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AHPR
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AHPR is an acronym for Annualized Holding Period Return.[1] For example, if you hold a non-dividend yielding stock and it appreciates a certain percent over a period other than a year, it is typically expected that you annualize it, or determine the rate of return as if you held that security for a year, given a consistent, compounding rate of return.
Failing to annualize makes it difficult to accurately rate the quality of a holding. For example, it is hard to compare the prudence of investing in a risk-free bond that appreciates 10% over two years with the prudence of investing in a risk-free equity that appreciates 5% over the course of a week.
Calculating the annualized holding period return
Annualized HPR = (((Present Value, or face Value, End-Of-Period Value) + (Any Intermediate Gains eg. Dividents) - (Initial Value)) /(Initial Value)) + 1 ) ^ ( 1 / (Years) ) - 1
![Annualized_HPR_n=(([Income + (P_{n+1} - P_n)]/P_n) + 1)^{\,\!1/Years}-1](/images/math/e/8/a/e8a4ce4a5914580ca2053c0688462c60.png)
References
- ^ http://financial-dictionary.thefreedictionary.com/Annualized+holding-period+return Definition from Financial Dictionary
