Mathematics · Financial Mathematics
M/s. Corporate Finance Ltd. (CFL) invests Rupees 5 Crore in a new Mutual Fund scheme on its launch date, when the Net Asset Value (NAV) is set at Rupees 10 per unit. After one year, the market value of the fund's total investments is Rupees 150 Crore, and the fund has 10 Crore units outstanding. During this year, the fund incurred total expenses of Rupees2 Crore. Which of the following statements correctly identifies the definition of NAV, calculates the NAV per unit after one year (before adjusting for expenses), and calculates the annualized Expense Ratio?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Definition of NAV: Total income of the fund; NAV (Before Expense): Rupees 13.00; Expense Ratio: 1.50%.
- 2Definition of NAV: Market value of the fund's net assets divided by the total number of units outstanding; NAV (Before Expense): Rupees 15.00; Expense Ratio: 1.33%.✓
- 3Definition of NAV: Sum of all liabilities and assets; NAV (Before Expense): Rupees 13.00; Expense Ratio: 1.33%.
- 4Definition of NAV: Total market value of the fund's equity holdings; NAV (Before Expense): Rupees 15.00; Expense Ratio: 1.50%.
Correct answer
Definition of NAV: Market value of the fund's net assets divided by the total number of units outstanding; NAV (Before Expense): Rupees 15.00; Expense Ratio: 1.33%.
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