Question

one year ago scully bought 200 shares of hitchcock inc at 30.43 per share. today scully decides to sell all of his shares at 39.75 per share. if hitchcock inc distributed 2.04 per share in dividends over the last year, what is scullys HPR on hitchcock inc.?

Answer 1

Solution:

Holding period Return is the return earned on an investment for the period during which it is held.

The formula for calculating the holding period return is

= ( Sale price + Income earned during the holding period – Purchase Price ) / Purchase Price

As per the information given in the question is

Purchase price: $ 30.43

Sale price : $ 39.75

Income earned during the holding period = Dividends earned = $ 2.04

Applying the above values in the formula we have

= ( 39.75 + 2.04 – 30.43 ) / 30.43

= 11.36 / 30.43

= 0.3733

= 37.33 %

Thus the HPR i.e., Holding period return is 37.33 % .