Recent Articles

Holding Period Yield (HPY)

For investments, the Holding Period Yield (HPY) or Holding Period Return (HPR) refers to the total return earned from an investment or an investment portfolio over the holding period, that is, the period for which the asset or portfolio was held by the investor. Where...

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Bank Discount Yield

T-bills are quoted on a bank discount yield basis. The bank discount yield is calculated using the following formula:   Let’s take an example. The quoted price for a 90-day T-bill is USD 975,342 with a face value of USD 1 million. The bank discount yield will be...

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Yield Measures for Money Market Instruments

In addition to issuing long term bonds, governments also issue short-term instruments such as Treasury bills (T bills) of up to one year maturity. T-bills do not carry a coupon, but are sold on a discount basis. For example, the US Treasury, UK government and the...

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How to Calculate Annualized Returns

When we make investments, we invest our money in different assets and earn returns for different periods of time. For example, an investment in a short-term Treasury bill will be for 3 months. We may invest in a stock and exit after a week for a few days. For the...

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Money-weighted Returns

We learned about arithmetic returns and geometric returns. However, the problem with these measures is that they do not consider the amount of investment made in each period. For example, in the first year, we may have an investment of USD 5,000 while in the second...

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Time-weighted Returns

While calculating the returns on financial assets, we will often look at the returns from multiple holding periods. For example, one may hold an asset for five years, and the asset may have earned total 150% returns over this period of 5 years. However, it is...

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