2. You purchase one share of stock for $21.52. You sell that one share of stock...
2. You purchase one share of stock for $21.52. You sell that one share of stock after 2 months for $21.52. You received a $1.05 cash dividend while you held the stock. What is the average annualized compounded return?
A. 33.09%
B. 10%
C. 1.05%
D. 9.76%
Homework Answers
Holding Period Return = (Final Price - Initial Price + Dividend)/initial Price
HPR = ($21.52 - $21.52 + $1.05)/$21.52
HPR = 4.8792%
This is return for 2 months.
On an annual basis (6 periods of 2 months each),
Return = (1 + 4.8792%)6 - 1
Return = 1.3309 - 1
Return = 0.3309 = 33.09%
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