CA Final · Advanced Financial Management · Mutual Funds
Arvind holds 10,000 units of a debt fund at NAV Rs 50. He sets up a monthly SWP of Rs 10,000. At the end of month 1 the NAV is Rs 50 and at the end of month 2 it is Rs 40. Ignoring exit load and tax, how many units remain after the two withdrawals?
9,550 units remain. The first Rs 10,000 withdrawal redeems 200 units at Rs 50 and the second redeems 250 units at Rs 40, totalling 450 units, so 10,000 minus 450 leaves 9,550. A lower NAV means more units are redeemed.
- A9,550Correct
- B9,600
- C9,450
- D9,500
Explanation
Month 1 redeems 10,000/50 = 200 units. Month 2 redeems 10,000/40 = 250 units. Total redeemed = 450, so remaining = 10,000 - 450 = 9,550. Using a constant NAV of Rs 50 for both months would give 400 redeemed and 9,600, which is wrong.
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