Question

If Stock A had a price of $120 at the beginning of the year, $150 at the end of the year and paid a $6 dividend during the year, what would be the annualized holding period return? (NEED TO SHOW ALL WORK FOR CREDIT)

A. 36%
B. 30%
C. 24%
D. none of the above

Answer 1

B. 30%

Step-by-step explanation:

Initial value (Vi) = $120

Final value (Vf) = $150

Dividends paid (D) = $6

The holding period return is defined as the change in value during the year added to the dividends paid and then divided by the initial value:

`HPR = (D+(V_f-V_i))/(V_i) \\HPR = (6+(150-120))/(120)\\HPR = 0.30\ or\ 30\%`

The stock's annualized holding period return is 30%.