An investment of $275 grows to $400 in 3 years. The holding period return is:
Click on the arrows to vote for the correct answer
A. B. C. D.C
The holding period return (HPR) is 400 / 275 = 1.455
To calculate the holding period return (HPR), we need to determine the percentage increase in the value of the investment over the holding period. The formula for HPR is:
HPR = (Ending Value - Beginning Value) / Beginning Value
In this case, the beginning value is $275 and the ending value is $400. Plugging these values into the formula, we get:
HPR = ($400 - $275) / $275
Simplifying the equation further, we have:
HPR = $125 / $275
HPR = 0.4545
To express this as a percentage, we multiply the result by 100:
HPR = 0.4545 * 100
HPR = 45.45%
Therefore, the holding period return is 45.45%.
Now let's analyze the answer choices provided:
A. 1.13 B. 0.6875 C. 1.455 D. 1.455
We have already calculated that the HPR is 45.45%, which does not match any of the given answer choices. None of the provided answer choices are correct based on the calculated HPR.
It's important to note that there might be an error in the available answer choices, as both options C and D are listed as 1.455. However, even if one of the options were corrected to match the calculated HPR, it would still not be accurate.
Therefore, none of the answer choices accurately represent the calculated holding period return of 45.45%.