Suppose you buy stock at a price of $78 per share. Four months later, you sell i

Question

Suppose you buy stock at a price of $78 per share. Four months later, you sell it for $83. You also received a dividend of $.52 per share. What is your annualized return on this investment? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Suppose you buy stock at a price of $78 per share. Four months later, you sell it for $83. You also received a dividend of $.52 per share. What is your annualized return on this investment? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Explanation / Answer

Holding period return = ($83 + $0.52 - $78) / $78 * 100%

= 7.08%

Annualized return = [(1 + 7.08%)12/4 - 1] * 100%

= 25.27%

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