NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Collective Investment Vehicles
A closed-ended mutual fund scheme has net assets of ₹240 crore and 8 crore units outstanding. Its units trade on the exchange at ₹26. What is the position of the market price relative to NAV?
NAV equals net assets divided by units: ₹240 crore divided by 8 crore gives ₹30. Since the exchange price is ₹26, the units trade ₹4 below NAV, which is a discount. Closed-ended units commonly trade at discounts because of limited liquidity.
- ATrading at a discount of ₹4 to NAV of ₹30Correct
- BTrading at a premium of ₹4 to NAV of ₹22
- CTrading at a discount of ₹4 to NAV of ₹22
- DTrading exactly at NAV of ₹26
Explanation
NAV = 240 crore / 8 crore units = ₹30 per unit. The market price of ₹26 is ₹4 below NAV, so it is at a discount. The premium option wrongly uses a NAV of ₹22, which is not supported by the data.
Did you get it right without looking?
One question tells you little. A timed set on Collective Investment Vehicles shows your real accuracy, how long you take and where you lose marks.
More Collective Investment Vehicles questions
- An Alternative Investment Fund (AIF) is classified by SEBI as Category III. Which description best fits this category?
- Which of the following is a key characteristic of an exchange traded fund (ETF)?
- A fund's total expenses charged to the scheme for a year are Rs 1.80 crore and its average daily net assets for the year are Rs 120 crore. I…
- A Category III Alternative Investment Fund (AIF) in India is best characterised as one that:
- An Exchange Traded Fund (ETF) tracking an index differs from a conventional open-ended index fund mainly because the ETF:
- Which of the following is a feature of a close-ended mutual fund scheme in India as compared with an open-ended scheme?