Historical Rate of Return

One of the measures of Historical Rate of Return is the Holding Period Return (HPR)

HPR = Ending Value/Beginning Value

An example is that I put $1 in the bank and i find that in one year, there is $2 in my account, then my HPR = 2/1 = 2 (this is a really good bank)

If you find that you have $0.5 in your account, then HPR=0.5/1=0.5 (Take out your money dude)

If for some reason, you find that you are in debt, -$0.50 in your account, then HPR = -0.5/5 ( does the name Enron ring a bell?)

In the next post, we’ll take a step further and calculate Annual HPR. This is when a good financial calculator is a good investment.

Here is a cool web application which lets you know the historical rate of return of your investment
http://www.tifor.com/

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