Question

Mary purchased 100 shares of Sweet Pea Co. stock at a price of $48.29 six months ago. She sold all stocks today for $44.78. During that period the stock paid dividends of $2.96 per share. What is Mary’s effective annual rate?

Answer #1

**Answer:**

Semi-Annual Rate of Return = (Selling Price + Dividend –
Purchase Price) / Purchase Price * 100

Semi-Annual Rate of Return = ($44.78 + $2.96 - $48.29) / $48.29 *
100

Semi-Annual Rate of Return = -$0.55 / $48.29 * 100

Semi-Annual Rate of Return = -1.14%

Effective Annual Rate = (1 + Semi Annual rate of Return)^ 2 –
1

Effective Annual Rate = (1 + (-0.114)) ^ 2 – 1

Effective Annual Rate = (1 – 0.0114) ^2 – 1

Effective Annual Rate = (0.9886)^ 2 – 1

Effective Annual Rate = 0.97733 – 1

**Effective Annual Rate = -0.02267 or -2.27%**

Mary purchased 100 shares of Sweet Pea Co. stock at a price of
$43.65 six months ago. She sold all stocks today for $48.00. During
that period the stock paid dividends of $2.68 per share. What is
Mary’s effective annual rate?

Tom purchased 100 shares of Dalia Co. stock at a price of
$123.61 four months ago. He sold all stocks today for $125.48.
During the year the stock paid dividends of $6.31 per share. What
is Tom’s effective annual rate?

Sarah purchased 100 shares of General Electric stock at a price
of $51.46 three months ago. She sold all stocks today for $56.12.
During the year the stock paid dividends of $2.90 per share. What
is Sarah’s holding period return? Round the answers to two decimal
places in percentage form.

John purchased 100 shares of Black Forest Inc. stock at a price
of $159.63 three months ago. He sold all stocks today for $159.63.
During this period the stock paid dividends of $4.59 per share.
What is John's annualized holding period return (annual percentage
rate)?
Round the answers to two decimal places in percentage form.

You purchased 250 shares of General Motors stock at a price of
$77.98 two years ago. You sold all stocks today for $88.67. During
this period the stock paid dividends of $5.90 per share. What is
your annualized holding period return (annual percentage rate)

You purchased 100 shares of General Motors stock at a price of
$106.82 one year ago. You sold all stocks today for $106.94. During
the year, the stock paid dividends of $5.88 per share. What is your
holding period return?
You are considering the purchase of Crown Bakery, inc. common
stock that just paid a dividend of $15.15 per share. You expect the
dividend to grow at a rate of 5.34 percent per year, indefinitely.
You estimate that a required...

On January 1, 2020, Sweet Co. purchased 24,000 shares (a 10%
interest) in Elton John Corp. for $1,300,000. At the time, the book
value and the fair value of John’s net assets were
$12,900,000.
On July 1, 2021, Sweet paid $2,890,000 for 48,000 additional shares
of John common stock, which represented a 20% investment in John.
As a result of this transaction, Sweet owns 30% of John and can
exercise significant influence over John’s operating and financial
policies. (Any excess...

You purchased 200 shares of Frozen Foods stock for $42 a share
eight months ago. Today, you received a dividend of $0.40 a share
and also sold the shares for $46 each. What was your effective
annualized rate of return on this investment?

Three months ago, you purchased 100 shares of stock on margin.
The initial margin requirement on your account is 70 percent and
the maintenance margin is 40 percent. The call money rate is
4.2%/year and you pay 2.0% above that rate. The purchase price was
$22 per share. Today, you sold these shares for $25.00 each. What
is your annualized rate of return?

Josh purchased 200 shares of HAR stock at $25.30 per share and
sold it 9 months later for $27.20. HAR does not pay a dividend. At
the same time, he bought 500 shares of WIG for $9.15 a share. He
sold WIG for $9.65 one year later. During the year, WIG paid 4
quarterly dividends of $0.07 each. The most useful way to compare
the holding period returns on these stocks is to
A.
Divide the 1 year return on...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 14 minutes ago

asked 15 minutes ago

asked 22 minutes ago

asked 24 minutes ago

asked 32 minutes ago

asked 32 minutes ago

asked 53 minutes ago

asked 59 minutes ago

asked 59 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago