CMA Final · Strategic Financial Management · Mutual Funds
Ananya invests ₹1,00,000 in a mutual fund scheme when NAV is ₹25.00 and the entry load is 2%. Entry load is charged on NAV, so the purchase price is NAV plus load. How many units does she receive, assuming the whole amount is invested?
The entry load raises the purchase price to ₹25.50 per unit, which is 25 plus 2%. Dividing ₹1,00,000 by ₹25.50 gives about 3,921.57 units. Ignoring the load would wrongly give 4,000 units.
- A4,000 units
- B3,921.57 unitsCorrect
- C4,080 units
- D3,846.15 units
Explanation
Purchase price = 25 × 1.02 = ₹25.50. Units = 1,00,000 / 25.50 = 3,921.57. 4,000 ignores the load; 4,080 wrongly reduces the price by the load.
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