Self-Assessment HW5E (HPR, Annualized holding period return, Effective annual rate on investment)
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School
University of Maryland, University College *
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Course
330 7980
Subject
Finance
Date
Nov 24, 2024
Type
docx
Pages
4
Uploaded by Dogmom87
Question
1
The
prices
for
the
White
Swan
Corporation
for
the
first
quarter
of
the
last
year
are
given
below.
Find
the
holding
period
return
(percentage
return)
for
February.
End
of
the
month
|
Stock
price
January
94.02
February
9035
March
108.22
Round
the
answers
to
two
decimal
places
in
percentage
form.
(Write
the
percentage
sign
in
the
"units"
box)
Your
Answer:
W
)]
Answer
units
W
Hide
Check
my
answer
(890.35
-894.02)
/$94.02
=
-0.0390
=
-3.90%
Question
2
You
purchased
100
shares
of
General
Motors
stock
at
a
price
of
$98.99
one
year
ago.
You
sold
all
stocks
today
for
$102.76.
During
the
year,
the
stock
paid
dividends
of
$5.79
per
share.
What
is
your
holding
period
return?
Round
the
answers
to
two
decimal
places
in
percentage
form.
(Write
the
percentage
sign
in
the
"units"
box).
Your
Answer:
Answer
units.
W
Hide
Check
my
answer
($102.76
+
$5.79
-
$98.99)/
$98.99
=
$9.56/$98.99
=
0.0966
=
9.66%
Question
3
Sarah
purchased
100
shares
of
General
Electric
stock
at
a
price
of
$53.67
three
months
ago.
She
sold
all
stocks
today
for
$67.53.
During
the
year
the
stock
paid
dividends
of
$4.52
per
share.
What
is
Sarah's
holding
period
return
Round
the
answers
to
two
decimal
places
in
percentage
form.
(Write
the
percentage
sign
in
the
"units"
box)
Your
Answer:
34.25
%
Answer
units
W
Hide
Check
my
answer
($67.53
+
$4.52
-
$53.67)
/
$53.67
=
0.3425
=
34.25%
Question
4
You
purchased
250
shares
of
General
Motors
stock
at
a
price
of
$82.03
two
years
ago.
You
sold
all
stocks
today
for
$78.14.
During
this
period
the
stock
paid
dividends
of
$5.70
per
share.
What
is
your
annualized
holding
period
return
(annual
percentage
rate)?
Round
the
answers
to
two
decimal
places
in
percentage
form.
(Write
the
percentage
sign
in
the
"units"
box)
Your
Answer:
1.10
Answer
units.
W
Hide
Check
my
answer
Step
1:
Calculate
holding
period
return:
(§78.14
+$5.70
-
$82.03)
/$82.03
=
0.02207
=2.207%
Step
2:
Calculate
annualized
holding
period
return
(annual
percentage
rate):
APR
=
HPR/n
In
the
problem
"You
purchased
shares...
two
years
ago’,
so
n=2.
2.207%
/2
=1.10%
Question
5
You
purchased
300
shares
of
General
Electric
stock
at
a
price
of
$61.56
four
years
ago.
You
sold
all
stocks
today
for
$69.92.
During
that
period
the
stock
paid
dividends
of
$3.91
per
share.
What
i
your
annualized
holding
period
return
(annual
percentage
rate)?
Round
the
answers
to
two
decimal
places
in
percentage
form.
(Write
the
percentage
sign
in
the
“units"
box)
Your
Answer:
4.98
%
Answer
units.
W
Hide
Check
my
answer
Step
1:
Calculate
holding
period
return:
(569.92
+$3.91
-
$61.56)
/$61.56
=
0.1993
=19.93%
Step
2:
Calculate
annualized
holding
period
return
(annual
percentage
rate):
APR
=
HPR/n
In
the
problem
“You
purchased
shares...
four
years
ago”,
so
n
=
4
19.93%/
4
=4.98%
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Your preview ends here
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Question
8
Tom
purchased
100
shares
of
Dalia
Co.
stock
of
at
a
price
of
$129.49
four
months
ago.
He
sold
all
stocks
today
for
$125.12.
During
the
year
the
stock
paid
dividends
of
$5.80
per
share.
What
is
Tom's
effective
annual
rate?
Round
the
answers
to
two
decimal
places
in
percentage
form.
(Write
the
percentage
sign
in
the
"units"
box)
Your
Answer:
3.35
Answer
units.
W
Hide
Check
my
answer
Step
1:
Calculate
holding
period
return:
($125.12
+$5.80
-
$129.49)
/$129.49
=
0.01104
=
1.104%
Step
2:
Calculate
effective
annual
rate:
In
this
problem
“Tom
purchased
shares...
four
months
ago’,
so
n=4/12
=
0.3333
EAR
=[(1+HPR)*(1/n)]
-1
=[(1+0.01104))*(1/0.3333)]
-1
=[(1+0.01104)*3]
-1
=3.35%
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