CMA Final · Strategic Financial Management · Mutual Funds
An open-ended fund has an opening NAV of ₹40.00. During the year it paid a dividend of ₹2.00 per unit and the closing NAV was ₹43.00. Ignoring reinvestment, what is the absolute return for the year?
The return is 12.5%. The NAV gain of ₹3 plus the dividend of ₹2 totals ₹5 per unit, which divided by the opening NAV of ₹40 gives 12.5%. Leaving out the dividend would understate the return at 7.5%.
- A12.50%Correct
- B7.50%
- C5.00%
- D10.00%
Explanation
Return = (closing NAV − opening NAV + dividend) / opening NAV = (43 − 40 + 2) / 40 = 5/40 = 12.5%. Omitting the dividend gives 7.5%, and omitting the NAV gain gives 5%.
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