Final answer:
The holding period return on a stock includes dividends and capital gains received during the time an investor holds the stock, with its proportions changing over the years as observed in S&P 500 index data.
Step-by-step explanation:
The holding period return on a stock is the total rate of return, including both dividends and capital gains, received by an investor over the period during which they hold the stock.
Historically, as seen in the S&P 500 index, the components of this return have varied over time. From the 1950s to the 1980s, dividends amounted to about 4% of the stock value, but since the 1990s, dividends have fallen to about 1% to 2%. Concurrently, capital gains have taken a more prominent role in the total return, particularly in the 1980s and 1990s. In the 2000s, despite low dividends, stock prices fluctuated and ended the decade approximately where they started, impacting total return figures.