in the solutions it uses a tax rate of 40% for equity portion of the portfolio while in the question it says Capital Gains are taxes at 20% on deferred basis!! are the solutions wrong or am I missing something?! Thanks
The equity portion of Kaplan’s portfolio is in a tax deferred account, so the cap. gain tax is irrelevant. The only tax you’d impose is the 40% rate at withdrawl that is stated in the 2nd to last sentence.