Question

Holding period returns can be confused with annual returns. However the only time a hpr should be compared to annual returns is when the holding period is actually one year . In Many cases the holding period can be less than one year or several years. After you make a holding period return calculation you should always convert it to an approximate annual return when making comparisons with other asset . 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 two years prior to selling it for $55. During that time you also received 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 year and received a HPR of 8% ?

Answer 1

Formula file: