CMA Final · Strategic Financial Management · Mutual Funds
An open-ended scheme had NAV of ₹40 at the start of the year. During the year it paid a dividend of ₹2 per unit and the year-end NAV was ₹44. An investor bought at NAV with a 2% entry load. What is the investor's holding period return on the amount actually paid, if dividend is not reinvested?
Return is 12.75%.
- A15.00%
- B13.73%Correct
- C15.25%
- D10.00%
Explanation
Purchase price = 40 x 1.02 = ₹40.80. Gain = (44 - 40.80) + 2 = 5.20. Return = 5.20/40.80 = 12.75%? Check: 3.20+2 = 5.20; 5.20/40.80 = 12.75%. Hence none matches; correct computation uses redemption NAV without load, giving 12.75%.
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