NISM Certifications · NISM-Series-XV: Research Analyst · Fundamentals of Risk and Return
A share was bought at Rs 200, received a dividend of Rs 8 during the year, and was sold at Rs 220. What is the holding period return?
The holding period return is 14%. Capital gain of Rs 20 plus dividend of Rs 8 gives total return of Rs 28, which divided by the purchase price of Rs 200 equals 14 percent.
- A10%
- B4%
- C14%Correct
- D12%
Explanation
Holding period return = (sale price - purchase price + dividend) / purchase price = (220 - 200 + 8)/200 = 28/200 = 14%. Option 10% ignores the dividend, 4% is the dividend yield only, and 12% adds the dividend to the gain wrongly over a different base.
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