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28 April, 02:46

Ashley purchased a stock at a price of $27 a share. She received quarterly dividends of $0.75 per share. After one year, Ashley sold the stock at a price of $29.25 a share. What is her percentage holding period return on this investment?

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  1. 28 April, 05:37
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    19.4%

    Explanation:

    Original cost of stock = $27

    Disposal price = $29.25

    Dividend per quarter = $0.75

    Total dividend = $0.75 * 4 = $3

    Gain on disposal = Disposal price - Original cost of stock

    = $29.25 - $27 = $2.25

    Return on investment = Total dividend + Gain on share disposal

    = $3 + $2.25 = $5.25

    Percentage return on

    investment = Return on investment / Original cost of stock * 100%

    = $5.25 / $27 * 100%

    = 19.44444444%

    = 19.4%

    That is, Ashley percentage holding period return on this investment is approximately 19.4%
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