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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Investing in Stocks

Rohit bought a share of a company for Rs 200 and received dividends of Rs 8 during the year. At year end he sold it for Rs 230. What is his holding period return for the year?

The holding period return is 19%. Capital gain of Rs 30 plus dividend of Rs 8 gives total return of Rs 38, which divided by the purchase price of Rs 200 equals 19%. Leaving out the dividend would understate the return at 15%.

  1. A19%Correct
  2. B15%
  3. C4%
  4. D21.5%

Explanation

Holding period return = (sale price - purchase price + dividend)/purchase price = (230 - 200 + 8)/200 = 38/200 = 19%. Ignoring the dividend gives 15%; dividend yield alone is 4%; dividing by sale price gives about 16.5%, and 21.5% is not derived from the data correctly.

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