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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Net Asset Value, Total Expense Ratio and Pricing of Units

An investor buys 1,000 units at NAV ₹18 and after some time NAV is ₹22.50. What is the absolute return on the investment, ignoring load and tax?

The absolute return is 25%. The gain per unit is ₹4.50 on a purchase NAV of ₹18, and dividing the gain by the original cost gives 25%.

  1. A20%
  2. B22.5%
  3. C25%Correct
  4. D18%

Explanation

Return = (22.50 - 18)/18 = 4.5/18 = 25%. 20% uses the ending NAV as base, which is wrong.

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