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

Anita invests Rs 50,000 in a regular plan of an equity scheme. The NAV on the applicable day is Rs 25.00 and there is no entry load. How many units is she allotted, and what does a stamp duty of 0.005% on the purchase mean for her allotment?

She is allotted about 1,999.90 units. Stamp duty of 0.005% on Rs 50,000 is Rs 2.50, which is deducted from the investment. The net Rs 49,997.50 divided by the NAV of Rs 25 gives 1,999.90 units.

  1. A2,000 units; the duty is deducted from the investment so units are slightly fewer
  2. B2,000 units exactly; the duty is paid by the AMC separately
  3. C2,000.00 units; stamp duty is added on top of the investment amount
  4. D1,999.90 units approximately; the duty is deducted from the amount investedCorrect

Explanation

Stamp duty of 0.005% on Rs 50,000 is Rs 2.50. Net invested is Rs 49,997.50, giving 49,997.50/25 = 1,999.90 units. Option 1 is wrong because it states 2,000 units while saying fewer units. The duty is deducted from the amount invested.

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