Final answer:
The after-tax return on Corporation Y's stock could likely be greater than that of Corporation X's stock if the longer investment period qualifies for lower capital gain taxes, despite identical before-tax returns and no dividends from both corporations.
Step-by-step explanation:
Cameron is assessing the after-tax return on stocks from Corporation X and Corporation Y, neither of which pays dividends. With an identical before-tax rate of return and no dividend payouts, the return is solely dependent on capital gains achieved through the increase in stock value. Given the information that capital gains are the primary method of earning a return in this scenario, one crucial factor to consider for after-tax return is the length of time the investment is held before selling. In some tax jurisdictions, long-term capital gains (held for more than a year) are taxed at a lower rate than short-term capital gains. Thus, if Cameron's long-term hold on Corporation Y's stock qualifies for a more favorable tax rate compared to the shorter hold on Corporation X's stock, then despite identical before-tax rates of return, Corporation Y's stock would likely produce a greater after-tax return due to lower taxation on its capital gains.