Question

Exactly one year ago, Harv bought 500 shares of Primer Corp stock for $40.95. He plans on selling all of the shares today at the current market price of $37.75. Over the last year, Primer Corp. paid out dividends of $0.75 per share on its common stock. What is Harv's holding period return for the year on Primer Corp. stock? Submit your answer as a percentage and round to two decimal places.

The following are examples of how it must done:

Answer 1

1st step

Harv bought no. of shares of primer corp = 500

stock price of shares of primer corp = $ 40.95

Total price paid for the purchase of shares = 500* 40.95 = $ 20475

2nd step

Dividend received from primer corp per share = $ 0.75

Total no .of shares = 500

Total dividend received from primer corp = 0.75 * 500 = $ 375

3rd step

Current market price of share of primer corp = $ 37.75

Total no .of shares = 500

Total price of shares at current market price = 37.75 * 500 = $ 18875

4th step

total Inflow received from shares = $18875 + $ 375 = $19250 (A)

total outflow from shares 1 year ago = $ 20475 (B)

net outflow = $ 20475- $ 19250 = $ -1225 (C)

holding period return loss of $ -1225

5th step

percentage of return = C divided by B multiplied by 100

$-1225/ 20475 = -0.0598 *100 = -5.98 %