NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Risk, Return and Performance of Funds
A mutual fund scheme's NAV rose from Rs 40 to Rs 46 over one year, and it paid no dividend during the year. What is the absolute return for the year?
The absolute return is 15%. Return is measured on the opening NAV: the gain of Rs 6 divided by the starting NAV of Rs 40 gives 0.15, or 15%, since no dividend was paid during the year.
- A13.04%
- B15%Correct
- C6%
- D18%
Explanation
Absolute return = (46 - 40) / 40 = 6/40 = 15%. The 13.04% option wrongly uses the closing NAV (46) as the base instead of the opening NAV. The 6% option is just the rupee gain and ignores the percentage conversion.
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