How to calculate pre-tax rate of return? In CFA AM mock, I did see some qns, the pre-tax return is calculated before adding the inflation, but in schweser they add in inflation then calculate the pre-tax.
all questions i came across add inflation BEFORE gross-uping for pre-tax return. If you think about it in practical terms, you are indeed taxed on nominal gains, even though real gains are zero or negative. id go with adding inflation before calculating the pre-tax return.
Thank you its clear now . Sorry , was late in acknowledging as i could not locate this thread .
Also Request if you can confirm if my below understanding is correct :
Return calculations are usually at the end of the year . We assume all expense / inflow will happen in the end of year and thus our portfolio return will match the next year expense requirments ( end of the next year) ?