CMA Final · Strategic Financial Management · Mutual Funds
A mutual fund scheme has net assets (after all liabilities) of Rs 62,40,000 and 4,00,000 units outstanding. An investor wishes to buy units and the scheme charges an entry load of 2% on NAV. What is the purchase price per unit?
The purchase price is about Rs 15.91 per unit. NAV is Rs 62,40,000 divided by 4,00,000 units, which is Rs 15.60. The 2% entry load is added to NAV, giving 15.60 x 1.02 = Rs 15.912. Deducting the load instead would be the repurchase-side treatment.
- ARs 15.60
- BRs 15.29
- CRs 15.91Correct
- DRs 16.20
Explanation
NAV = 62,40,000 / 4,00,000 = Rs 15.60. Entry load = 2% of 15.60 = Rs 0.312. Purchase price = 15.60 + 0.312 = Rs 15.912, i.e. about Rs 15.91. Rs 15.29 wrongly deducts the load from NAV.
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