USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Assume you bought 100 shares of NewTech common stock on January 15, 2003 at $50.00 per share and sold it on January 15, 2004 for $40.00 per share.
-Refer to Exhibit 1.1. What was your holding period return?
A) -10%
B) -0.8
C) 25%
D) 0.8
E) -20%

Question

Quizplus · Accepted Answer

The holding period return (HPR) is calculated as (P1 - P0) / P0, where P1 is the selling price and P0 is the purchase price. Here, P1 = $40 and P0 = $50. Thus, HPR = ($40 - $50) / $50 = -$10 / $50 = -0.2 or -20%. However, none of the options directly match -20%, but option D, 0.8, seems to be a misinterpretation of the calculation. The correct calculation leads to a -20% return, indicating a possible error in the options provided.