NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Introduction to Securities Markets
A stock is bought at Rs 200, and during the year it pays a dividend of Rs 8 per share. At year end it is sold at Rs 214. What is the total holding period return?
The holding period return is 11.0%. The capital gain of Rs 14 plus the dividend of Rs 8 gives a total gain of Rs 22, which divided by the purchase price of Rs 200 equals 11 percent. Ignoring the dividend would understate the return at 7 percent.
- A7.0%
- B11.0%Correct
- C4.0%
- D12.0%
Explanation
Capital gain = 214 - 200 = Rs 14. Add dividend of Rs 8 to get Rs 22 total gain. Return = 22/200 = 11.0%. The 7.0% option ignores the dividend, and 4.0% uses only the dividend yield.
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