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

Mr. Iyer invested Rs 50,000 in a share. After one year he received a dividend of Rs 2,000 and sold the share for Rs 54,000. What is his holding period return?

The holding period return is 12%. The total gain is Rs 4,000 of capital appreciation plus Rs 2,000 of dividend, which is Rs 6,000, and dividing this by the initial investment of Rs 50,000 gives 12 percent.

  1. A8.0%
  2. B12.0%Correct
  3. C4.0%
  4. D10.0%

Explanation

Total gain = capital gain 4,000 + dividend 2,000 = 6,000. Holding period return = 6,000 / 50,000 = 12%. Counting only the capital gain gives 8%, and counting only the dividend gives 4%.

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