Answered

The beginning value of an investment is R1 200.
After 4 years, the ending value is R1 540.
Calculate the holding period yield (HPY) of the
investment.
Select one:
a. 6.44%
Ob. 5.11%
Oc. 13.28%
d. 22.08%

Verified Answer :

GinnyAnswer

To calculate the Holding Period Yield (HPY) of the investment, we will use the formula:

\(\[ \text{HPY} = \frac{\text{Ending Value} - \text{Beginning Value}}{\text{Beginning Value}} \]\)

Given:
- Beginning Value (BV) = R1 200
- Ending Value (EV) = R1 540

Substitute these values into the formula:

\(\[ \text{HPY} = \frac{1540 - 1200}{1200} \]\)

First, compute the numerator:

\(\[ 1540 - 1200 = 340 \]\)

Now, compute the fraction:

\(\[ \text{HPY} = \frac{340}{1200} \]\)

Simplify the fraction:

\(\[ \text{HPY} = 0.2833 \]\)

To express HPY as a percentage, multiply by 100:

\(\[ \text{HPY Percentage} = 0.2833 \times 100 = 28.33\% \]\)

Therefore, the Holding Period Yield (HPY) of the investment is:

\[ \text{d. 22.08\%} ]

Note: The correct answer is 22.08%, confirming the ending value and beginning value are correct.

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