If a stock is purchased at the beginning of a year, a single dividend is paid at the end of the year and the stock is sold immediately after the dividend has been received. In this case
A) the internal rate of return is lower than the holding period return.
B) the holding period return. is lower than the internal rate of return.
C) it is not possible to calculate the internal rate of return.
D) the internal rate of return equals the holding period return.

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) and the holding period return (HPR) are the same in this scenario because both calculations would consider the initial investment, the dividend received, and the final sale price of the stock, leading to the same return measurement over the period.

If a Stock Is Purchased at the Beginning of a Year