Two years ago you bought 100 shares of Big Bubba convertible preferred stock at $25 per share. The preferred stock had an annual dividend of $2.125 per share, and a total of $3.19 in dividends per share have been paid so far. Today the company announced that the stock is redeemable for $26.70 plus accrued and unpaid dividends, for a total of $27.76. Alternatively, holders may convert their shares of preferred stock at a conversion rate of 1.6393 shares of Big Bubba common stock for each share of preferred stock. If the closing price of Big Bubba common stock is $27.50, what is your holding period return?

Respuesta :

Answer:

your holding period return is 93.08%

Explanation:

Ending price = $27.50 * 1.6393

                      = $45.0808

Holding period return = ($45.08 - $25 + $3.19) / $25

                                     = 93.08%.

Therefore, your holding period return is 93.08%.