Question

January 2nd: Bought 1,000 shares of speculative stock for $2.16 per share. July 1st: Sold the...

January 2nd: Bought 1,000 shares of speculative stock for $2.16 per share.

July 1st: Sold the shares for $9.59 per share.

Online broker charges $10 per trade.

1) What is the HPR?

2) What is the annualized HPR on this investment?

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Homework Answers

Answer #1

1)

Holding period return = (Selling price+Income-Commission-Purchase price)/Purchase price

Holding period return = (1000*9.59-10-1000*2.16)/(1000*2.16) = 3.43519

Holding period return = 343.519%

2)

Days between January 2nd and July 1st = 182 days

Number of years = 182/365 = 0.4986

Annualized holding period return = (((Selling price+Income-Commission)/Purchase price)^(1/182)) -1

Annualized holding period return = (4.43519^(1/0.4986))-1

Annualized holding period return = 18.8361 = 1883.61%

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