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Rama09 [41]
3 years ago
6

Suppose you buy some stock in the Alpha Corporation at a price of $45.95 per share. 410 days later you sell the stock for $48.27

. During this period you received a per share dividend of $1.20. What is your annualized return on this investment
Business
1 answer:
kondaur [170]3 years ago
8 0

Answer: 6.79%

Explanation:

The holding period return is:

= (Current price - Cost price + Dividend) / Cost price

= (48.27 - 45.95 + 1.20) / 45.95

= 7.66%

The annualized return is:

= ( ( 1 + holding period return) ^ number of days in a year/ number of days stock was held - 1)

= ( ( 1 + 7.66%) ³⁶⁵ / ⁴¹⁰ - 1)

= 6.79%

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