2. This represents a share of interest in a firm representing rights of ownership and claims of benefits such as dividends and book value a. Short-term investments b. Derivative securities c. Equity securities d. Debt securities O e. None of the above

2. This represents a share of interest in a firm representing rights of ownership and claims of benefits such as dividends and book value a. Short-term investments b. Derivative securities c. Equity securities d. Debt securities O e. None of the above

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter11: Venture Capital Valuation Methods

Section11.1: Brief Review Of Basic Cash Flow-based Equity Valuations

Problem 1CC

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Concept explainers

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.

Question

2. This represents a share of interest in a firm representing rights of
ownership and claims of benefits such as dividends and book value.
a. Short-term investments
b. Derivative securities
c. Equity securities
d. Debt securities
e. None of the above

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