1. Suppose your company just exported 1 million dollars goods to USA on 15 December 2016, the spot exchange rate is 6.9 RMB/$. The US importer promise to pay the 1 million dollars in one year (15 December 2017). Your boss is a risk- adverse person, who does not want to take any exchange risk of RMB appreciation. He want to use the forward contract to hedge the exchange risk, but unfortunately there is no forward in your market. How can you use monetary market to help your boss avoid exchange risk. Suppose the interest rate of RMB is 6%, and interest rate of US dollar is 4%.

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.