NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Investing in Stocks
Rohan bought a share at Rs 200. Over the year, it paid a dividend of Rs 8 and he sold it at Rs 230. What is his holding period return?
Holding period return equals the dividend plus the capital gain divided by the purchase price. Here that is Rs 8 plus Rs 30, which is Rs 38, divided by Rs 200, giving 19%. Ignoring the dividend would wrongly give 15%.
- A19%Correct
- B15%
- C4%
- D11.5%
Explanation
Total gain = capital gain 30 + dividend 8 = Rs 38. Return = 38/200 = 19%. The 15% option ignores the dividend. The 4% option counts only the dividend yield. The 11.5% option divides by the sale price incorrectly (or halves the gain).
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