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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's NAV is Rs 40.00. It charges an exit load of 1% if units are redeemed within one year. An investor redeems 500 units after eight months. What amount is received, ignoring other charges and taxes?

The investor receives Rs 19,800. Redemption at NAV gives Rs 20,000, but redeeming after eight months falls within the one-year exit load period, so 1% (Rs 200) is deducted, leaving Rs 19,800.

  1. ARs 19,000
  2. BRs 19,800Correct
  3. CRs 20,000
  4. DRs 20,200

Explanation

Redemption value before load = 500 x 40 = Rs 20,000. Exit load is 1% of NAV, i.e. Rs 200, deducted because the holding is under one year. Proceeds = Rs 19,800. Rs 20,000 ignores the load.

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