Answer: 31.25%.

## Explanation The holding period return (HPR) is calculated as: \[\text{HPR} = \frac{\text{Dividend} + (\text{Ending Value} - \text{Beginning Value})}{\text{Beginning Value}}\times 100\%\] Given: - Beginning price = $20 - Expected ending price = $25 - Expected dividend = $1.25 Calculation: \[\text{HPR} = \frac{1.25 + (25 - 20)}{20} = \frac{1.25 + 5}{20} = \frac{6.25}{20} = 0.3125 = 31.25\%\] **Key Points:** - The holding period return includes both capital appreciation and dividend income - Last year's dividend ($1) is irrelevant - only the expected dividend during the holding period matters - The formula correctly captures total return from both price change and dividend income - The answer is 31.25% (Option C)

Author: LeetQuiz Editorial Team