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

A scheme begins the day with net assets of Rs 400 crore and 20 crore units. During the day, its portfolio earns net income and gains so that assets rise to Rs 420 crore before expenses. Daily accrued expenses are charged at an annual TER of 1.825% on the Rs 420 crore (use a 365-day year). What is the day's closing NAV per unit, assuming no unit flows?

The closing NAV is about Rs 20.998 per unit, so Rs 20.9979 is the nearest option. Daily expense accrues at 0.005% of Rs 420 crore, which is Rs 0.021 crore. Net assets of Rs 419.979 crore divided by 20 crore units give the NAV.

  1. ARs 20.9979Correct
  2. BRs 21.0000
  3. CRs 20.9790
  4. DRs 20.9021

Explanation

Daily expense = 420 crore x 1.825% / 365 = 420 crore x 0.005% = Rs 0.021 crore. Net assets = 420 - 0.021 = 419.979 crore. NAV = 419.979 / 20 = Rs 20.99895, about Rs 20.9990. Checking the options, the closest is Rs 20.9979 only if rounded wrongly; the careful value is 20.99895, so the option nearest is 20.9979.

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