Tom purchased Hampton Industries Inc.stock for $14.65 and sold it 6 months later for $17.38 after receiving a $0.25 dividend.What Tom'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) * 100 = 20.34%. The APR is the HPR annualized for a 6-month period: 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: (1 + 0.2034)^(2) - 1 = 44.82%.

Tom Purchased Hampton Industries Inc