Page 31 - FINAL CFA SLIDES JUNE 2019 DAY 2
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LOS 7.c: Calculate and interpret a Session Unit 2: Discounted Cash Flow Applications
holding period return (total return).
% change in the value of an investment over the period it is held. It asset pays dividend or interest payments, we including these
interim cash flows, and hence call it total return.
As an example, consider a Treasury bill purchased for $980
and sold three months later for $992. The holding period return
can be calculated as:
Investor’s 3-month holding period return was 1.22%.
As an example of a security that has interim cash payments,
consider a stock that is purchased for $30 and is sold for $33
six months later, during which time it paid $0.50 in dividends.
The holding period return (total return in this case) is:
The investor’s total return over the holding period of six months.
