For every year in the sample, calculate the Holding Period Return. Recall that the HPR reflects both capital gains and dividend payments. For this calculation, assume the dividends are paid out at once at the end of the year.

a. What is your best estimate for next year's HPR?

b. What would have been the annual HPR if you invested in January 1960 and sold at the end of 2020?

c. Which year saw the lowest return? What happened?

d. Starting with an investment in the year after the lowest annual return on record, what would have been the total return over the subsequent 5 years?

e. What is the annual HPR for the 5-year investment starting the year after the lowest return year? 

 

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Year 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2000 Earings Yield Dividend Yield S&P 500 58.11 71.55 63.1 5.34% 4.71% 5.81% 5.51% 5.62% 5.73% 6.74% 5.66% 5.51% 6.63% 5.98% 5.46% 5.23% 8.16% 13.64% 8.55% 9.07% 11.43% 12.11% 13.48% 11.04% 12.39% 9.83% 8.06% 10.07% 7.42% 5.96% 6.49% 8.69% 6.88% 6.86% 4.63% 4.79% 5.77% 6.91% 6.12% 5.49% 4.54% 3.60% 3.52% 4.25% 3.38% 5.23% 4.92% 5.58% 6.12% 6.18% 5.62% 5.48% 5.10% 7.67% 6.79% 5.68% 5.64% 4.92% 4.75% 4.66% 5.92% 5.03% 3.68% 3.41% 2.85% 3.40% 3.13% 3.05% 3.06% 3.59% 3.09% 2.93% 3.52% 3.46% 3.10% 2.70% 3.70% 5.43% 4.14% 3.93% 5.11% 5.39% 5.53% 4.74% 5.57% 4.93% 4.32% 4.68% 3.88% 3.38% 3.71% 3.68% 3.32% 3.74% 3.11% 2.90% 2.72% 2.91% 2.30% 2.01% 1.60% 1.32% 1.23% 1.37% 1.81% 1.57% 1.79% 1.77% 1.92% 3.15% 1.97% 1.80% 2.11% 2.19% 1.92% 2.12% 2.04% 1.83% 2.14% 1.82% 1.51% 75.02 84.75 92.43 80.33 96.47 103.86 92.06 92.15 102.09 118.05 97.55 68.56 90.19 107.46 95.1 96.11 107.94 135.76 122.55 140.64 164.93 167.24 211.28 242.17 247.08 277.72 353.4 330.22 417.09 435.71 466.45 459.27 615.93 740.74 970.43 1229.23 1469.25 1320.28 1148.09 879.82 Eamings Dividends Payout Ratio 3.10 1.98 63.86% 1111.91 1211.92 3.37 3.67 4.13 4.76 5.30 5.41 5.46 5.72 6.10 5.51 5.57 6.17 7.96 9.35 7.71 9.75 10.87 11.64 14.55 14.99 15.18 13.82 13.29 16.84 15.68 14.43 16.04 24.12 24.32 22.65 19.30 20.87 26.90 31.75 37.70 40.63 44.09 44.27 51.68 56.13 38.85 46.04 54.69 67.68 1248.29 76.45 1418.3 87.72 82.54 49.51 56.86 1468.36 903.25 1115.1 1257.64 83.77 1257.60 96.44 1426.19 96.82 1848.36 104.92 2058.90 116.16 2043.94 100.48 2238.83 106.26 2673.61 124.51 2506.85 148.34 3230.78 162.35 3756.07 138.12 204 215 2.35 2.58 283 2.88 2.98 3.04 3.24 3.19 3.16 3.19 3.61 3.72 3.73 4.22 4.86 5.18 5.97 6.44 6.83 6.93 7.12 7.83 8.20 8.19 9.17 9.75 11.06 12.09 12.20 12.39 12.58 13.17 13.79 14.90 15.50 16.20 16.69 16.07 15.74 15.96 17.88 19.01 22.34 25.04 28.14 28.45 21.97 22.65 26.53 31.25 34.90 39.55 43.41 45.70 48.93 53.61 58.80 56.70 60.51% 58.52% 56.81% 54.27% 53.40% 53.26% 54.59% 53.18% 53.09% 57,86% 56.78% 51.63% 45.34% 39.81% 48.42% 43.33% 44.71% 44.51% 41.02% 42.93% 44.96% 50.15% 53.60% 46.47% 52.29% 56.71% 57.16% 40.42% 45.48% 53.38% 63.21% 59.37% 46.77% 41.48% 36.58% 36.67% 35.16% 36.59% 32.29% 28.63% 40.51% 34.67% 32.69% 28.09% 29 23% 28.55% 34.09% 57.46% 38.64% 27.04% 27.51% 32.28% 33.26% 34.04% 43.20% 43.01% 39.30% 36.14% 36.22% 41.05% Year 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2000 Earings Yield Dividend Yield S&P 500 58.11 71.55 63.1 5.34% 4.71% 5.81% 5.51% 5.62% 5.73% 6.74% 5.66% 5.51% 6.63% 5.98% 5.46% 5.23% 8.16% 13.64% 8.55% 9.07% 11.43% 12.11% 13.48% 11.04% 12.39% 9.83% 8.06% 10.07% 7.42% 5.96% 6.49% 8.69% 6.88% 6.86% 4.63% 4.79% 5.77% 6.91% 6.12% 5.49% 4.54% 3.60% 3.52% 4.25% 3.38% 5.23% 4.92% 5.58% 6.12% 6.18% 5.62% 5.48% 5.10% 7.67% 6.79% 5.68% 5.64% 4.92% 4.75% 4.66% 5.92% 5.03% 3.68% 3.41% 2.85% 3.40% 3.13% 3.05% 3.06% 3.59% 3.09% 2.93% 3.52% 3.46% 3.10% 2.70% 3.70% 5.43% 4.14% 3.93% 5.11% 5.39% 5.53% 4.74% 5.57% 4.93% 4.32% 4.68% 3.88% 3.38% 3.71% 3.68% 3.32% 3.74% 3.11% 2.90% 2.72% 2.91% 2.30% 2.01% 1.60% 1.32% 1.23% 1.37% 1.81% 1.57% 1.79% 1.77% 1.92% 3.15% 1.97% 1.80% 2.11% 2.19% 1.92% 2.12% 2.04% 1.83% 2.14% 1.82% 1.51% 75.02 84.75 92.43 80.33 96.47 103.86 92.06 92.15 102.09 118.05 97.55 68.56 90.19 107.46 95.1 96.11 107.94 135.76 122.55 140.64 164.93 167.24 211.28 242.17 247.08 277.72 353.4 330.22 417.09 435.71 466.45 459.27 615.93 740.74 970.43 1229.23 1469.25 1320.28 1148.09 879.82 Eamings Dividends Payout Ratio 3.10 1.98 63.86% 1111.91 1211.92 3.37 3.67 4.13 4.76 5.30 5.41 5.46 5.72 6.10 5.51 5.57 6.17 7.96 9.35 7.71 9.75 10.87 11.64 14.55 14.99 15.18 13.82 13.29 16.84 15.68 14.43 16.04 24.12 24.32 22.65 19.30 20.87 26.90 31.75 37.70 40.63 44.09 44.27 51.68 56.13 38.85 46.04 54.69 67.68 1248.29 76.45 1418.3 87.72 82.54 49.51 56.86 1468.36 903.25 1115.1 1257.64 83.77 1257.60 96.44 1426.19 96.82 1848.36 104.92 2058.90 116.16 2043.94 100.48 2238.83 106.26 2673.61 124.51 2506.85 148.34 3230.78 162.35 3756.07 138.12 204 215 2.35 2.58 283 2.88 2.98 3.04 3.24 3.19 3.16 3.19 3.61 3.72 3.73 4.22 4.86 5.18 5.97 6.44 6.83 6.93 7.12 7.83 8.20 8.19 9.17 9.75 11.06 12.09 12.20 12.39 12.58 13.17 13.79 14.90 15.50 16.20 16.69 16.07 15.74 15.96 17.88 19.01 22.34 25.04 28.14 28.45 21.97 22.65 26.53 31.25 34.90 39.55 43.41 45.70 48.93 53.61 58.80 56.70 60.51% 58.52% 56.81% 54.27% 53.40% 53.26% 54.59% 53.18% 53.09% 57,86% 56.78% 51.63% 45.34% 39.81% 48.42% 43.33% 44.71% 44.51% 41.02% 42.93% 44.96% 50.15% 53.60% 46.47% 52.29% 56.71% 57.16% 40.42% 45.48% 53.38% 63.21% 59.37% 46.77% 41.48% 36.58% 36.67% 35.16% 36.59% 32.29% 28.63% 40.51% 34.67% 32.69% 28.09% 29 23% 28.55% 34.09% 57.46% 38.64% 27.04% 27.51% 32.28% 33.26% 34.04% 43.20% 43.01% 39.30% 36.14% 36.22% 41.05%

Answer rating: 100% (QA)

To calculate the Holding Period Return HPR for each year we can use the formula HPR Ending Value Dividends Beginning Value 1 Here are the calculations ... View the full answer