NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Mutual Funds
Mr. Iyer invests Rs 1,00,000 in a mutual fund scheme with NAV of Rs 20.00 per unit and no entry load. After one year the NAV is Rs 23.00 and the fund paid a dividend (IDCW) of Rs 1.00 per unit during the year, which Mr. Iyer received in cash. What is his absolute return for the year?
The absolute return is 20%. Mr. Iyer holds 5,000 units, gaining Rs 15,000 from NAV rise and Rs 5,000 from the dividend, a total of Rs 20,000 on an investment of Rs 1,00,000. Leaving out the dividend would wrongly give 15%.
- A15%
- B20%Correct
- C10%
- D18%
Explanation
Units = 1,00,000/20 = 5,000. Capital gain = 5,000 x 3 = Rs 15,000. Dividend = 5,000 x 1 = Rs 5,000. Total gain Rs 20,000 on Rs 1,00,000 = 20%. Ignoring the dividend gives 15%, which is the key distractor.
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