Skip to content

NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Mutual Fund Scheme Performance

An investor put Rs 1,00,000 in a scheme and the value after exactly 2 years was Rs 1,44,000, with no interim payouts. What is the compounded annual growth rate (CAGR)?

The CAGR is 20%. The investment grew 1.44 times in two years, and the square root of 1.44 is 1.2, so the annual compounded growth is 20%. Simply halving the 44% total gain gives 22%, which ignores compounding and overstates the rate.

  1. A22%
  2. B20%Correct
  3. C44%
  4. D18%

Explanation

Growth multiple = 1.44, so CAGR = (1.44)^(1/2) - 1 = 1.2 - 1 = 20%. Check: 1.2 x 1.2 = 1.44. The 22% figure comes from dividing the 44% total gain by 2, which ignores compounding.

Did you get it right without looking?

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

Practise Mutual Fund Scheme PerformanceFree diagnostic mock

More Mutual Fund Scheme Performance questions