Rico Bought 100 Shares of Banana Republic Stock for $24

question 121

Multiple Choice

Rico bought 100 shares of Banana Republic stock for $24.00 per share on January 1, 2010.He received a dividend of $2.00 per share at the end of 2010 and $3.00 per share at the end of 2011.At the end of 2012, Rico collected a dividend of $4.00 per share and sold his stock for $18.00 per share.What was Rico's realized holding period return?

• A)-15.5%
• B)15.5%
• C)-16.7%
• D)16.7%
• E)none of the above

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Definitions:

Overprice

A scenario where the market price of an asset is higher than its intrinsic value due to speculation, misinformation or other factors.

Shareholder

An individual or entity that owns shares in a corporation, thus holding a portion of its equity.

Direct Flotation Costs

Expenses directly incurred by a company when it issues new securities, such as underwriting fees, legal fees, and registration fees.

Offering Size

The total value or amount of securities, such as stocks or bonds, that are made available for sale in a public offering.