an investor buys a stock for $40. the stock pays a dividend of $0.75 in year 1 and $1.25 in year 2. at the end of year 2 the investor sells the stock for $44. what is the investor's holding period return?

Respuesta :

The investor's holding period return is 15.0%

What Is the Return/Yield for the Holding Period?

The overall return earned from owning an asset or portfolio of assets over time—referred to as the holding period—is known as the holding period return and is typically stated as a percentage. Holding period return is calculated using total returns from the asset or portfolio (income plus changes in value). It is especially helpful for comparing the returns of assets kept for various lengths of time.

holding period return is calculated

= Income + (End of period value - Initial value)÷ Initial value

Capital Appreciation = 40 - 4= 4

Dividend yield = 1.5

total dividend income received is calculated,

=  1.5 + (44-40)/40× 100

=1.5 + 1/10× 100

= 15%

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