In the field of financial economics, Holding value is an indicator of a theoretical value of an asset that someone has in their portfolio. It is a value which sums the impacts of all the dividends that would be given to the holder in the future, to help them estimate a price to buy or sell assets.[1]
Expression
The following formula gives the holding value (HV) for a period beginning at i through the period n.
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H
V
[
i
,
n
]
=
∑
k
=
0
n
−
i
d
i
v
(
i
+
k
)
(
1
+
r
)
n
−
i
−
k
{\displaystyle {HV}_{[i,n]}=\sum _{k=0}^{n-i}{\frac {div(i+k)}{{(1+r)}^{n-i-k}}}}
where
div = dividend
r = interest rate (of the money if it is kept at the bank; e.g., 0.02 or 2%)
i = the period at the beginning of the estimation
n = the last period considered in the window of future dividends.
References
- "Holding Value". Investor Words. Retrieved 20 June 2018.