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NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Introduction to Securities Markets

An investor buys 200 shares at Rs 500 each, and receives a dividend of Rs 10 per share during the year. At year end the share price is Rs 540. What is the total return for the year, ignoring taxes and costs?

The total return is 10%. The investor gains Rs 40 per share from price appreciation and Rs 10 per share as dividend, totalling Rs 50 on an investment of Rs 500 per share. Dividing 50 by 500 gives 10%. Counting only the price gain would wrongly give 8%.

  1. A8%
  2. B10%Correct
  3. C6%
  4. D12%

Explanation

Price gain is 540-500 = Rs 40 per share and dividend is Rs 10, so total gain is Rs 50 per share. Return = 50/500 = 10%. Counting only the price gain gives 8%, which ignores the dividend.

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