Question

On August 15, you purchased 110 shares of stock in the Cara Cotton Company at $26 a share and a year later you sold it for $22 a share. During the year, you received dividends of $2.00 a share. Compute your HPR and HPY on your investment in Cara Cotton. Use a minus sign to enter negative values, if any. Round your answer for HPR to three decimal places. Round your answer for HPY to one decimal place.

Answer 1

HPR 7.692 %

HPY 7.7 %

Step-by-step explanation:

Holding period return: return in one year

Holding period yield: until maturirty

are the same for this case, as the share was for 1 year only:

returns/ investment = HPR = HPY

return:

dividends $ 2

price variance -$ 4

net return -$ 2

Investment

purchase at $ 26

-2/ 26 = -1/13 = -0,0769230 = -7.692%