NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Investments
An investor buys 200 shares of an Indian company at Rs 500 per share. After one year, the share price is Rs 560 and a dividend of Rs 10 per share is received during the year. What is the total holding period return?
The holding period return is 14%. The gain per share is Rs 60 from price appreciation plus Rs 10 dividend, totalling Rs 70, which divided by the purchase price of Rs 500 gives 14%. Leaving out the dividend would understate the return at 12%.
- A12%
- B14%Correct
- C10%
- D2%
Explanation
Capital gain per share = 560 - 500 = Rs 60; dividend = Rs 10; total gain = Rs 70. Return = 70/500 = 14%. Ignoring the dividend gives 12%, which is the key wrong choice.
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