Transcribed Image Text
Holding period returns can be confused with annual returns. Howeverthe only time a hpr should be compared to annual returns is whenthe holding period is actually one year . In Many cases the holdingperiod can be less than one year or several years. After you make aholding period return calculation you should always convert it toan approximate annual return when making comparisons with otherasset . Let’s look at an asset and calculate its holing return.Assume you paid $53 for one share of Stock Y and held it for twoyears prior to selling it for $55. During that time you alsoreceived annualized did I vends of $2 a share.1- what is the how for stock Y ?2- how does that compare to stock Z that you held for one yearand received a HPR of 8% ?