Question

You bought a share of stock for. $47.50 that paid a dividend of $.72 and sold one year later for $51.38. What was your dollar profit/loss and holding period return?

a) $3.88 ; 9.68%

b) $4.60 ; 9.68%

c) $3.88 ; 8.95%

d) $0.72 ; 7.55%

Answer 1

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

Dollar profit/loss will be

= $ 51.38 - $ 47.50 + 0.72

= $ 4.60

Holding period return will be:

= ($ 51.38 - $ 47.50 + 0.72) / $ 47.50

= 9.68% Approximately

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