The Holding Period Return (HPR) of One's Portfolio Should Be

question 87

Multiple Choice

The holding period return (HPR) of one's portfolio should be compared to investment goals
I. to determine whether the rate of return is commensurate with the risk involved.
II. to be sure one's portfolio is outperforming the S&P 500 Index.
III. to isolate any problem investments.
IV. to determine when to change benchmarks from the S&P 500 to the NASDAQ Composite Index.

• A) I and III only
• B) II and IV only
• C) I, II and III only
• D) II, III and IV only

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Definitions:

Annual Cash Inflows

The total amount of money received by a business within one fiscal year from its operations, investments, and financing activities.

Salvage Value

The estimated residual value of an asset at the end of its useful life, considered for depreciation calculations.

Working Capital Investment

Funds used by a company to finance its day-to-day operations, including investments in inventory and accounts receivable.

Net Present Value

The calculation used to determine the current value of a series of future cash flows by discounting them at a specific rate.