Problem 6-13 Historical Realized Rates of Return Stocks A and B have the following historical returns: Year     2012 -17.20% -15.50% 2013 30.25 24.40 2014 10.75 33.60 2015 -4.75 -13.10 2016 32.50 22.15   Calculate the average rate of return for each stock during the 5-year period. Round your answers to two decimal places. Stock A  % Stock B  % Assume that someone held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would have been the realized rate of return on the portfolio in each year? What would have been the average return on the portfolio during this period? Round your answers to two decimal places. Year Portfolio 2012  % 2013  % 2014  % 2015  % 2016  % Average return  % Calculate the standard deviation of returns for each stock and for the portfolio. Round your answers to two decimal places.   rA rB Portfolio Std. Dev.  %  %  %

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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.