Explanation

Holding Period Return (HPR) is calculated as:

$HPR = \frac{(Ending\ Value + Dividends) - Beginning\ Value}{Beginning\ Value}$

Given:

• Beginning Value = $60
• Ending Value = $75
• Dividend = $1.50

Calculation: $HPR = \frac{(75 + 1.50) - 60}{60} = \frac{76.50 - 60}{60} = \frac{16.50}{60} = 0.275 = 27.5\%$

Key Points:

• The holding period return includes both capital appreciation and dividend income
• The formula accounts for all cash flows received during the holding period
• Option C (27.5%) is correct because it properly includes the $1.50 dividend in the total return calculation