Do you want BuboFlash to help you learning these things? Or do you want to add or correct something? Click here to log in or create user.

When analyzing rates of return, our starting point is the

- P
_{t}= price per share at the end of time period t - P
_{(t-1)}= price per share at the end of time period t-1, the time period immediately preceding time period t - P
_{t}- P_{t-1}= price appreciation of the investment - D
_{t}= cash distributions received during time period t: for common stock, cash distribution is the dividend; for bonds, cash distribution is the coupon payment.

It has two important characteristics:

- It has an element of time attached to it: monthly, quarterly or annual returns. HPR can be computed for any time period.
- It has no currency unit attached to it; the result holds regardless of the currency in which prices are denominated.

A stock is currently worth $60. If you purchased the stock exactly one year ago for $50 and received a $2 dividend over the course of the year, what is your holding period return?

R

The return for time period t is the

The holding period return for any asset can be calculated for any time period (day, week, month, or year) simply by changing the interpretation of the time interval.

Return can be expressed in decimals (0.05), fractions (5/100), or as a percent (5%). These are all equivalent.

Learning Outcome Statements

c. calculate and interpret a holding period return (total return);

If you want to change selection, open original toplevel document below and click on "Move attachment"

status | not read | reprioritisations | ||
---|---|---|---|---|

last reprioritisation on | suggested re-reading day | |||

started reading on | finished reading on |

Do you want to join discussion? Click here to log in or create user.