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

A scheme's net assets are Rs 100 crore with 10 crore units at the start. The AMC then allots 2 crore new units at the prevailing NAV, and the market value of the portfolio is unchanged. After the allotment, what is the NAV per unit?

The NAV stays at Rs 10. Initial NAV is Rs 100 crore over 10 crore units. New units issued at Rs 10 add Rs 20 crore, making Rs 120 crore over 12 crore units, which is again Rs 10, so existing investors are not diluted.

  1. ARs 10Correct
  2. BRs 8.33
  3. CRs 12
  4. DRs 11.67

Explanation

Initial NAV = 100/10 = Rs 10. New units at Rs 10 bring in Rs 20 crore, so net assets become Rs 120 crore with 12 crore units, giving Rs 10. Issuing units at NAV does not dilute existing investors. Rs 8.33 wrongly ignores the new money (100/12).

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