NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Mutual Fund Scheme Performance
A fund's NAV at the start of the year was Rs 25. It paid a dividend of Rs 2 per unit, and the NAV at year-end was Rs 28. Ignoring reinvestment, what is the total return for the year?
The total return is 20%. The unit holder gained Rs 3 from NAV growth plus Rs 2 in dividend, totalling Rs 5 on an opening NAV of Rs 25. Ignoring the dividend would understate the return at 12%.
- A12%
- B20%Correct
- C8%
- D16%
Explanation
Total return = (28 - 25 + 2) / 25 = 5/25 = 20%. The 12% figure ignores the dividend (3/25), and 8% counts only the dividend (2/25).
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