What is meant by the holding period, and why is it advisable to use holding periods of equal length when comparing alternative investments? Define the holding period return, and explain for what length holding periods it is typically used.
Answer to relevant QuestionsDefine yield (internal rate of return). When is it appropriate to use yield rather than the HPR to measure the return on an investment? How much would an investor earn on a stock purchased 1 year ago for $45 if it paid an annual cash dividend of $2.25 and had just been sold for $52.50? Would the investor have experienced a capital gain? Explain. Use a financial calculator or an Excel spreadsheet to estimate the yield for each of the following investments. Assume you purchased a bond for $9,500. The bond pays $300 interest every 6 months. You sell the bond after 18 months for $10,000. Calculate the following: a. Income b. Capital gain or loss c. Total return in dollars and as ...Define, discuss, and contrast the following terms. a. Interest b. Simple interest c. Compound interest d. True rate of interest (or return)
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