Question

g You purchased a stock for $20 and sold it later for $24. During this period, the stock paid a $1 dividend. Calculate the holding period return. Write your answer as a percent, but leave off the % sign (e.g. if your answer is 33%, type in "33" in the answer blank.)

Answer 1

Answer:

25

Explanation:

Holding period return (HPR) refers to rate of return earned from an investment during the period, the investment is held. It is calculated as annual return.

It comprises of both capital gain yield and dividend yield. It is expressed and calculated using the following formula:

= $\frac{Closing\ value\ -\ Initial \ Value\ +\ Income\ earned}{Initial\ Value}$

Here, Closing value = value of a security at the end of the period

         Initial value= value of security at the beginning of the period

         Income earned = Dividend or Interest received during the period

Hence, HPR = $\frac{24\ - 20\ +\ 1}{20}$

HPR = 25%