Alice purchased Hampton Industries Inc. stock for $14.65 and sold it 6 months later for $17.38 after receiving a $0.25 dividend. What was Alice's holding period return (HPR), Annual Percentage Rate (APR), and Effective Annual Rate (EAR)?
A) 20.34%, 40.68%, 9.70%
B) 18.63%, 37.27%, 40.74%
C) 17.15%, 34.29%, 37.23%
D) 20.34%, 40.68%, 44.82%

Question

Quizplus · Accepted Answer

The holding period return (HPR) is calculated as [(17.38 + 0.25 - 14.65) / 14.65] = 20.34%. The APR is the HPR annualized, so 20.34% * 2 = 40.68%. The EAR is calculated using the formula (1 + HPR)^(1/n) - 1, where n is the number of periods in a year, so (1 + 0.2034)^(2) - 1 = 44.82%.

Alice Purchased Hampton Industries Inc