in the lending and borrowing of funds. These changes – which include updates in technology, risk transfer, and credit and equity generation – have increased available credit for borrowers and given banks new and less costly ways to raise equity capital.