NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Fund Distribution and Channel Management Practices
An investor invests Rs 3,00,000 in a regular plan of a scheme and the distributor is paid a trail commission of 0.80% per annum of the average assets. Assuming the investment value stays at Rs 3,00,000 for the full year, what is the annual trail commission payable?
The annual trail commission is Rs 2,400, found by applying 0.80% to the Rs 3,00,000 held through the year. Multiplying 3,00,000 by 0.008 gives 2,400. Other figures arise from misplacing the decimal in the percentage.
- ARs 2,400Correct
- BRs 24,000
- CRs 4,000
- DRs 240
Explanation
Trail commission = 0.80% of 3,00,000 = 3,00,000 x 0.008 = Rs 2,400. Rs 24,000 uses 8%, Rs 240 uses 0.08%, and Rs 4,000 uses 1.33%, all wrong rates.
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