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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Concept and Role of a Mutual Fund

A scheme has total assets of Rs 520 crore and liabilities of Rs 20 crore, with 25 crore units outstanding. An investor holding 1,000 units redeems after the NAV rises by 10% from the above level, with no exit load. What redemption proceeds does the investor receive?

The investor receives Rs 22,000. Net assets of Rs 500 crore over 25 crore units give an NAV of Rs 20; a 10% rise makes it Rs 22, and 1,000 units redeemed at that NAV with no exit load yield Rs 22,000.

  1. ARs 20,000
  2. BRs 22,000Correct
  3. CRs 21,200
  4. DRs 22,800

Explanation

Net assets = 520 - 20 = Rs 500 crore; NAV = 500/25 = Rs 20. After a 10% rise NAV = Rs 22; proceeds = 1,000 x 22 = Rs 22,000. Rs 20,000 ignores the rise; using total assets without deducting liabilities gives NAV Rs 20.80 and a wrong base.

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