NISM Certifications · NISM-Series-XV: Research Analyst · Fundamentals of Risk and Return
An investor buys a share at ₹200, receives a dividend of ₹8 and sells it after one year at ₹222. What is the holding period return?
The holding period return is 15%. Total gain is the capital gain of ₹22 plus the dividend of ₹8, which is ₹30, divided by the purchase price of ₹200. Leaving out the dividend would understate the return at 11%.
- A11.0%
- B15.0%Correct
- C13.0%
- D10.0%
Explanation
HPR = (sale price - purchase price + dividend)/purchase price = (222 - 200 + 8)/200 = 30/200 = 15%. Ignoring the dividend gives 11%, and ignoring the capital gain gives 4%.
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