Question

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.

Answer 1

Step-1, Calculation of Holding Period Return (HPR)

Holding Period Return (HPR) = [{(Selling price per share – Purchase Price per share) + Dividend Received} / Purchase Price per share] x 100

= [{($159.63 - $159.63) + $4.59} / $159.63] x 100

= [($0 + $4.59) / $159.63] x 100

= [$4.59 / $159.63] x 100

= 2.8754%

Step-2, Calculation of Annualized Holding Period Return

Annualized Holding Period Return = Holding Period Return x (12/3)

= 2.8754% x (12 / 3)

= 11.50%

“Therefore, the John's annualized holding period return (annual percentage rate) would be 11.50%”