In part 2 we no longer pay capital gains tax on the 2 redemption payments why is this the case?

Login

+2 votes

Best answer

Its an omission. The capital gains tax should only not be charged on the selling price S but not on N_{1} and N_{2}. Try to effect capital gains tax at t=4 and t = 5 and see if you get a different answer. Sometimes when typing solutions I have typos but final answers will include the correct thing. The answer when you do the right thing should be 0.0576788 = 5.76788%

- All categories
- BUS 1003H - Introduction to Financial Risk (33)
- BUS 2016H - Financial Mathematics (44)
- BUS 3018F - Models (40)
- BUS 3024S - Contingencies (47)
- BUS 4028F - Financial Economics (12)
- BUS 4027W - Actuarial Risk Management (19)
- BUS 2029H - Research Project (2)
- Mphil (1)
- Calculus and Pure Mathematics (3)
- Statistics (10)

...