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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Introduction to Investment

Mr. Iyer bought a share for Rs 200, received a dividend of Rs 10 during the year, and sold it at Rs 230 at the year end. What is his holding period return?

The holding period return is 20%. Capital gain of Rs 30 plus dividend of Rs 10 gives total gain of Rs 40, which divided by the purchase price of Rs 200 equals 20 percent. Ignoring the dividend would wrongly give 15 percent.

  1. A15%
  2. B20%Correct
  3. C5%
  4. D10%

Explanation

Holding period return = (Sale price - Purchase price + Dividend) / Purchase price = (230 - 200 + 10)/200 = 40/200 = 20%. Choosing 15% ignores the dividend; 5% counts only the dividend yield.

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