NISM Certifications · NISM-Series-XV: Research Analyst · Fundamentals of Risk and Return
A share was bought at ₹200. Over one year it paid a dividend of ₹10 and was sold at ₹230. What is the holding period return?
The holding period return is 20%. Capital gain of ₹30 plus dividend of ₹10 gives total gain of ₹40, which divided by the purchase price of ₹200 equals 20%. Excluding the dividend would wrongly give 15%.
- A15%
- B20%Correct
- C5%
- D12.5%
Explanation
Return = (230 - 200 + 10) / 200 = 40/200 = 20%. Ignoring the dividend gives 15%, which is a missed income adjustment. Using only the dividend gives 5%.
Did you get it right without looking?
One question tells you little. A timed set on Fundamentals of Risk and Return shows your real accuracy, how long you take and where you lose marks.
More Fundamentals of Risk and Return questions
- A stock gave returns of +20% in year 1 and -20% in year 2. What is its two-year holding period return and the approximate arithmetic mean re…
- A portfolio earned a return of 14% in a year, the risk-free rate was 6%, and the portfolio's standard deviation was 16%. What is its Sharpe …
- A stock bought at Rs 200 paid a dividend of Rs 8 during the year and was sold at Rs 218. What is the holding period return?
- Which statement about the coefficient of variation (standard deviation divided by mean return) is correct?
- A stock's returns over five years were 10%, 20%, -10%, 15% and 5%. What is the arithmetic mean annual return?
- Which of the following best describes systematic risk in the context of equity investing?