CMA Final · Strategic Financial Management · Mutual Funds
Aarav Growth Fund has total assets of Rs 52,00,000 at market value and external liabilities of Rs 2,00,000. It has 4,00,000 units outstanding. A new investor buys units at NAV with an entry load of 2% on NAV. What price per unit does the investor pay?
Net assets are Rs 50,00,000 on 4,00,000 units, so NAV is Rs 12.50. With a 2% entry load the investor pays 12.50 x 1.02 = Rs 12.75 per unit. The load is added to NAV, and liabilities must be deducted first.
- ARs 12.50
- BRs 12.75
- CRs 13.00
- DRs 13.26Correct
Explanation
NAV = (52,00,000 - 2,00,000)/4,00,000 = Rs 12.50. Entry load 2% on NAV = Rs 0.25, so the purchase price is 12.50 x 1.02 = Rs 12.75. Check: option Rs 12.50 ignores the load; Rs 13.26 results from using gross assets (13.00) with load.
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