Question

Two years ago, you purchased 100 shares of General Mills Corporation. Your purchase price was $61 a share, plus a total commission of $38 to purchase the stock. During the last two years, you have received total dividends of $2.48 per share. Also, assume that at the end of two years, you sold your General Mills stock for $66 a share minus a total commission of $36 to sell the stock. Calculate the total return for your investment and the annualized holding period yield.

Answer 1

Net purchase price = ($61*100)+$38
= $6138
Total dividends received = $2.48*100
= $248
Net sale price = ($66*100)-$36
= $6564
Holding period return = ($6564+$248-$6138)/$6138
= 10.98%
Annualized holding period return = (1+total return)^(1/time) - 1
	= (1+0.1098)^(1/2) - 1
	= 1.05347-1
	= 0.05347 or 5.347%