The longer the holding period on growth stocks, ____________ the after-tax rate of return.

Question

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The greater. Growth stocks are those of companies that are expected to grow at a rate above the average for the market. These companies typically reinvest earnings to finance further growth, and as a result, they often pay little or no dividends. This means that holding growth stocks for a longer period of time allows investors to benefit from the compounding effects of reinvested earnings, which can lead to higher returns over time. Additionally, for US investors, holding growth stocks for a longer period of time can provide tax benefits in the form of long-term capital gains rates, which are generally lower than short-term capital gains rates.

The Longer the Holding Period on Growth Stocks, ____________ the After-Tax