The return on a security held for a specific period, such as 18 months, without adjusting for time or compounding, is referred to as theholding period return (HPR). This straightforward calculation assesses total returns over the period of ownership.

1. Definition of Holding Period Return:The HPR is calculated as:

HPR=(Ending Value - Initial Value) + Dividends ReceivedInitial ValueHPR = \frac{{\text{(Ending Value - Initial Value) + Dividends Received}}}{{\text{Initial Value}}}HPR=Initial Value(Ending Value - Initial Value) + Dividends Received​

This measure evaluates total growth, disregarding compounding or annualization.

2. Other Return Types (Incorrect Answers):

Effective Rate of Return:Reflects annualized returns considering compounding within a year. It is not applicable to non-annualized periods like 18 months.

Nominal Rate of Return:The unadjusted rate of return without accounting for inflation. While related, it does not specifically refer to the holding period concept.

Annualized Total Return:This adjusts returns to reflect an annual basis, assuming constant performance throughout the period. It is unsuitable for raw, unadjusted returns like the HPR.

References from CSC Study Documents:

Chapter 15, Volume 2: Covers the calculation of different return metrics, with detailed examples of HPR and its application​.

Portfolio Return Analysis inSection 15explains the non-compounded nature of holding period calculations​.

Let me know if further details or clarifications are needed!