Nico bought 100 shares of Cisco Systems stock for $24.00 per share on January 1, 2002. He received a dividend of $2.00 per share at the end of 2002 and $3.00 per share at the end of 2003. At the end of 2004, Nico collected a dividend of $4.00 per share and sold his stock for $18.00 per share. What was Nico's realized holding period return?
A) -12.5%
B) +12.5%
C) -16.7%
D) +16.7%

Question

Quizplus · Accepted Answer

Nico's realized holding period return is calculated by considering both the dividends received and the capital loss from selling the stock. He received a total of $9.00 in dividends per share over three years ($2 + $3 + $4). He bought the shares for $24.00 and sold them for $18.00, resulting in a capital loss of $6.00 per share. The total return per share is $9.00 (dividends) - $6.00 (capital loss) = $3.00. The holding period return is $3.00 / $24.00 = 12.5%.

Nico Bought 100 Shares of Cisco Systems Stock for $24