n NISM Certifications
X NISM Series X
Medium

If an investor is in the 30% tax bracket, an 8.4% post-tax return is equivalent to what pre-tax return?

Practice question from NISM Series XA- Investment Adviser (Level 1) Mock Test 4 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    13%

  2. B

    14%

  3. 12%

    Correct answer

  4. D

    15%

Why this is the answer

Pre-tax return is calculated as post-tax return divided by (1 − tax rate), which gives 8.4% ÷ 0.70 = 12%.

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