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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Net Asset Value, Total Expense Ratio and Pricing of Units

A investor invests Rs 50,000 in a regular plan of a scheme with no entry load when the NAV is Rs 25.00. The scheme has no exit load for the investor's holding period. After allotment, how many units does the investor hold?

The investor holds 2,000 units. Since SEBI does not permit entry load, the full Rs 50,000 is invested at the applicable NAV of Rs 25.00, and dividing 50,000 by 25 gives 2,000 units.

  1. A1,500 units
  2. B1,800 units
  3. C2,000 unitsCorrect
  4. D2,500 units

Explanation

Entry load is not permitted in India, so units are allotted at the applicable NAV. Units = 50,000 / 25 = 2,000. The figure 2,500 would result from using a NAV of Rs 20, which is not given.

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