The holding-period return on a stock was 32%. Its beginning price was $25, and its cash dividend was $1.50. Its ending price must have been _________.
A. $28.50
B. $33.20
C. $31.50
D. $29.75
Answer: C. $31.50
HPR = (P1 + DIV - P0)/P0
HPR × P0 = P1 + DIV - P0
P1 = HPR × P0 - DIV + P0
P1 =.32 × $25 - $1.50 + 25 = $31.50