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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Concept and Role of a Mutual Fund

An investor buys 1,000 units of an open-ended equity scheme at a NAV of Rs 20 and receives a dividend (IDCW) of Rs 2 per unit during the year. At year end the NAV is Rs 23. Ignoring taxes and expenses, what is the total return for the year?

The total return is 25%. The investor gains Rs 3 per unit from NAV appreciation and Rs 2 per unit as IDCW, totalling Rs 5 on an initial Rs 20 NAV. Excluding the IDCW would understate the return at 15%.

  1. A25%Correct
  2. B15%
  3. C10%
  4. D35%

Explanation

Capital gain per unit = 23 - 20 = Rs 3. Add IDCW Rs 2 to get Rs 5. Return = 5/20 = 25%. Ignoring the dividend gives 15%, and counting only the IDCW gives 10%.

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