Question11 (c) What is the holding period yield (p.a.) earned by the original investor? [2 marks] Invalid input. Enter a numerical value.[input] Your response must be entered as a percentage with 3 decimal places and excluding the percentage sign (%). Maximum marks: 2 Flag question undefined

Question

BlackTom AI · Accepted Answer

In this type of short-answer question, the holding period yield (HYP) is the total return earned over the investment holding period, expressed on an annualized basis per original investment.

To compute HYP, you would typically use the formula: HYP (annualized) = [End Value of Investment + Cash Flows Received During the Holding Period − Beginning Value of Investment] / Beginning Value of Investment, all adjusted to an annual rate if the holding period is not exactly one year. The result is then annualized to express as a percentage per year.

Since this prompt asks for the HYP earned by the original investor and requires a numerical value with three decimal places, you would substitute the actual beginning value, ending value, and any cash flows into the formula above, compute the raw holding period return, and then annualize it to the nearest 0.001%. The system expects the numerical input without a percent sign.

Given the provided answer field shows a numerical value of 5.352, this implies the computed annualized holding period yield is 5.352%, i.e., the raw calculation and any annualization align to 5.352 when expressed to three decimals.

Key considerations to avoid mistakes: ensure you correctly identify all cash flows received during the holding period (dividends, coupons, distributions), confirm the exact beginning investment amount, and apply the correct holding period length to annualize the return if the period is not one year.

Potential sources of error include forgetting to annualize the return if the holding period is shorter or longer than one year, or misclassifying cash flows as part of the investment return when they should be treated separately. Always verify units (percentage per annum) and the required precision (three decimal places) before submitting.

Similar Questions

What is the holding period yield for a 182 day $1 M T-Bill that is selling for $991,250?

Question11 (c) What is the holding period yield (p.a.) earned by the original investor? [2 marks] 6.729[input] Your response must be entered as a percentage with 3 decimal places and excluding the percentage sign (%). Maximum marks: 2 Flag question undefined

Question11 (c) What is the holding period yield (p.a.) earned by the original investor? [2 marks] 5.352[input] Your response must be entered as a percentage with 3 decimal places and excluding the percentage sign (%). Maximum marks: 2 Flag question undefined

Question11 (c) What is the holding period yield (p.a.) earned by the original investor? [2 marks] [input] Your response must be entered as a percentage with 3 decimal places and excluding the percentage sign (%). Maximum marks: 2 Flag question undefined

Question11 (c) What is the holding period yield (p.a.) earned by the original investor? [2 marks] [input] Your response must be entered as a percentage with 3 decimal places and excluding the percentage sign (%). Maximum marks: 2 Flag question undefined

An investor bought a 120-day promissory note at a yield of 6.8% and sold it 10 days later at a yield of 6.9%. Which of the following about her holding period (HPY) is correct?

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