Question

Holding-period dollar gain and return​) Suppose you purchased 15 shares of Diamond Company stock for ​$20.07 per share on May​ 1, 2016. On September 1 of the same​ year, you sold 13 shares of the stock for ​$15.74. Calculate the​ holding-period dollar gain for the shares you​ sold, assuming no dividend was​ distributed, and the​ holding-period rate of return.

a. The​ holding-period dollar gain for the shares you sold is ​$nothing. Enter a negative number if it is a loss.  ​(Round to the nearest​ cent.)

Answer 1

- You purchase 15 shares Diamond Company stock for ​$20.07 per share on May​ 1, 2016

On September 1 of the same​ year, you sold 13 shares of the stock for ​$15.74

As, you sold 13 shares out of 15 purchased and since we have to calculate Holding period return of number of shares sold.So, Taking 13 shares in calculation

Total Purchase Value of 13 shares = $20.07 per share*13 shares = $260.91

Total Sale Value of 13 shares = $15.74 per share*13 shares = $204.62

i). Holding period gain = Total Sale Value - Total Purchase Value

= $204.62 - $260.91

Holding period gain = -$56.29

ii). Holding period rate of Return = (Holding period Gain/Total Purchase Value)*100

= (-$56.29/$260.91)*100

Holding period rate of Return = 21.57%

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