NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Risk, Return and Performance of Funds
A mutual fund scheme's NAV rose from Rs 40.00 to Rs 46.00 over exactly one year, and it paid no dividend during the period. What is the absolute return for the year?
The absolute return is 15%. The gain of Rs 6 per unit is divided by the opening NAV of Rs 40, which is the correct base, giving 15%. Using the closing NAV as the base would wrongly give 13.04%.
- A13.04%
- B15.00%Correct
- C6.00%
- D18.00%
Explanation
Absolute return = (46 - 40) / 40 = 6/40 = 15%. The 13.04% figure comes from dividing the gain by the ending NAV (6/46), which is the wrong base. 6.00% is just the rupee gain, not a percentage.
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