NISM Certifications · NISM-Series-XV: Research Analyst · Fundamentals of Risk and Return
In the context of risk and return, what does the 'holding period return' of an investment measure?
Holding period return is the total return earned over the time an asset is held, combining income received and price change, expressed relative to the initial investment value. It is not just dividend yield, volatility or a beta-based excess return measure.
- ATotal return over the period owned, including income received and price change, relative to the starting valueCorrect
- BOnly the dividend received divided by the current price
- CAnnualised standard deviation of daily prices
- DReturn earned above the risk-free rate per unit of beta
Explanation
Holding period return = (Ending value - Beginning value + Income) / Beginning value. It captures both capital gain and income over the whole period owned. The other options describe dividend yield, volatility and a risk-adjusted measure respectively.
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