Definition – What is Holding Period Return?
Holding period return is simply the return over the time that an investment is held.
Formula – How to calculate Holding Period Return
Holding Period Return = ((income + ending value – initial value) / initial value) x 100%
A company has an income of $500, initial value of $4,000, and ending value of $6,000.
Holding Period Return = (($500 + $6,000 – $4,000) / $4,000) x 100% = ($2,500 / $4,000) x 100% = 0.625 x 100% = 62.5%
Therefore, this company has a holding period return of 62.5%.
Sources and more resources
- Wikipedia – Holding Period Return – Wikipedia’s entry on holding period return.
- NASDAQ – Holding-period return – A very short description of the holding-period return.
- Motley Fool – How to Calculate the Annualized Holding Period Return – A walk through the holding period return formula.
- xplainD – Holding Period Return – An explanation of holding period return including a number of calculation examples.
- Investopedia – Holding Period Return – A short description of holding period return.