Maria purchased $5,000 of no- fee managed fund units just over a year ago. She received $136 in dividend income and $201 in long- term capital gains distributions. Today she sold her shares for $5,062. Maria is in the 25% marginal tax bracket. Capital gains with holding periods in excess of one year and dividend income are taxed at 15%. What is Maria's after- tax holding period return?

Question

Quizplus · Accepted Answer

The after-tax holding period return is calculated as follows:After-tax holding period return = (Sale price - Purchase price + Dividend income + Capital gains distributions) / Purchase price * (1 - Tax rate)= (5,062 - 5,000 + 136 + 201) / 5,000 * (1 - 0.15)= 6.8%

Maria Purchased $5,000 of No- Fee Managed Fund Units Just