Twelve months ago, Javier purchased a stock for $28 a share. The stock pays a quarterly dividend of $0.45 per share. Today, Javier sold the stock for $26.75 a share. What is his holding period return?
A) -4.46%
B) 1.96%
C) 6.73%
D) 19.6%

Question

Quizplus · Accepted Answer

The holding period return is calculated by considering both the capital loss and the dividends received. The capital loss is ($26.75 - $28) = -$1.25 per share. The total dividends received over the year is 4 quarters * $0.45 = $1.80 per share. The holding period return is [(-$1.25 + $1.80) / $28] * 100% = 1.96%.

Twelve Months Ago, Javier Purchased a Stock for $28 a Share