SIE Exam Question 792: Answer and Explanation

Question: 792

Christine purchased 100 shares of Alpha stock for $50 per share. At the end of two years, she sold the shares for $70 per share. In the first year, the stock did not pay a dividend. In the second year, the stock paid a $3 dividend. What was the holding period return of Christine's investment?

• A. 23%
• B. 26%
• C. 32%
• D. 46%

Correct Answer: D

Explanation:

HPR = [($7,000 + $300) - $5,000] ÷ $5,000 = 0.46 = 46%