NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Investments
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 capital gain of Rs 20 plus the dividend of Rs 10 gives a total gain of Rs 30, which is divided by the original purchase price of Rs 200 to give the return.
- A10%
- B15%Correct
- C5%
- D20%
Explanation
Holding period return = (capital gain + dividend) / purchase price = (20 + 10) / 200 = 15%. Ignoring the dividend gives 10%, which is the capital gain return alone. Using the sale price as the base gives about 13.6%, which is not offered.
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