An investor earned a holding period return equal to 10 percent on a stock that she purchased for $27.50.During the time she held the stock,the company paid a $2 dividend.For what price did the investor sell the stock?
A) $26.75
B) $26.25
C) $30.25
D) $29.50
E) $28.25

Question

Quizplus · Accepted Answer

The holding period return (HPR) is calculated as (Ending Price - Initial Price + Dividend) / Initial Price. Here, 0.10 = (Ending Price - 27.50 + 2) / 27.50. Solving for the Ending Price gives $28.25.

An Investor Earned a Holding Period Return Equal to 10