NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Fund Distribution and Channel Management Practices
A distributor earns trail commission of 0.80% per annum on average assets of Rs 5,00,00,000 held by clients through regular plans over a year. The commission is paid evenly. What is the commission earned for one quarter (a quarter of the year)?
The quarterly commission is Rs 1,00,000. Annual trail commission is 0.80% of Rs 5 crore, which equals Rs 4,00,000, and dividing by four for one quarter gives Rs 1,00,000.
- ARs 1,00,000Correct
- BRs 4,00,000
- CRs 40,000
- DRs 10,00,000
Explanation
Annual commission = 0.80% × 5,00,00,000 = Rs 4,00,000. One quarter = 4,00,000 ÷ 4 = Rs 1,00,000. Rs 4,00,000 is the full-year figure, Rs 40,000 misplaces the decimal, and Rs 10,00,000 uses the wrong rate.
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