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.

mohdsaad: What about cash in from sold shares |

mohdsaad: assuming there is cash dividends declared but not collected so it is to be added or only we consider cash dividends that already collected |

hopeipass: you can only calculate holding period return for shares you hold for the whole time period (hence the name) |

choas69: someone explain my question in last quiz please |

sunxx320: @choas69: your question has been answered. |

choas69: efficient thank you sunxx320 |