You purchased 250 shares of General Motors stock at a price of $74

Finance Apr 19, 2021

You purchased 250 shares of General Motors stock at a price of $74.62 two years ago. You sold all stocks today for $71.31. During this period the stock paid dividends of $5.54 per share. What is your annualized holding period return (annual percentage rate)?

Round the answers to two decimal places in percentage form

Expert Solution

Computation of the annualized holding period return:-

Holding period return = (Selling price + Dividends - Buying price) / Buying price

= ((250 * $71.31) + (250 * $5.54) - (250 * $74.62)) / (250 * $74.62)

= ($17,827.50 + $1,385 - $18,655) / $18,655

= $557.50 / $18,655

= 2.99%

Annualized holding period return = (1+HPR)^(1/n)-1

= (1+2.99%)^(1/2) -1

= 1.0148 - 1

= 1.48%

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