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Homework answers / question archive / On January 1, 2017, you purchased shares of ABC Corporation for $200 and received annual dividends of $7

On January 1, 2017, you purchased shares of ABC Corporation for $200 and received annual dividends of $7

Finance

On January 1, 2017, you purchased shares of ABC Corporation for $200 and received annual dividends of $7. On January 1, 2020, you divested your position $190. What was your realized holding period return?

answer choices

5.50%

-1.50%

5.79%

-5.00%

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Given that initial investment in the stock is $200.

Annual dividends received= $7. So, for 3 years, total dividends received= 7*3= $21.

Final price for which the stock is sold is $190.

Holding period return can be calculated as: ((Final price+Dividends)/Initial Investment)-1

= ((190+21)/200)-1

= (211/200)-1

= 5.50% (Option A).