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

An investor buys 200 shares of an Indian company at Rs 500 per share. After one year the price is Rs 560 and a dividend of Rs 10 per share was received during the year. What is the total return for the year, ignoring taxes and costs?

The total return is 14 percent. Capital gain per share is Rs 60 and dividend is Rs 10, giving Rs 70 on an initial price of Rs 500, which is 14 percent. Ignoring the dividend would wrongly give 12 percent.

  1. A12.0%
  2. B14.0%Correct
  3. C10.0%
  4. D2.0%

Explanation

Capital gain per share is 560 - 500 = Rs 60. Add dividend Rs 10 to get Rs 70 total gain per share. Total return = 70/500 = 14%. The 12% option ignores the dividend, and 2% is just the dividend yield on the wrong base.

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