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    Question

    An investor buys a stock at ₹100. After one year, he

    receives a dividend of ₹5 and sells the stock for ₹110. His holding period return (in %) is:
    A 10% Correct Answer Incorrect Answer
    B 15% Correct Answer Incorrect Answer
    C 5% Correct Answer Incorrect Answer
    D 20% Correct Answer Incorrect Answer
    E 12% Correct Answer Incorrect Answer

    Solution

    • The Holding Period Return (HPR) is the total return earned from holding an asset over a specific period.
      Formula: HPR = [(Ending Value - Beginning Value) + Income] / Beginning Value
      Here:
      • Beginning Value (Purchase Price) = ₹100
      • Ending Value (Sale Price) = ₹110
      • Income (Dividend) = ₹5
        HPR = [(110 - 100) + 5] / 100
        HPR = [10 + 5] / 100
        HPR = 15 / 100 =  0.15 or 15% .

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