NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Risk, Return and Performance of Funds
A scheme's NAV rose from Rs 40 to Rs 50 over exactly 2 years with no dividend. What is the point-to-point absolute return over the period?
The absolute return is 25%. The NAV gain is Rs 10 on an opening NAV of Rs 40, so 10 divided by 40 equals 25%. Using the closing NAV of Rs 50 as the base would wrongly give 20%, since returns are measured on the starting value.
- A10%
- B20%
- C25%Correct
- D50%
Explanation
Absolute return = (50 - 40)/40 = 25%. Using 10 as a percentage gives 10%, dividing by the closing NAV gives 20% (wrong base), and 50% is meaningless here.
Did you get it right without looking?
One question tells you little. A timed set on Risk, Return and Performance of Funds shows your real accuracy, how long you take and where you lose marks.
More Risk, Return and Performance of Funds questions
- A fund earned a return of 14% in a year. The risk-free rate is 6%, the fund's standard deviation is 16% and its beta is 0.8. What is the fun…
- A scheme has a beta of 1.2 relative to its benchmark. If the benchmark rises by 10%, what is the scheme's expected movement, all else equal?
- Fund A has a standard deviation of 18% and Fund B has a standard deviation of 12%, both over the same period and with similar objectives. Wh…
- A scheme has a beta of 1.2. If the market index falls by 10%, what fall would be expected in the scheme's value, based on beta alone?
- A scheme returned 18% in a year while its benchmark index returned 15%. Its beta relative to the benchmark is 1.2. What does a beta of 1.2 i…
- Which of the following best describes 'standard deviation' when used to assess a mutual fund scheme?