Nico Bought 100 Shares of Cisco Systems Stock for $24

question 112

Essay

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? Explain the difference?

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Definitions:

Parsimonious Theory

A theory that explains phenomena in the simplest way possible, using the fewest possible assumptions or variables.

Scientists

Professionals engaged in systematic activities to acquire knowledge that describes and predicts the natural world, typically through observations and experiments.

Correlation

A statistical measure that describes the size and direction of a relationship between two or more variables.

Changes Observed

Alterations or variations that have been noticed or recorded in a particular condition or situation over time.