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

An investor buys 500 units of a scheme at an NAV of Rs 40 and receives a dividend (IDCW) of Rs 2 per unit. After one year the NAV is Rs 44. Ignoring taxes and costs, what is the total percentage return for the year?

The total return is 15%. The investor gained Rs 4 per unit from NAV growth plus Rs 2 per unit as IDCW, totalling Rs 6 on an investment of Rs 40 per unit. Counting only the NAV rise gives 10%, which ignores the IDCW.

  1. A10%
  2. B15%Correct
  3. C5%
  4. D20%

Explanation

Capital gain per unit = 44 - 40 = Rs 4; IDCW = Rs 2; total = Rs 6 on Rs 40 cost = 15%. Ten percent counts only the capital gain; five percent counts only the IDCW.

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