NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Concept and Role of a Mutual Fund
A scheme has net assets of Rs 240 crore and 8 crore units outstanding. An investor bought units at an NAV of Rs 24 one year ago and redeems today with no exit load. What is the investor's absolute return, ignoring taxes?
The absolute return is 25%. Today's NAV is Rs 240 crore divided by 8 crore units, which is Rs 30. The gain of Rs 6 over the purchase NAV of Rs 24 gives 25% on the original investment base.
- A20%
- B25%Correct
- C30%
- D6%
Explanation
Current NAV = 240 crore / 8 crore units = Rs 30. Absolute return = (30 - 24) / 24 = 25%. Check: 24 x 1.25 = 30. The 20% result wrongly uses the current NAV as the base, (30 - 24) / 30.
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