Question of the Week

John purchased 100 shares of XYZ stock for $50 per share. He held the stock for one year then sold the 100 shares for $60 per share. During the time he owned the stock it paid a $1.50 dividend per share. What was John’s Holding Period Return?

a) 21 percent
b) 23 percent
c) 27 percent
d) 25 percent

Answer:

The correct answer is b.

The Holding Period Return (HPR) is the total return (income, dividends, plus capital appreciation less margin interest) over the entire period dividend by the price of the investment. In the example above, $6,000 (proceeds) + $150 (dividend) - $5,000 (cost) divided by $5,000 (cost) equals 23%.

Financial Professionals
  1. the general ledger is the record of a company's entire financial transaction history.
    Investing

    What's a General Ledger?

  2. Several things factor into the salary of a financial advisor. Here's a look.
    Investing Basics

    How Much Does A Financial Advisor Earn?

  3. These 5 strategies offer financial advisors a blueprint on how to grow their practices.
    Professionals

    Growth Strategies For Financial Advisors

  4. If you're considering investing in China and want to know when to buy, sell, hold or stay away, consider these economic indicators.
    Economics

    Eyeing China? Consider These Economic Indicators

  5. Whether you're a saver or a financial advisor who want to give their clients a leg up, these 8 tips are essential for financial planning.
    Investing Basics

    8 Essential Tips For Retirement Saving