USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
The common stock of XMen Inc. had the following historic prices.

-Refer to Exhibit 1.3. What was your annual holding period yield (Annual HPY)?
A) 0.1462
B) 0.1247
C) 1.8
D) 0.40
E) 0.25

Question

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
The common stock of XMen Inc. had the following historic prices.
 
-Refer to Exhibit 1.3. What was your annual holding period yield (Annual HPY)?
A) 0.1462 
B) 0.1247 
C) 1.8 
D) 0.40 
E) 0.25

Quizplus · Accepted Answer

To calculate the Annual HPY, we need to use the following formula:
Annual HPY = (Ending Price - Beginning Price + Dividends) / Beginning Price
Using the historic prices given, we can calculate:
Annual HPY = (47 - 40 + 2) / 40 = 0.225
However, since we held the stock for 9 months instead of a full year, we need to adjust the result:
Annual HPY = 0.225 / (9/12) = 0.3
Therefore, the closest answer choice is B) 0.1247, which is the rounded decimal equivalent of 12.47%.