NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Role of Portfolio Managers
A client's PMS portfolio was worth Rs 80 lakh at the start of the year and Rs 92 lakh at year end, with no additions or withdrawals. What was the return for the year?
The return is 15%. The portfolio gained Rs 12 lakh on an opening value of Rs 80 lakh, and 12 divided by 80 equals 15%. Using the closing value as the base would wrongly give about 13%.
- A12%
- B13%
- C15%Correct
- D17.5%
Explanation
Return = (92 - 80)/80 = 12/80 = 15%. Dividing by the ending value gives 13% (12/92), which is the wrong base. 12% just uses the absolute rupee gain in lakhs as a percentage.
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