Holding period return measures the value of an investment over its entire lifespan. The beginning investment value is the amount you initially paid for the investment when you purchased it. In other words, it is its initial market value.
Holding period return also takes into account any cash you periodically receive (such as dividends) from the investment over its holding period. This is called current income for period.
Along with current income, HPR looks at the capital gains or capital losses of your investment. A capital gain or loss is the difference between the amount you pay for an investment and the amount you sell it for. If you sell an asset for more than its original purchase price, you make a capital gain. If you sell it for less than its original purchase price, you take a capital loss.
The sum of your investment's current income and capital gains/losses is known as its total return. It is expressed as a dollar amount. One investment can have a higher total return than another investment, but have a lower HPR.
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