Jason Owned a Stock for Four Months and Earned an Annualized

question 20

Multiple Choice

Jason owned a stock for four months and earned an annualized rate of return of 11 percent. What was the holding period return?

• A)2.37 percent
• B)2.42 percent
• C)2.46 percent
• D)2.64 percent
• E)2.72 percent

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Definitions:

Maturity Risk Premium

The additional return that investors demand for holding a bond until its maturity due to the potential for a change in the value over time.

Par Value

The face value of a bond or the stock value stated in the corporate charter, which is the minimum at which shares can be issued.

Coupon Paid Semiannually

A bond payment made twice a year, representing the interest owed to bondholders.

Annual Coupon

The yearly interest payment made to bondholders, usually fixed and expressed as a percentage of the bond's face value.