What is your holding period return for the two years

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Reference no: EM131450943

Given the following information about Stock A:

P0 = $39.50

D1 = $3.25 paid at end of year

D2 = $3.25 paid at end of year

Suppose that you can invest D1 at an annual rate of 5% over the second year and after collecting dividend D2 you sell the stock for $41.75 at the end of year 2.

a. What is your holding period return for the two years?

b. What is the geometric mean annual return?

Reference no: EM131450943

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