Holding Period Return Calculator











 

What is Holding Period Return Calculator?

A Holding Period Return (HPR) Calculator is a useful tool for investors who want to calculate the percentage return on their investment over a specified period. It takes into account the initial and final values of an investment, as well as the income generated during the holding period, to calculate the HPR.

Formula for Holding Period Return

The formula for calculating the Holding Period Return is:

HPR = I + (FV – IV) / IV

Where:

  • HPR = Holding Period Return
  • I = Income Generated
  • FV = Final Value
  • IV = Initial Value

The formula adds the income generated to the capital gain or loss on the investment, and then divides the result by the initial value. This gives the percentage return on the investment over the holding period.

How to Calculate Holding Period Return

To calculate the Holding Period Return using the formula, follow these steps:

  1. Determine the income generated by the investment during the holding period.
  2. Determine the initial value of the investment.
  3. Determine the final value of the investment.
  4. Plug in the values into the formula:
HPR = I + (FV – IV) / IV
  1. Calculate the HPR, which will be expressed as a percentage.

Example of Holding Period Return Calculation

Let’s say you invested $10,000 in a stock and held it for one year. During that year, the stock paid a dividend of $200. At the end of the year, the stock was worth $11,000.

Using the formula, we can calculate the Holding Period Return as follows:

HPR = $200 + ($11,000 – $10,000) / $10,000 = 0.12 or 12%

Therefore, the Holding Period Return on this investment is 12%.

Frequently Asked Questions (FAQs)

What is the Holding Period Return?

The Holding Period Return is the percentage return on an investment over a specified holding period, taking into account the initial and final values of the investment, as well as the income generated during the holding period.

What is the significance of Holding Period Return?

The Holding Period Return is significant because it allows investors to evaluate the performance of their investment over a specified period. It can be used to compare the returns of different investments or to assess the effectiveness of an investment strategy.

How can I use a Holding Period Return Calculator?

A Holding Period Return Calculator can be used to calculate the HPR on an investment quickly and easily. Simply enter the initial value, final value, and income generated into the calculator, and it will calculate the HPR for you.

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