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holding period return confusion

pcunniffpcunniff MilwaukeePosts: 30 Associate

Can someone explain this? I thought the holding period return formula was End Value/Beg Value - 1?

An investor purchased 725 shares of stock at $40 per share and posted initial margin of 60%. He subsequently sold the shares at $50 per share. Based only on this information, the investor's holding period return is closest to:





(50 – 40) / (40 × 0.6) = 41.67%.

(Study Session 12, Module 36.2, LOS 36.f)


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