Question

Fendy purchased 800 shares of Grandsports’ stock at RM3 per share on 1/1/12. He
sold the shares on 12/31/12 for RM3.45. Grandsports’ stock has a beta of 1.9, the
risk-free rate of return is 4%, and the market risk premium is 9%. What is Fendy's
holding period return?

Answer 1

Purchased 800 shares at RM3 per share on 1/1/12. Sold the shares on 12/31/12 for RM3.45. Stock has a beta of 1.9, the risk-free rate of return is 4%, and the market risk premium is 9%.
Holding period return HPR = (End Value - Initial Value) / Initial Value = (3.45 - 3)/3*100% = 15%.