CMA Final · Strategic Financial Management · Mutual Funds
A fund's NAV rose from Rs 40 to Rs 46 during the year, and it paid a dividend of Rs 2 per unit. An investor bought at the opening NAV with no loads. What is the total return for the year?
The total return is 20%. The capital gain is Rs 6 (46 minus 40) and the dividend is Rs 2, so total gain of Rs 8 on an investment of Rs 40 gives 20%. Ignoring the dividend would understate the return at 15%.
- A20%Correct
- B15%
- C5%
- D25%
Explanation
Total return = (46 - 40 + 2) / 40 = 8/40 = 20%. Ignoring the dividend gives 15%. Taking only dividend yield and mixing gives other values.
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