CA final SFM May 2018

Main question was what was the date of original investment?? 

Seriously I think Bonus Q was Incomplete. Is anyone else?

average

get analysis of sfm paper may 2018 by respected ca mayank kothari.

Calculation of Front-End Load or Entry Load:

Calculation of Back-End Load or Exit Load:

Examples showing the calculation of entry load and exit load are given below:

1. Entry Load:

Charged at the time of entering into the scheme. The entry load percentage is added to the NAV at the time of allotment of units.

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For example, if an open-end fund’s per unit is Rs.11 with front load of 2%. The price at which an investor can buy a unit is Rs.11.22. In other words, Rs.100 would buy units = (Rs.100 – Rs.2)/11 = 8.9 units.

2. Exit Load:

Charged at the time of redeeming, transfer between schemes. The exit load percentage is deducted from the NAV at the time of redemption or transfer between schemes.

For example, if the redemption price is Rs.10.70, with a back-end load of 2%, the exit load charged by the fund amounts to Rs.0.21. So, the net sale proceeds will be Rs.10.70 – Rs.0.21 = Rs.10.49

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In other words, sale of 50 units would not fetch 50 units x Rs.10.70 = Rs.535 but only 50 units x Rs.10.49 = Rs.524.5

Problem:

The unit price of TSS Scheme of a mutual fund is Rs.10. The public offer price (POP) of the unit is Rs.10.204 and the redemption price is Rs.9.80.

Calculate:

(i) Front-end Load, and

(ii) Back-end Load.

(i) Calculation of Front-End Load (F):

(ii) Calculation of Back-End Load (B):