NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Mutual Fund Scheme Performance
A scheme's NAV grew from Rs 25 to Rs 36 over 2 years with no dividends. What is the approximate compounded annual growth rate (CAGR)?
The CAGR is 20%. The NAV multiplied 1.44 times in two years, and the square root of 1.44 is 1.2, so each year grew by 20%. The 44% figure is the cumulative return, not the annual compounded rate.
- A22%
- B20%Correct
- C44%
- D18%
Explanation
Growth multiple = 36/25 = 1.44, and the square root of 1.44 is 1.2, so CAGR = 20%. Option 22% is not supported by the data. Option 44% is the total return over 2 years. Option 18% does not reproduce 1.44 when compounded (1.18^2 = 1.39).
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