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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Net Asset Value, Total Expense Ratio and Pricing of Units

A scheme's NAV on 1 April was ₹40.00. Over the year it paid no dividend, and its NAV on 31 March next year was ₹46.00. An investor holding units for exactly this one year earned what absolute return?

The absolute return is 15%. The gain of ₹6 per unit is divided by the opening NAV of ₹40, because return is always measured on the amount invested at the start, with no dividend to add.

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

Explanation

Return = (46 - 40) / 40 = 6/40 = 15%. Check: 40 x 1.15 = 46. The 13% option uses a wrong base, and 17.4% wrongly uses the closing NAV as the base: 6/46 is about 13.0%, and the 17.4% figure is not derived from the data.

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