NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Investing in Stocks
Rohan bought a share for Rs 400, received dividends of Rs 20 during the year and sold the share at Rs 460 at the end of the year. What is his holding period return for the year?
The holding period return is 20%. The capital gain is Rs 60 and the dividend is Rs 20, so total gain is Rs 80 on an initial investment of Rs 400. Ignoring the dividend would give 15%, which understates the return.
- A15%
- B20%Correct
- C12%
- D5%
Explanation
Capital gain = 460 - 400 = Rs 60. Add dividend Rs 20 to get total return Rs 80. Return = 80 / 400 = 20%. Counting only the capital gain gives 15%, which misses the dividend.
Did you get it right without looking?
One question tells you little. A timed set on Investing in Stocks shows your real accuracy, how long you take and where you lose marks.
More Investing in Stocks questions
- A stock trades at Rs 200 per share, has earnings per share of Rs 10 and pays a dividend of Rs 4 per share. What is its dividend payout ratio…
- Caselet: Meera, a 40-year-old client, expects a stock to pay a dividend of Rs 12 next year. Dividends are expected to grow at a constant 6% …
- In the context of equity share capital, which of the following best describes a 'sweat equity share' issued by an Indian company?
- 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?
- Mr Sharma bought 100 shares of an Indian company at Rs 500 each. After one year he received a dividend of Rs 15 per share and sold the share…
- Which of the following corporate actions leaves the total market capitalisation of a company unchanged, in theory, while reducing the market…