Question

In January 2012​, an investor purchased 400 shares of Engulf​ & Devour, a rapidly growing​ high-tech conglomerate. From 2012 through 2016​, the stock turned in the following dividend and share price​ performance:

Year Share Price Beginning of Year Dividends Paid during Year Share Price End of Year
2012 $39.26 $0.75 $49.02
2013 $49.02 $0.99 $63.45
2014 $63.45 $0.96 $61.06
2015 $61.06 $1.65 $44.23
2016 $44.23 $2.05 $111.07


Required:
On the basis of this​ information, find the annual holding period returns for 2012 through 2016. ​

Answer 1

The annual holding period returns for 2012 through 2016 is 199.21%

Step-by-step explanation:

In order to Calcualte the Holding Period Return for 2012 through 2016

we would have to use and calculate the following formula :

HPR = [(P1-P0) +D] / P0

P0 = Beginning value of stock = $39.26

P1 = The closing value of stock = $111.07

D = Dividends received during the year =($0.75 + $0.99 + $0.96 + $1.65 + $2.05) = $6.40

Substituting all the values in the formula , we will get Holding period return

HPR = [($111.07 - $39.26) + $6.40] / $39.26

= $78.21/ $39.26

= 1.9921

= 199.21%

Therefore, the annual holding period returns for 2012 through 2016 is 199.21%