CS Executive · Corporate Accounting and Financial Management · Security Analysis
Shares of Kaveri Textiles Ltd. were bought at ₹200, a dividend of ₹10 was received during the year, and the share was sold at ₹216 at year end. What is the holding period return?
The holding period return is 13%. Total gain is the dividend of ₹10 plus the capital gain of ₹16, which is ₹26, divided by the purchase price of ₹200. Ignoring the dividend would understate the return at 8%.
- A8%
- B13%Correct
- C10%
- D5%
Explanation
Holding period return = (dividend + price change) / opening price = (10 + 16) / 200 = 26/200 = 13%. Option 8% counts only the capital gain and ignores the dividend. Option 5% counts only the dividend yield.
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