Maher purchased 100 shares of Chill Pill Pharmaceuticals at $30 per share last spring and sold them in six months for $36 per share. The stock paid no dividend. What was Maher's holding period return?

Question

Quizplus · Accepted Answer

Holding period return = ((ending price - beginning price) + dividends) / beginning price
Since the stock paid no dividend, the formula simplifies to:
Holding period return = (ending price - beginning price) / beginning price
In this case, Maher purchased the stock at $30 per share and sold it for $36 per share, which gives an increase of $6 per share. The holding period return is then:
(36 - 30) / 30 = 0.20
Multiplying by 100 to express the result as a percentage:
0.20 * 100 = 20%
Therefore, Maher's holding period return was 20%. The correct answer is B.

Maher Purchased 100 Shares of Chill Pill Pharmaceuticals at $30