Hi, I have a question: On page 189 of Volume 2 it says: “The accrual equivalent return approaches the pretax return as the time horizon increases” I wonder if that is true as a general statement. On page 178 it says that a long investment horizon can increase the tax drag. Shouldnt the statement on page 189 only be valid if there is a high percentage of capital gains that can be deferred into the future? Thanks for helping! Chris
chb81 Wrote: ------------------------------------------------------- > Hi, > > I have a question: > On page 189 of Volume 2 it says: “The accrual > equivalent return approaches the pretax return as > the time horizon increases” > > I wonder if that is true as a general statement. > On page 178 it says that a long investment horizon > can increase the tax drag. Shouldnt the statement > on page 189 only be valid if there is a high > percentage of capital gains that can be deferred > into the future? > > Thanks for helping! > Chris Yes, it says that in the fourth last line of the last paragraph on Pg 189. Your thinking is correct.
Good to see others grinding through Taxes as well right now
@idreesz Thanks for answering! I still think it’s not written correctly by CFA…But let’s hope a possible exam question will be clearer 