Three years ago,you purchased a stock at a price of $33.48.The stock paid annual dividends of $.60 per share.Today,the stock is worth $35.20 per share.What is your holding period return?

Question

Quizplus · Accepted Answer

To calculate the holding period return, we need to consider the dividends received during the holding period and the increase in stock price.

Dividends received = Annual dividends per share x Number of shares x Holding period
= 0.60 x 1 x 3 = $1.80

Increase in stock price = (Current stock price - Purchase price) / Purchase price
= (35.20 - 33.48) / 33.48
= 0.0513 or 5.13%

Holding period return = (Dividends received + Increase in stock price) / Purchase price x 100%
= (1.80 + 5.13) / 33.48 x 100%
= 10.51%

Therefore, the correct answer is C, 10.51 percent.

Three Years Ago,you Purchased a Stock at a Price of $33.48.The