Maria Purchased $5,000 of No-Load Mutual Fund Shares Just Over

question 107

Multiple Choice

Maria purchased $5,000 of no-load mutual fund shares 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?

• A) 6.0%
• B) 6.6%
• C) 6.8%
• D) 8.0%

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Definitions:

Tax-Oriented Lease

A leasing agreement structured to maximize tax benefits for the lessor, often by passing on tax advantages to the lessee in the form of lower lease payments.

Long-Term Commitment

A pledge or engagement to something for an extended period, often seen in investments or strategic plans.

International Accounting Standards

A set of accounting standards stating how particular types of transactions and other events should be reported in financial statements, established by the International Accounting Standards Board.

IAS 17

An International Accounting Standard that prescribes the accounting policies and disclosures applicable to leases for both lessees and lessors.