Question

Bought 2,000 shares at NAV of $8.59. Dividends were $0.36 and capital gain distributions were $0.36....

Bought 2,000 shares at NAV of $8.59. Dividends were $0.36 and capital gain distributions were $0.36. 35% tax bracket.

Sold all shares for a capital gain at $8.95 per share.

1) What is the pre tax HPR?

2) What is the after-tax HPR?

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Homework Answers

Answer #1

Return = Dividend + Capital Gain

= 0.36 + 0.36

= 0.72

Total Return = 0.72 * 2000 shares = 1440

Investment = Purchase Price * No of Shares

= 8.59 * 2000

= 17180

Pre Tax Holding Period Return = Return / Investment

= 1440 / 17180

= 6.64%

PostTax holding Period Return = Pre Tax Holding Period Return * (1-taxes)

= 6.64 * (1-0.35)

= 4.32%

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