Nico Bought 100 Shares of Cisco Systems Stock for $24

question 43

Multiple Choice

Nico bought 100 shares of Cisco Systems stock for $24.00 per share on January 1, 2002. He received a dividend of $2.00 per share at the end of 2002 and $3.00 per share at the end of 2003. At the end of 2004, Nico collected a dividend of $4.00 per share and sold his stock for $18.00 per share. What was Nico's realized holding period return? What was Nico's compound annual rate of return?

• A) -12.5%; -4.4%
• B) +12.5%; +4.4%
• C) -16.7%; -4.4%
• D) +16.7%; +4.4%

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Definitions:

Variable Cost

Costs that vary directly with the level of production or the volume of services rendered, such as raw materials and direct labor.

Fixed Costs

Costs that remain constant regardless of the amount of products or services a company generates, including expenses like lease payments, wages, and premiums.

Break-even Point

The volume of production or sales at which total revenues equal total costs, resulting in neither profit nor loss.

Variable Cost

Expenses that vary directly with the level of production or sales volume, such as raw materials and direct labor.