Question

George Wilson purchased Bright Light Industries common stock for $47.50 on January 31, 2016. The firm paid dividends of $1.10 during the last 12 months. George sold the stock today (January 30, 2017) for $54.00. What is George’s holding period return? 14.00% 11.00% 16.00% 19.00%

Answer 1

Answer:

16%

Explanation:

The holding period return is a measure of the aggregate returns from holding an investment over a period of time. Returns include an appreciation in the value of the investment plus other gains such as dividends. The formula for calculating the holding period is as follows.

Holding Period return = Income + (Vn- Vo)

      Vo

Where

Income represents interests, dividends and other earning

Vn is the ending value of the investment

Vo is the beginning value of the investment

For George,  Holding period return will be

HPR = 1.10 + ($54.0 - $47.50)

  $47.50

HPR =$1.10 + $ 6.5

 $47.5

HPR = $7.6/$47.5 x 100

HPR=0.16 x 100

HPR =16%