NISM Certifications · NISM-Series-XV: Research Analyst · Fundamentals of Risk and Return
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?
The holding period return is 13%. Capital gain of Rs 18 plus dividend of Rs 8 gives total gain of Rs 26, which divided by the purchase price of Rs 200 equals 13 percent.
- A9.0%
- B13.0%Correct
- C4.0%
- D10.0%
Explanation
Holding period return = (Sale price - Purchase price + Dividend) / Purchase price = (218 - 200 + 8)/200 = 26/200 = 13%. Option 9% ignores the dividend; 4% ignores the capital gain; 10% is wrongly computed on the sale price base.
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