CA Final · Advanced Financial Management · Mutual Funds
A fund's repurchase price is ₹49.50 per unit after an exit load of 1% of NAV and no entry load. What is the NAV per unit and the price at which units would be sold if the fund instead charged a 2% entry load on that NAV?
NAV is ₹50.00 and the sale price is ₹51.00. Since the load is a percentage of NAV, the repurchase price of ₹49.50 equals 99% of NAV, giving ₹50. Adding a 2% entry load to ₹50 gives ₹51.
- ANAV ₹50.00; sale price ₹51.00Correct
- BNAV ₹49.99; sale price ₹50.99
- CNAV ₹50.00; sale price ₹50.50
- DNAV ₹49.00; sale price ₹49.98
Explanation
Repurchase price = NAV × (1 − 0.01) = 0.99 NAV = 49.50, so NAV = ₹50.00. Sale price with a 2% entry load = 50 × 1.02 = ₹51.00. The ₹49.99 option wrongly computes NAV as 49.50 + 1% of 49.50, using the wrong base for the load.
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