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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Investing in Stocks

Aarav Mehta bought 200 shares of an Indian company at Rs 500 per share. During the year he received a dividend of Rs 10 per share, and at year end the share price was Rs 540. Ignoring taxes and transaction costs, what is his holding period return for the year?

The holding period return is 10%. The capital gain of Rs 40 per share plus the Rs 10 dividend gives Rs 50 total gain on an investment of Rs 500 per share, and 50 divided by 500 equals 10 percent.

  1. A8.0%
  2. B10.0%Correct
  3. C12.0%
  4. D2.0%

Explanation

Capital gain per share = 540 - 500 = Rs 40; dividend = Rs 10; total = Rs 50. Return = 50/500 = 10%. Choosing 8% ignores the dividend, and 12% wrongly mixes in a different base or double counts.

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