Annual Holding Period Yield

Now we are getting to the nitty gritty details.

Previously, we were talking about Holding Period Return with no sense of the time factor. Now, we are going to put the time factor in with the Annual Holding Period Yield and the calculation is as below:

Annual HPY = Annual HPR - 1
Annual HPR = HPR to the power of (1/n)
Where n = number of years

Going from the previous example but with some minor modification. Let's say that after investing $1, in two years, I get $1.50.

Therefore, HPR = 1.5/1 = 1.5
Annual HPR = HPR to the power of (1/n)
= 1.5 power (1/2)
= 1.224

Sorry for the confusion as I haven't found out how to superscript in my computer.

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