Tom purchased Hampton Industries Inc. stock for $14.65 and sold it 6 months later for $17.38 after receiving a $0.25 dividend. What Tom's holding period return (HPR), Annual Percentage Rate (APR), and Effective Annual Rate (EAR)?
A) 20.34%, 40.68%, 9.70%
B) 18.63%, 37.27%, 40.74%
C) 17.15%, 34.29%, 37.23%
D) 20.34%, 40.68%, 44.82%
Answer: D
Explanation: D) HPR = = = 20.34%,
APR = = = 40.68%, EAR = (1 + HPR)(1/n) - 1 = (1.2034)(2) - 1 = 44.82%.
In this case, n =0.5 years.
Business
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