Multiple choice

The net asset value of a mutual fund investment is calculated as

  1. (market value of the securities/number of units on a particular day) – the scheme expenses

  2. market value of the securities less the scheme expenses/number of units on a particular day

  3. market value of the securities/number of units on a particular day

  4. market value of the securities plus the scheme expenses/number of units on a particular day
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B Correct answer
Explanation

The performance of a particular scheme of a mutual fund is denoted by Net Asset Value (NAV). Mutual funds invest the money, collected from the investors, in securities market. Net Asset Value is the market value of the securities held by the scheme. Since market value of securities changes every day, NAV of a scheme also varies on day to day basis. The NAV per unit is the market value of securities of a scheme (from this all expenses are subtracted) divided by the total number of units of the scheme on any particular date.

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