Pretax rate of return

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Pretax rate of return

Gain on a security before taxes.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Pretax Rate of Return

The rate of return on an investment before capital gains or other taxes. Most of the time, when one sees a calculation of the rate of return it is the pretax rate of return. For a tax-free investment, the pretax and post-tax rates of return are identical.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
I'm going to discuss shareholder wealth creation by focusing on shareholder pre-tax rates of return on invested equity.
(7) International tax differentials might distort such allocation by resulting in higher after-tax rates not necessarily associated with the higher pre-tax rates of return. The distortion in capital allocation occurs because investors seek to maximize their net profits, and ergo invest where after-tax rates of return are higher.
Furthermore, with residence-based taxation, after-tax rates of return are a function of pre-tax rates of return prevailing in the source country and the tax rates prevailing in the country of residence.
The curve representing the pre-tax marginal product of capital (pre-tax rates of return) demonstrates the shifting of the economic burden of source-based taxation (t) from mobile factors (capital) to immobile factors (land, labor, etc.).
Can total distributions be used to predict pre-tax rates of return? Perform a regression analysis for 1999 using total distributions as the independent variable and pre-tax rates of return as the dependent variable.
Can pre-tax rates of return be used to predict after-tax rates of return?
Are rankings based on pre-tax rates of return significantly different from rankings based on after-tax rates of return?
Finally, y reflects the favorable tax treatment given the fraction a of the investment, so assets that receive more favorable tax treatment also exhibit lower pre-tax rates of return. Both the initial investment [K.sub.0] and all subsequent reinvestments [alpha]K du earn the same expected after-tax rate of return [rho].
In other words, the effect of the tax preference is to lower pre-tax rates of return rather than increase after-tax rates of return.
Column 5 shows the pre-tax rates of return that would be required under each of the various scenarios on lines 1 through 5 to equal the ending value of $6.73 (line 6, column 2).
Under a system of debt indexation, real pre-tax rates of return remain constant regardless of the marginal tax rates faced by creditors and debtors.
Furthermore, you warn them that the impact of taxes must be considered since the funds' after-tax rates of returns may be substantially different from their pre-tax rates of returns. You begin by explaining a bit about mutual funds in general.