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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Net Asset Value, Total Expense Ratio and Pricing of Units

An open-ended scheme has an NAV of Rs 40 per unit and an exit load of 1% applies to the redemption. What redemption price per unit will the investor receive?

The redemption price is Rs 39.60 per unit. The exit load of 1% is deducted from the NAV of Rs 40, so the investor receives 99% of NAV, which is Rs 39.60. Adding the load would be wrong because loads at exit reduce the proceeds.

  1. ARs 39.60Correct
  2. BRs 40.40
  3. CRs 39.00
  4. DRs 40.00

Explanation

Repurchase price = NAV x (1 - exit load) = 40 x 0.99 = Rs 39.60. Rs 40.40 wrongly adds the load, as would apply to an entry load, which is no longer permitted. Rs 40.00 ignores the load.

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