Question

H Ch 5 HW Saved Information about three securities appears next. 10 points Stock 1 Stock 2 Bond 1 Beginning-of- Year Price $43.10 $ 1.85 $1,080 End-of-Year Interest/Dividend Price Paid $ 47.35 $ 2.10 $ 1.99 $ 0 $1,108 $ 47.00 8 02:04:10 a. Assuming interest and dividends are paid annually, calculate the annual holding period return on each security. (Round your answers to 1 decimal place.) eBook Annual Holding Period Return Stock 1 % Print Stock 2 Bond 1 ſ References

Answer 1

The annual holding period return of Stock 1 is computed as shown below:

= ( End of year price - Beginning of year price + Dividend paid ) / Beginning of year price

= ( $ 47.35 - $ 43.10 + $ 2.10 ) / $ 43.10

= 14.7% Approximately

The annual holding period return of Stock 2 is computed as shown below:

= ( End of year price - Beginning of year price + Dividend paid ) / Beginning of year price

= ( $ 1.99 - $ 1.85 + $ 0 ) / $ 1.85

= 7.6% Approximately

The annual holding period return of Bond 1 is computed as shown below:

= ( End of year price - Beginning of year price + Interest ) / Beginning of year price

= ( $ 1,108 - $ 1,080 + $ 47 ) / $ 1,080

= 6.9% Approximately

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