Question

How do you calculate the annualized percent return of an investment that had a holding period of 15 days and resulted in a loss? Please provide an example with step by step details.

Answer 1

Annualized percent return of an investment with a holding period of 15 days can be calculated as:-

Step 1) Calculate the profit or return earned during the 15 days period.

Step2) Calculate the percentage rate of return by dividing the return by the initial investment.

Step3) Since the return as per step 2 is for 15 days only, therefore convert the 15 days return into annual return by dividing the 15 days return by 15 and multiplying 365 (i.e. total days of a year)

For example: If Mr A purchased a share for $100 and sold it for $120 after holding for 15 days. In such case;

Step 1) The profit earned in 15 days is $ 120- $ 100 = 12

Step 2) % profit is for 15 days: 12/100 = 0.12 or 12 %

Step 3) % profit for the whole year : 0.12*365/15 = 2.92 or 292 %