Question

Janet bought a share of stock for​ $47.50 that paid a dividend of​ $.72 and sold one year later for​ $51.38. What was her dollar profit or loss and holding period​ return?A. $0.72, 7.55% B. $3.88, 8.95% C. $4.60, 9.68% D. $3.88, 9.68%

Answer 1

Answer:

Option (C) is correct.

Explanation:

The dollar profit/loss and holding period return is computed as follows:

Dollar profit/loss will be:

= Stock sold one year later - Purchasing price of stock + Dividend paid

= $51.38 - $47.50 + $0.72

= $4.60

Holding period return will be:

= (Stock sold one year later - Purchasing cost of stock + Dividend paid ) ÷ Purchasing price of stock

= ($ 51.38 - $ 47.50 + 0.72) ÷ $47.50

= 9.68% Approximately

So, the correct answer is option C i.e. $4.60 ; 9.68%