You are considering 2 investment alternatives. The first is a stock that pays quarterly dividends of $0.25 per share and is trading at $30 per share; you expect to sell the stock in 6 months for $34. The second is a stock that pays quarterly dividends of $0.50 per share and is trading at $27 per share; you expect to sell the stock in 1 year for $30. Which stock will provide the better annualized holding period return?

Option 1

Explanation:

The computation is shown below:

For option 1

Dividend received in 6 month is

= $0.25 × 2

= $0.50

Now  

Profit from the sale of stock is

= sale price - purchase price

= $24 - $20 i

= $4

So,

Net proceed received from stock is

= dividend + profit from the sale

= $0.50 + $4

= $4.50

Now

Holding period return for 6 months is

= (Net proceed received ÷ purchase price) ×100

= ($4.50 ÷ $20) × 100

= 22.5 %

So,  

Annualized holding period return is

= 22.5% × 2

= 45%

For  Option 2

Dividend received in 1 year is

= $0.50 × 4

= $2

Profit from sale of stock is

= $30 - $27

= $3

Net proceeds from stock is

= $2 + $3

= $5

So,

Annualized holding period return is

= ($5 ÷ $27) × 100

= 18.52%.

As we can see that option 1 contains higher return so it would be selected

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know