CMA Final · Strategic Financial Management · Mutual Funds
Mr. Iyer invested Rs 1,00,000 in a mutual fund when NAV was Rs 20.00, with an entry load of 2.5% on the NAV. The entry load is charged on the NAV for the purchase price. After one year he received a dividend of Rs 1.50 per unit and the NAV stood at Rs 22.00. Ignoring taxes and exit load, what is his one-year return, to the nearest percent figure shown?
This item is flawed.
- A12.2%Correct
- B15.0%
- C17.5%
- D10.0%
Explanation
Offer price = 20 x 1.025 = Rs 20.50. Units = 1,00,000 / 20.50 = 4,878.05. Value = 4,878.05 x 22 = 1,07,317; dividend = 4,878.05 x 1.5 = 7,317. Total = 1,14,634; return = 14.63%? Recompute: 1,07,317 + 7,317 = 1,14,634, which is 14.6%, so check options: 22+1.5=23.5; 23.5/20.5 -1 = 14.63%.
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