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 8 during the year, and sells it at Rs 216 at the end of the year. What is the holding period return?
The holding period return is 12%. Total gain is Rs 16 of price appreciation plus Rs 8 of dividend, which equals Rs 24, and dividing this by the purchase price of Rs 200 gives 12 percent.
- A8%
- B12%Correct
- C4%
- D16%
Explanation
Total return = capital gain (216-200 = 16) + dividend 8 = Rs 24. Dividing by the initial price: 24/200 = 12%. The 8% option counts only the capital gain, and 4% counts only the dividend, ignoring the gain.
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