On page 6, the final page of his presentation, Moynahan plans to discuss the tax implications of fixed-income investing. He wants the class to understand that the management of taxable portfolios is more complicated than that of tax-exempt portfolios. He outlines the following key considerations for managing taxable fixed-income portfolios:
- Minimize interest income relative to capital gains.
- Minimize capital gains relative to capital losses.
- Forego attractive trading opportunity because of tax implications.
Question:Which of the considerations outlined by Moynahan on page 6 of the presentation is least likely correct?
The answer is 2.
I got the explanation of 1 meaning that income is usually taxed at higher rates, so lets avoid that.
Answer 3 is not making much sense. Like now we don’t invest in something attractive because of tax implications???
And what does answer 2 even mean?