Question

If you bought a security at $1,000 and after one year it is sold for $1,250 

What is the holding period return of the investment?

Answer 1

Here,

Price at which security bought = $1,000

Price at which security sold = $1,250

Terms used in the formula

HPR - Holding Period Return

P0 - Price at which security bought

P1 - Price at which security sold

\( \begin{align}HPR &= \frac {P1-P0}{P0}\times 100\\ &= \frac {\$1,250 - \$1,000}{\$1,000} \times 100\\ &= 25\% \end{align} \)

So, the holding period return of investment is 25%

Holding Period return of investment is 25%