Question

Nico bought 100 shares of Cisco Systems stock for​ $30.00 per share on January​ 1, 2018. He received a dividend of​ $2.00 per share at the end of 2018 and​ $3.00 per share at the end of 2019. At the end of​ 2020, Nico collected a dividend of​ $4.00 per share and sold his stock for​ $33.00 per share. What was​ Nico's realized holding period​ return?

Answer 1

40%

Step-by-step explanation:

The computation of the Nico's realized holding period​ return is shown below:

= (End year price - beginning year price + dividend per share at the end of 2018 + dividend per share at the end of 2019 + dividend per share at the end of 2020) ÷ (beginning year price)

= ($33 per share - $30 per share + $2 per share + $3 per share + $4 per share) ÷ ($30 per share)

= ($12 per share) ÷ ($30 per share)

= 40%