In the context of mortgage-backed securities, half-life refers to the point in time at which half of the principal amount of the security has been repaid.
Holding Period
[HOHL-ding PEER-ee-uhd]
What is the definition of Holding Period?
The duration between the acquisition and the sale or disposition of an asset by a taxpayer.
Using Holding Period in an Example
In the context of capital gains tax, the holding period of an asset is crucial in determining whether the capital gain or loss is classified as long-term or short-term. For example, if an investor purchases shares and sells them after holding them for more than a year, the gains from the sale are typically subject to a lower tax rate as long-term capital gains.
Using Holding Period in a sentence
Our financial advisor emphasized the importance of the holding period for our stock investments to take advantage of lower long-term capital gains tax rates.
Related Terms
Head of Household
A tax filing status for individuals who are unmarried and provide more than half of the financial support for their household, which may include dependents or other qualifying relatives. This status offers more favorable tax rates and higher deductions compared to single filers.
Hedge
A transaction or series of transactions undertaken to reduce the risk of an investment, often by taking an offsetting position in a related security.
Held-to-Maturity Security
A debt security that a company has the intent and ability to hold until its maturity date, at which point it is expected to be paid in full.
High-Low Method
A technique used in cost accounting to separate fixed and variable costs associated with a business activity by analyzing the highest and lowest points of activity and their corresponding costs.
High-Premium Convertible Debenture
A type of bond that features a long-term maturity, offers a high premium for conversion into common stock, and provides a competitive interest rate.
Historical Cost
The original cost of an asset to an entity at the time of its acquisition, recorded on the financial statements.
Hope Scholarship Credit
A tax credit available for the first two years of post-secondary education, providing a maximum credit of $1,500 per student per year, contingent upon meeting specific eligibility requirements.
Horizontal Analysis
A financial analysis technique that compares line items in financial statements over a series of periods, calculating both the dollar amount and percentage changes from one period to the next.
Deferred.com Resources
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