Lesson 2 of 8 · 12 min

Holding period return

A holding period return measures everything you earned over one stretch of time, price change plus income, relative to what you paid.

In short

Total return = income yield (dividends, coupons) + capital gain or loss (price change).
Holding period return (HPR): $R = (P_1 - P_0 + I_1)/P_0$ . The period can be a day or ten years.
To link several periods, multiply the $(1+R)$ terms and subtract 1. Never add returns across periods.
Losses need larger gains to recover: after −40% you need +66.7% to break even.
Decimal, fraction and percentage are interchangeable: 0.07 = 7/100 = 7%.

Create a free account to get 7 days of full access — every lesson, video, flashcard, mock and the question bank. No card needed.