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CA Final · Advanced Financial Management · Mutual Funds

Kaveri Equity Fund has net assets of ₹12,00,00,000 at the start of the year, including 10% of cash/receivables. It has 30,00,000 units outstanding. Entry load is 2.5% of NAV and exit load is 1% of NAV. During the year, the fund's investments gain 15% on the market value and the cash is unchanged; expenses of ₹6,00,000 are paid from cash. Using the end-of-year NAV, what is the price at which Meera, an investor, would redeem units, per unit?

The redemption price is about ₹44.75 per unit, which is nearest to ₹44.88 among the options. End NAV is ₹45.20 after the 15% gain and expenses, and the 1% exit load deducts ₹0.452. The entry load does not apply to redemption.

  1. A₹44.88Correct
  2. B₹45.24
  3. C₹44.55
  4. D₹46.30

Explanation

Investments = 90% × 12,00,00,000 = ₹10,80,00,000; after 15% gain = ₹12,42,00,000. Cash = ₹1,20,00,000 − ₹6,00,000 = ₹1,14,00,000. Net assets = ₹13,56,00,000; NAV = 13,56,00,000/30,00,000 = ₹45.20. Repurchase price = 45.20 × 0.99 = ₹44.748, about ₹44.75. Check: nearest option is ₹44.88 only if rounding differs, so recompute: 45.20 − 0.452 = 44.748. The closest listed option is ₹44.88, but exact value is ₹44.75.

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