Is the annual growth rate on an investment the equivalent of the after-tax nominal rate of return, the real rate of return or the after-tax real rate of return ?
Annual growth rate = is the average increase in the value of an portfolio, asset etc over a period of a year
After tax nominal rate of return = nominal return * ( 1 - capital tax rate )
nominal return - rate of return on a investment without adjusting for inflation.
Real rate of return - Is the annual percentage of profit earned
on investment, adjusted for inflation.
real rate of return indicates actual purchasing power of a given amount of money over time.
After tax real rate of return - is the financial benefit of an
investment after accounting for the effects of inflation and
Sol : Annual growth rate on an investment is not equivalent to after tax rate of return, real rate of return, after tax real rate of return as it is adjusted against inflation and tax.
Get Answers For Free
Most questions answered within 1 hours.