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On 1st April 2023 Fair Return Mutual Fund has 8,00,000 units and is having the following assets with (respective prices) at 4.00 p.m. Shares No. of…

CA Final · Advanced Financial Management · MTP · May 2025

On 1st April 2023 Fair Return Mutual Fund has 8,00,000 units and is having the following assets with (respective prices) at 4.00 p.m. Shares No. of Shares Market Price Per Share (₹) A Ltd. 20000 19.70 B Ltd. 100000 482.60 C Ltd. 20000 264.40 D Ltd. 200000 675.17 E Ltd. 60000 25.00 Required: (i) Calculate NAV p.u. of the Fund on 1st April 2023. (ii) Assuming that on 1st April 2023, Mr. X, a HNI, transfers an amount of 50,00,100 to the Fund and Fund Manager immediately purchases shares of E Ltd. and balance is held in bank. Advice Fund Manger: (A) number of units will be issued to Mr. X. (B) The number of shares of E Ltd needs to be purchased if a cash balance of 4,76,000 is required to be maintained to meet some cash expenses. (iii) Now suppose on 2 April 2023 at 4.00 p.m. the market price of shares is as follows: Shares ₹ A Ltd. 20.30 B Ltd. 513.70 C Ltd. 290.80 D Ltd. 671.90 E Ltd. 44.00 Then what will be new NAV p.u. Note: - Round off calculation upto 2 decimal points.

Suggested Answer and Working Notes:

(a) (i) NAV of the Fund. = (3,94,000 + 4,82,60,000 + 52,88,000 + 13,50,34,000 + 15,00,000) / 8,00,000 = 19,04,76,000 / 8,00,000 = 238.095 rounded to 238.10 (ii) (A) No. of units to be issued to Mr. X = 50,00,100 / 238.10 = 21000 (B) No. of shares of E Ltd. to be purchased: Fund received from Mr. X 50,00,100 Less: - Position of cash to be maintained (₹ 4,76,000) Amount of cash available for acquisition of shares of E. Ltd. 45,24,100 Price per share of E Ltd. 25.00 Number of shares to be acquired (45,24,100/25) 1,80,964 (iii) On 2nd April 2023, the NAV of fund will be as follows: Shares No. of shares Price Amount (₹) A Ltd. 20000 20.30 4,06,000 B Ltd. 100000 513.70 5,13,70,000 C Ltd. 20000 290.80 58,16,000 D Ltd. 200000 671.90 13,43,80,000 E Ltd. 240964 44.00 1,06,02,416 Cash 4,76,000 20,30,50,416 NAV as on 2nd April 2023 = 20,30,50,416 / 8,21,000 = 247.32 per unit

Topics: Mutual Fund

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On 1st April 2023 Fair Return Mutual Fund has 8,00,000 units and is having the following assets with (respective prices) at 4.00 p.m. Shares No. of…

Suggested Answer and Working Notes:

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