Explanation:

Holding Period Return (HPR) is calculated as:

HPR = (Ending Value - Beginning Value + Income) / Beginning Value

Where:

• Beginning Value = Purchase price = $63.25
• Ending Value = Sale price = $62.80
• Income = Dividends received = $0.54 + $0.54 = $1.08 (two quarterly dividends)

Calculation:

1. Capital gain/loss = $62.80 - $63.25 = -$0.45 (capital loss)
2. Total income = $1.08
3. Total return = -$0.45 + $1.08 = $0.63
4. HPR = $0.63 / $63.25 = 0.00996 ≈ 0.996%

Rounded to one decimal place, this is approximately 1.0%.

Key points:

• The investor receives two dividends: May 1 and August 1 (both within the holding period)
• The holding period is from March 24 to September 27
• The capital loss is offset by dividend income, resulting in a positive overall return
• The correct answer is A) 1.0%