Anticipated Holding Period

Posted in Finance, Accounting and Economics Terms, Total Reads: 449
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Definition: Anticipated Holding Period

Anticipated Holding Period refers to the time period for which an individual or a firm expects to hold or own a specific asset.


After the specific period the firm or the individual will sell the asset and the capital invested will be repaid to the investors.


The concept of anticipated holding period holds importance due to the following reasons:

1. Calculating the position’s expected returns

2. For tax planning as long term investments are not taxes as heavily as short term ones.

3. Measuring investment performance


Holding Period Return (HPR) is the Measure of the financial Performance of the asset over the anticipated holding period.HPR Is equal to the End Value minus Initial Value divided by the initial value.i.e the return earned over the initial value or the return on investment. Where End Value includes also includes incomes such as dividends, earned on the investment

 

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