Mr. X invested - 1,00,000 at a face value of 10 per unit in a dividend reinvestment plan in a mutual fund during its initial public offering on 1 st…

CA Final · Advanced Financial Management · PYQS · November 2024
Mr. X invested - 1,00,000 at a face value of 10 per unit in a dividend reinvestment plan in a mutual fund during its initial public offering on 1 st July, 2022. On 31 st March, 2023, the mutual fund declared a dividend of 10%. At that time Mr. X calculated his holding period return to be 115% On 31 March, 2024 the mutual fund declared a dividend of 20% and Mr. X redeemed all his investment and calculated his holding period return to be 193.134%. You are required to calculate (i) The NAVs as on 31.03.2023 and 31.03.2024. (ii) Calculate the total units redeemed.

Suggested Answer and Working Notes:

(i) Yield for 9 months = 115% Market value of Investments as on 31.03.2023 = 1,00,000 + (1,00,000 x 115%) = 2,15,000/- Therefore, NAV as on 31.03.2023 = (2,15,000-10,000)/10,000 = 20.50 (NAV would stand reduced to the extent of dividend payout, being (₹ 1,00,000 x 10%) = 10,000 Since dividend was reinvested by Mr. X, additional units acquired: = 10,000 /20.50 = 487.80 units Therefore, total units as on 31.03.2023 = 10,000 + 487.80 = 10,487.80 Alternately, total units as on 31.03.2023 = (2,15,000/20.50) = 10,487.80 Dividend as on 31.03.2024 = 10,487.80 x 10 x 0.2 = 20,975.60 Market Value of Investment as on 31.03.2024 = 1,00,000 +1,00,000(193.134%) = 2,93,134 Thus, NAV per Unit as on 31.03.2024 = ₹ (2,93,134-20,975.60) / 10,487.80 = 25.95 (ii) Calculation of total numbers of Units redeemed No. of Units issued on 31.03.2024 = 20,975.60 / 25.95 = 808.31 units Thus, total number of units redeemed = 10487.80 + 808.31 = 11296.11 units

Topics: Mutual Fund

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