CA Final · Advanced Financial Management · Mutual Funds
A fund's NAV rose from ₹40.00 to ₹46.00 during the year. It paid a dividend of ₹2.00 per unit and distributed no capital gains. What is the fund's total return for the year, assuming no entry or exit load?
The total return is 20%. The NAV gain of ₹6 plus the dividend of ₹2 gives ₹8 of total benefit on an opening NAV of ₹40. Leaving out the dividend would understate the return at 15%.
- A15.0%
- B20.0%Correct
- C5.0%
- D17.5%
Explanation
Total return = (closing NAV - opening NAV + dividend) / opening NAV = (46 - 40 + 2)/40 = 8/40 = 20%. Ignoring the dividend gives 15%, which is the mistake in the first option.
Did you get it right without looking?
One question tells you little. A timed set on Mutual Funds shows your real accuracy, how long you take and where you lose marks.
More Mutual Funds questions
- Kavita invests Rs 12,00,000 in a liquid fund at NAV Rs 100 and starts an STP transferring Rs 2,00,000 monthly into an equity fund. Equity fu…
- Arvind holds 10,000 units of a debt fund at NAV Rs 50. He sets up a monthly SWP of Rs 10,000. At the end of month 1 the NAV is Rs 50 and at …
- Mr. Deshmukh invests Rs 1,02,000 in a scheme whose NAV is Rs 20.00 per unit and which charges a 2% entry load on NAV. He is allotted units o…
- Which statement about the Sharpe and Treynor measures for evaluating mutual fund schemes is correct?
- Equity scheme Alpha reported a return of 14%, with a beta of 0.8 and a standard deviation of 15%. The risk-free rate is 6%. Using the Treyno…
- Two schemes are compared over the same period with a risk-free rate of 5%. Scheme P: return 17%, standard deviation 15%, beta 0.9. Scheme Q:…