Question

You buy a stock for $34 per share and sell it for $36 after you collect a $1.00 per share dividend. Your pre-tax holding period return is

Answer 1

8.82%

Step-by-step explanation:

Holding period return can be decomposed into : dividend yield and price return

Dividend yield = dividend / price = $1 / 34 = 0.029412

Price return = 36 / 34 - 1 = 0.058824

0.058824 + 0.029412 = 0.088236 = 8.82%