Your investment portfolio consists of $150,000 invested in only one stock - Pocemon. Suppose the risk free rate is 3%. The Pocemon stock has an expected return of 12%, and a volatility of 40%, and the market portfolio has an expected return of 10% and volatility of 18%. Now what if you had the stomach for the kind of volatility Pocemon has. Under the CAPM assumptions, what would be the expected return you should then earn? Answer:

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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.