The holding-period return on a stock was 25%. Its ending price was $18, and its beginning price was $16. Its cash dividend must have been _________.
A. $.25
B. $1
C. $2
D. $4
Answer: C. $2
HPR = (P1 + DIV - P0)/P0
HPR × P0 = P1 + DIV - P0
HPR × P0 - P1 + P0 = DIV
.25 × $16 - $18 + $16 = $2