Christy purchased 100 shares of Good Idea stock for $48 last year. Yesterday she sold the stock for $45. If she received $4 in dividends during the time she held the security, what is her holding period return (round % to 2 decimals)?

Question

Quizplus · Accepted Answer

The holding period return (HPR) is calculated as [(Ending Value - Beginning Value + Dividends) / Beginning Value] * 100. Here, the beginning value is $48 per share for 100 shares ($4800), the ending value is $45 per share for 100 shares ($4500), and the dividends received are $4. So, HPR = [($4500 - $4800 + $4) / $4800] * 100 = [(-$296) / $4800] * 100 = -6.17%, which when rounded is -6.17%. However, the correct calculation should include the total dividends received, which is $4 * 100 shares = $400, not $4. Thus, the corrected HPR calculation is [($4500 - $4800 + $400) / $4800] * 100 = [($100) / $4800] * 100 = 2.08%.

Christy Purchased 100 Shares of Good Idea Stock for $48