Hi All,
When calculating the HPY for a stock which pays dividends semi annually do we assume that the dividends are reinvested in the middle of the year or will this information need to be given?
If they give you the reinvestment rate, use it.
If not, compute the IRR.
Say if they give you
Price at time 0 = 50
Price at time 0.5 = 55
Price at time 1 = 60
with semi annual dividends.
Do we assume the dividends are reinvested?