Skip to content

NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Concept and Role of a Mutual Fund

An investor buys units of a scheme at an NAV of Rs 25.00 and, after one year, redeems them at an NAV of Rs 28.00. No dividend was paid and loads are ignored. What is the absolute return?

The absolute return is 12%. The gain per unit is Rs 3 (28 minus 25), and dividing this by the purchase NAV of Rs 25 gives 0.12, or 12%. The base must be the original purchase price, not the redemption value.

  1. A10.7%
  2. B11.0%
  3. C12.0%Correct
  4. D13.0%

Explanation

Absolute return = (28 - 25) / 25 = 3/25 = 12%. The 10.7% option wrongly divides the gain by the redemption NAV (3/28). The 11.0% and 13.0% options do not follow from the data.

Did you get it right without looking?

One question tells you little. A timed set on Concept and Role of a Mutual Fund shows your real accuracy, how long you take and where you lose marks.

Practise Concept and Role of a Mutual FundFree diagnostic mock

More Concept and Role of a Mutual Fund questions