Question

The holding period return on a stock was 28%. Its beginning price was $25 and its cash dividend was $1.2. Its ending price must have been _________.

Answer 1

Answer: $30.8

Step-by-step explanation:

From the question, we are informed that the holding period return on a stock was 28%, its beginning price was $25 and its cash dividend was $1.2.

The ending price will be calculated as:

= (28% × $25) - $1.2 + $25

= (0.28 × $25) - $1.2 + $25

= $7 - $1.2 + $25

= $30.8

Answer 2

The ending price on the stock = $30.8

Step-by-step explanation:

Holding period return on a stock = 28%

Beginning price = $25

Cash dividend = $1.2

The ending price on the stock = (Holding period return*Beginning price) - Cash dividend + Beginning price

The ending price on the stock = (0.28*$25) - $1.2 + $25

The ending price on the stock = $7 - $1.2 + $25

The ending price on the stock = $30.8