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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Mutual Fund Scheme Performance

A mutual fund scheme's NAV rose from Rs 40.00 at the start of the year to Rs 46.00 at the end of the year. No dividend was paid during the year. What is the absolute return for the year?

The absolute return is 15%. The gain in NAV is Rs 6 on an opening NAV of Rs 40, and return is measured on the opening value, so 6 divided by 40 gives 15 percent for the year.

  1. A12.0%
  2. B13.0%
  3. C15.0%Correct
  4. D17.4%

Explanation

Absolute return = (46 - 40) / 40 = 6/40 = 15%. The 17.4% figure comes from using the closing NAV as the base (6/46 is 13.0%, and 6/34.5 would be 17.4%), which is the wrong base. Return is always computed on the opening NAV.

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