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Ashley purchased a stock at a price of $27 a share. She received quarterly dividends of $0.75 per share. After one year, Ashley sold the stock at a price of $29.25 a share. What is her percentage holding period return on this investment?

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Abotaiwo

Answer:

19.4%

Explanation:

Original cost of stock=  $27

Disposal price           =  $29.25

Dividend per quarter=  $0.75

Total dividend           =  $0.75 * 4         = $3

Gain on  disposal      =  Disposal price - Original cost of stock

                                   =  $29.25 - $27  = $2.25

Return on investment= Total dividend + Gain on share disposal

                                   =  $3 + $2.25      = $5.25

Percentage return on

investment                   =  Return on investment /Original cost of stock * 100%

                                     =  $5.25/ $27 * 100%

                                     = 19.44444444%

                                     =  19.4%

That is,  Ashley percentage holding period return on this investment is approximately  19.4%

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