Skip to content

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

Ms. Anita Rao invested Rs 1,00,000 in a stock. After one year she received a dividend of Rs 4,000 and the share value had risen to Rs 1,10,000. What is her holding period return?

The holding period return is 14%. It combines the capital gain of Rs 10,000 and the dividend of Rs 4,000, giving Rs 14,000 total gain on an initial investment of Rs 1,00,000. Ignoring the dividend would understate the return at 10%.

  1. A10%
  2. B14%Correct
  3. C4%
  4. D15.4%

Explanation

Holding period return = (ending value - beginning value + income) / beginning value = (1,10,000 - 1,00,000 + 4,000) / 1,00,000 = 14,000 / 1,00,000 = 14%. Choosing 10% ignores the dividend, and 4% ignores the capital gain. 15.4% wrongly divides by a different base.

Did you get it right without looking?

One question tells you little. A timed set on Introduction to Investment shows your real accuracy, how long you take and where you lose marks.

Practise Introduction to InvestmentFree diagnostic mock

More Introduction to Investment questions