NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Introduction to Investment
An investor buys a share at Rs 200, receives a dividend of Rs 10 during the year, and sells it at Rs 220 at the end of the year. What is the holding period return?
The holding period return is 15%. The total gain is Rs 20 of capital appreciation plus Rs 10 of dividend, which is Rs 30, and dividing this by the Rs 200 purchase price gives 15 percent.
- A10%
- B5%
- C15%Correct
- D20%
Explanation
Holding period return = (price gain + dividend) / opening price = (20 + 10) / 200 = 15%. Taking only the capital gain gives 10%, which ignores the dividend. Taking only the dividend gives 5%.
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