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NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Investing in Stocks (NISM XXI-A)

An investor buys a share at Rs 200 and receives a dividend of Rs 8 during the year. At year end the share price is Rs 230. What is the total return for the year?

The total return is 19%. The investor earns a capital gain of Rs 30 plus a dividend of Rs 8, totalling Rs 38 on an initial Rs 200. Considering only the price rise would understate the return at 15%.

  1. A15%
  2. B4%
  3. C19%Correct
  4. D11%

Explanation

Capital gain = 230 - 200 = Rs 30. Add dividend Rs 8 to get Rs 38. Return = 38 / 200 = 19%. Using only the capital gain gives 15%, ignoring the dividend.

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