Question

Brittany purchased a stock for $14 a share and sold it 6 months later for $15.50. While she owned the stock, Brittany received dividends of $0.32 per share. Brittany's 6-month holding period return on this stock is

A) 10%
B) 11%
C) 13%
D) 14%

Answer 1

Brittany's 6-month holding period return on the stock is calculated to be 11% (b) based on the capital gains and dividends she received during her ownership.

Step-by-step explanation:

The student has asked how to calculate Brittany's 6-month holding period return on a stock that she purchased at $14 per share, sold for $15.50 per share, and from which she received a dividend of $0.32 per share. The holding period return (HPR) is calculated by taking the sum of the capital gain (the difference between the selling and purchase price) and the dividends received, divided by the original purchase price of the stock. In Brittany's case, the HPR would be (($15.50 - $14.00) + $0.32) / $14.00, which equals a return of 11%(b).