Question
In: Finance
Jeff Krause purchased 1, 000shares of a speculative stock on January 2 for $ 1.91per share....
Jeff Krause purchased 1, 000shares of a speculative stock on January 2 for $ 1.91per share. Six months later on July 1, he sold them for $ 9.95 per share. He uses an online broker that charges him $ 10.00 per trade. What was Jeff's annualized HPR on this investment?
Solutions
Expert Solution
| Holding Period Return = (Selling price - Purchase price - Trade Chages ( 2 No's ) ) / Purhcase Price | |||
| Holding Period Return = | |||
| Selling Price = (1000 Shares X $ 9.95 ) = | $ 9,950 | ||
| Less: Purchase Price (1000 Shares X $ 1.91) = | $ 1,910 | ||
| Less: Broker Charges ( $ 10 X 2 No's) = | $ 20 | ||
| Net income | $ 8,020 | ||
| Divide By | "/" By | ||
| Purchase Price | $ 1,910 | ||
| Holding Period Return = | 420% | ||
| Holding Period Return Annualized % = 420 % X 12 Months / 6 Months | |||
| Holding Period Return Annualized % = 840% | |||
| Answer = 840% | |||
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