Holding Period Return Concepts

Holding Period Return Concepts

Assessment

Interactive Video

Business

11th - 12th Grade

Hard

Created by

Thomas White

FREE Resource

The video tutorial explains the concept of holding period return, a measure of total return for an investment over a specific period. It details the formula for calculating holding period return, including the impact of dividends. The tutorial also highlights the importance of this concept in the CFA curriculum, particularly in portfolio management and corporate finance. Different time periods and nomenclature are discussed, along with a method for compounding annual returns to determine a multi-year holding period return. An example calculation is provided to illustrate the process.

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8 questions

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1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the holding period return for an investment with a single cash payment at the end?

Beginning price divided by ending price

Cash flows divided by ending price

Ending price minus beginning price plus cash flows divided by beginning price

Ending price minus beginning price

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is NOT a component of the holding period return formula?

Beginning price

Interest rate

Ending price

Cash flows

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

In which contexts is the concept of holding period return applied?

Portfolio management and corporate finance

Real estate and insurance

Banking and taxation

Healthcare and education

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How does a holding period return differ from an annual return?

It is always calculated annually

It is only applicable to stocks

It can be calculated for any specified period

It is only applicable to bonds

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What should you do if you encounter different formats of holding period return in CFA materials?

Ignore them

Use only one format

Get confused

Understand they express the same concept

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How do you calculate the holding period return when given multiple annual returns?

Compound the returns

Subtract the smallest return from the largest

Add the returns together

Divide the total returns by the number of years

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the first step in calculating a three-year holding period return?

Divide the returns

Subtract the returns

Multiply the returns

Add all the returns

8.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the final step in converting the compounded return to a percentage?

Multiply by 100

Subtract one from the result

Add one to the result

Divide by 100