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You're evaluating the performance of your pension fund. You invested $100 initially, which grew to $106 after 4 months, and then to $107 after another 6 months.
a. What was your HPR during the first 4 months?b. What was your HPR during the next 5 months?c. What was your total HPR over the 9 months?

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Answer:

a) the holding period return (HPR) for the first 4 months = ($106 - $100) / $100 = 6%

b) the holding period return (HPR) for the next 5 months = ($107 - $106) / $106 = 0.94%

c) the holding period return (HPR) for the 9 months period = ($107 - $100) / $100 = 7%

The holding period return measures the total return on an investment over a certain period of time. It does not necessarily calculate annual returns, since the holding period can be more or less than 1 year.  

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