1. What is Bond Holding Period Return?

The Holding Period Return (HPR) measures the total return from holding a bond over a specific period, including both price appreciation and coupon payments. It's expressed as a percentage of the initial investment.

2. How Does the Calculator Work?

The calculator uses the HPR equation:

Where:

• \( End\ Price \) — Bond price at end of holding period (USD)
• \( Coupons \) — Total coupon payments received during holding period (USD)
• \( Begin\ Price \) — Bond purchase price (USD)

Explanation: The equation calculates the total return by considering both the capital gain/loss and income from coupons relative to the initial investment.

3. Importance of HPR Calculation

Details: HPR is crucial for comparing bond performance across different holding periods and against other investment alternatives.

4. Using the Calculator

Tips: Enter all values in USD. Begin Price must be greater than zero. The calculator provides results in both decimal and percentage formats.

5. Frequently Asked Questions (FAQ)

Q1: Does HPR account for reinvestment of coupons?
A: No, this basic HPR calculation doesn't account for reinvestment returns from coupons.

Q2: How does HPR differ from yield to maturity?
A: YTM assumes holding to maturity and reinvestment of coupons at the same rate, while HPR measures actual returns over a specific period.

Q3: What's a good HPR for bonds?
A: This depends on market conditions, but typically investors compare HPR to benchmarks or risk-free rates.

Q4: Can HPR be negative?
A: Yes, if price decline plus coupons is less than the initial investment.

Q5: How to annualize HPR?
A: For periods less than a year, use: \((1 + HPR)^{(1/n)} - 1\) where n is holding period in years.