Pretax rate of return

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Pretax rate of return

Gain on a security before taxes.

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.
References in periodicals archive ?
Kainos has notched up pretax returns of more than PS15million, a 7% hike on the previous year.
Comparing after-tax returns to pretax returns can also be eye-opening.
This article examines the historical trend in community bank returns on equity (ROE) over the last 10 years and highlights the gap between current and historical pretax returns.
The answer will depend on several key variables, including the future of the tax code, the growth rate of the assets under consideration, and the tax efficiency of those returns (in other words, how much of their pretax returns investors get to keep).
Researchers in both public finance and financial economics have studied whether tax rules have a pronounced effect on asset pricing and the pretax returns on various financial assets.
A tax-exempt investor is indifferent between the three types of bonds only if the expected pretax returns are equal.
Brennan's (1970) model of these tax effects indicates that risk-adjusted pretax returns should be positively correlated to dividend yields.
Since most fund managers look to maximize pretax returns, they don't even consider the tax impact of their trading frequency.
Lyon advocates reducing or eliminating tax preferences that do not produce social returns in excess of their pretax returns as the most direct alternative to the corporate AMT for improving efficiency.
As Figure 2 shows, production businesses can deliver from 45 percent to 135 percent pretax returns on equity, depending upon the leverage ratio of the company and the all-in cost of production.
Planning suggestion: Corporations subject to the AMT may want to encourage dividend-paying companies in which they own 20% or more of the outstanding shares to sell their tax-exempt securities and invest in fully taxable securities that produce higher pretax returns.
The Garland results found that the typical investor received only 41% of the preexpense, pretax returns of the index.