Definition of Holding Period

Holding Period is the length of time during which an investor owned a security. The holding period is important for calculating tax liability.

Applying "Holding Period" to Securities Exams:

How long an investor owns a security will determine whether she has a capital gain or capital loss when she eventually sells the security. If an investor wants to determine what the return has been on their investment they can calculate their holding period return.
Ex: If an investor bought a stock at $50 and sold it five years later for $100, the investor has a 100% holding period return.

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