1. The tax treatment of capital gains is a big political issue. Republicans generally favor lower rates on capital gains while Democrats do not. Why is the issue so politically sensitive?
2. Which of the following issues should be considered with respect to the accuracy of stock pricing Models?
a. Assumptions regarding growth rates are imprecise.
b. Assumptions regarding market returns are difficult to make accurately.
c. The Gordon Model is only an approximation of the present value of an infinite stream of future cash flows.
d. Both a. and b. above have to be considered.
e. All of the above have to be considered.