Question:
The __________ the proportion of total return that is in the form of price appreciation, the __________ will be the value of the tax-deferral option for taxable investors.
A) greater; greater
B) greater; lower
C) lower; greater
D) Cannot tell from the information given
E) None of the options
Answer:
The correct answer is A) greater; greater
That is, the greater the proportion of total return that is in the form of price appreciation, the greater will be the value of the tax-deferral option for taxable investors.
Step-by-step explanation:
To understand the above, you need to know that Total Return in this instance means capital appreciation and all the form of income receiveable on an investment. When the prices of one's investment (e.g. stock or share in a company) appreciates, it becomes more appealing for investors to defer payment of tax.
Cheers!