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

An investor holds 2,000 units of a scheme bought at NAV Rs 25. The scheme declares a dividend (IDCW) of Rs 2 per unit on a face value of Rs 10, and the NAV before the payout was Rs 30. What is the approximate ex-dividend NAV, ignoring expenses and market movement?

The ex-dividend NAV is about Rs 28. When a scheme pays IDCW, the amount distributed leaves the scheme's assets, so NAV falls by the payout per unit: Rs 30 minus Rs 2 equals Rs 28, with expenses and market movement ignored.

  1. ARs 32
  2. BRs 30
  3. CRs 28Correct
  4. DRs 23

Explanation

On payout of the distribution, the NAV of the scheme falls by the amount distributed per unit. Ex-dividend NAV = 30 - 2 = Rs 28. Rs 32 adds instead of subtracting, Rs 30 ignores the payout, and Rs 23 wrongly deducts from the purchase NAV.

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