During the 65 months that Jane owned her Exxon preferred sto

During the 65 months that Jane owned her Exxon preferred stock shares, she received quarterly dividends that totaled $3,491. She bought the shares for $9,800 and sold them for $9,973. What was Jane\'s AVERAGE ANNUAL holding period return for this investment?

Solution

Holding Period Return =

Income + (End of Period Value – Initial Value) / Initial Value

=$3,491+($9,973-$9,800)/$9,800

=[$3,491+ $173]/$9,800

=$3,664/$9,800

=37.39%

This is for 65 months for 1 year =37.39/65 x 12=6.90%