John purchased 100 shares of Black Forest Inc stock at a pri

John purchased 100 shares of Black Forest Inc. stock at a price of $159.52 three months ago. He sold all stocks today for $160.63. During this period the stock paid dividends of $5.07 per shares. What is John\'s annualized holding period return (annual percentage rate)?

Solution

Purchase Price per share = $159.52
Dividend per share = $5.07
Selling Price per share = $160.63

Quarterly Holding Period Return = (Selling Price per share + Dividend per share - Purchase Price per share) / Purchase Price per share
Quarterly Holding Period Return = ($160.63 + $5.07 - $159.52) / $159.52
Quarterly Holding Period Return = 0.03874

Annualized Holding Period Return = (1 + Quarterly Holding Period Return)^4 - 1
Annualized Holding Period Return = (1 + 0.03874)^4 - 1
Annualized Holding Period Return = 1.03874^4 - 1
Annualized Holding Period Return = 1.1642 - 1
Annualized Holding Period Return = 0.1642
Annualized Holding Period Return = 16.42%