Question

The NAV of a unit in a mutual fund scheme is Rs 10.5 then find the amount required to buy 500 such units.
(A) 5325 (B) 5235 (C) 532500 (D) 53250

Answer 1

Hint:
NAV stands for “Net Asset Value”. It represents the price at which a mutual fund may be bought by an investor or sold back to a fund house. A mutual fund’s NAV is an indicator of its per unit market value. Here we have to use the formula:
Amount\[\; = {\text{ }}No.{\text{ }}of{\text{ }}units{\text{ }}\times{\text{ }}NAV\]
This question is similar to calculating the price of, say 500 apples. When the cost of one apple is Rs. 10.65. Since we know the number of units and the price of one, we can calculate the total amount required to purchase it.

Complete step by step solution:
NAV of a unit in mutual fund scheme id Rs 10.65
No. of units is 500
Here the ‘Net Asset Value’ for per unit in mutual fund is given as Rs 10.6
The number of units =500
Amount required to buy 500 such units is given as:
Total amount = NAV per unit x no. of units
Total amount \[ = {\text{ }}10.65 \times 500\]
\[ = {\text{ }}5325\]
The total amount to purchase 500 units if the mutual fund scheme is Rs 5325
Therefore, the correct answer is option (A)

Note:
Students must not get confused with the term NAV in mutual funds as given in the question. The mutual funds are divided into units and NAV is the price of one unit of mutual fund. This simple knowledge is sufficient to solve this problem. Also, one must be careful with their calculations, as you can see, they have given the four options with similar looking numerical values to confuse the students. Marking the correct option after solving the question is also a very important part of problem solving.