CMA Final · Strategic Financial Management · Mutual Funds
An open-ended fund began the year with NAV of Rs 40.00 per unit. During the year it paid a dividend of Rs 3.00 per unit and a capital gain distribution of Rs 2.00 per unit; year-end NAV was Rs 42.00. Ignoring reinvestment and loads, what is the fund's total return for the year?
The total return is 17.5%. The NAV rose by Rs 2, and the investor also received Rs 3 dividend and Rs 2 capital gain distribution, so total benefit is Rs 7 on an opening NAV of Rs 40. Seven divided by forty gives 17.5 percent.
- A5.00%
- B17.50%Correct
- C12.50%
- D10.00%
Explanation
Total return = (closing NAV - opening NAV + distributions) / opening NAV = (42 - 40 + 3 + 2) / 40 = 7/40 = 17.5%. Option 5% counts only the NAV change. Option 12.5% omits the capital gain distribution.
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