NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Introduction to Investment
Rohan invested Rs 1,00,000 in a company's shares. After one year the share price rose so that the holding was worth Rs 1,12,000, and he also received dividends of Rs 3,000 during the year. What is his holding period return?
The holding period return is 15%. Capital gain of Rs 12,000 plus dividend of Rs 3,000 gives total gain of Rs 15,000, which divided by the initial investment of Rs 1,00,000 equals 15 percent.
- A12%
- B15%Correct
- C3%
- D13%
Explanation
Holding period return = (ending value - beginning value + income) / beginning value = (1,12,000 - 1,00,000 + 3,000) / 1,00,000 = 15,000 / 1,00,000 = 15%. The 12% option ignores the dividend. The 3% option counts only the dividend. The 13% option is a wrong sum.
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