You purchased a share of CSCO stock for $20. One year later, you received $2 as a dividend and sold the share for $31. What was your holding-period return?
A) 45%
B) 50%
C) 60%
D) 40%
E) None of the options are correct.

Question

Quizplus · Accepted Answer

The holding-period return (HPR) is calculated as the total return received from holding an asset or portfolio of assets over a period of time, generally expressed as a percentage. The formula for HPR is: $$HPR = \frac{(P_1 - P_0) + D}{P_0}$$ where $P_0$ is the initial price of the asset, $P_1$ is the price of the asset at the end of the holding period, and $D$ is the dividend received. In this case, $P_0 = $20$, $P_1 = $31$, and $D = $2$. Plugging these values into the formula gives: $$HPR = \frac{($31 - $20) + $2}{$20} = \frac{$13}{$20} = 0.65$$ or 65%. Since 65% is not listed among the options, the correct choice is E) None of the options are correct.

You Purchased a Share of CSCO Stock for $20