Assuming no dividends were paid, what was the 3-year holding period return on a share given the following information: Year 1 return = 10%, Year 2 return = 15%, Year 3 return = 12%.
A)12.3%
B)13.9%
C)15.8%
D)41.7%
E)46.5%

Question

Quizplus · Accepted Answer

The 3-year holding period return can be calculated by multiplying the returns for each year, considering the compounding effect. The formula to calculate the overall return is: (1 + Year 1 return) * (1 + Year 2 return) * (1 + Year 3 return) - 1. Plugging in the given returns: (1 + 0.10) * (1 + 0.15) * (1 + 0.12) - 1 = 1.10 * 1.15 * 1.12 - 1 = 1.417 - 1 = 0.417 or 41.7%.

Assuming No Dividends Were Paid, What Was the 3-Year Holding