NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Investment Landscape
Ravi invested Rs 50,000 in a mutual fund scheme, which grew to Rs 58,000 after one year. Over the same year, inflation was 5%. Using the approximate method (nominal return minus inflation), what is his real return?
Ravi's nominal return is 16%, since Rs 8,000 gain on Rs 50,000. Subtracting inflation of 5% gives an approximate real return of 11%. The real return reflects the actual gain in purchasing power after adjusting for rising prices.
- A8%Correct
- B11%
- C16%
- D21%
Explanation
Nominal return = (58,000 - 50,000)/50,000 = 16%. Approximate real return = 16% - 5% = 11%. Hence the correct option is 11%, not 8%. Let me restate: the correct answer is 11%.
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