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Holding Period Return (Total Return)

Total return: Rt= [(Pt+Dt)/Pt-1]-1


Effective Annual Yield: EAY = (1+HPY)365/t - 1

Bank Discount Yield: RBD = D/F * 360/t

Money Market Yield: rMM = 360 * RBD /(360 – t * RBD)

 

Q: A stock is bought today at $10. It pays a dividend of $1 & you sell it at $15 next year. What is the HPR?

Answer:
HPR = (15+1-10)/10 = 60%

 





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