Net Asset Value, Total Expense Ratio and Pricing of Units
5 questions. Each answer is explained.
Question 1 of 5Practice · Series V-D — Mutual Fund - Specialized Investment Fund Distributors
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Learn these topics
More units in NISM Series V-D
- The Investment Landscape5
- Concept & Role of a Mutual Fund4
- Legal Structure of Mutual Funds in India3
- Legal and Regulatory Framework7
- Scheme Related Information7
- Fund Distribution and Channel Management Practices4
- Taxation3
- Investor Services10
- Risk, Return and Performance of Funds5
- Mutual Fund Scheme Performance5
- Mutual Fund Scheme Selection10
- Basics of Derivatives10
- Understanding Index5
- Introduction to Forwards and Futures15
- Introduction to Options13
- Strategies Using Equity Futures and Equity Options9
- Introduction to Interest Rate, Interest Rate Instruments and Fixed Income Markets6
- Interest Rate Derivatives2
- Exchange Traded Interest Rate Futures10
- Exchange Traded Interest Rate Options6
- Strategies Using Interest Rate Derivatives6
Exam format
| Questions | 150 · 1 mark each |
|---|---|
| Duration | 180 min · 3 hours |
| Pass mark | 60% · 90 of 150 marks |
| Negative marking | 10% · 0.1 marks off per wrong answer |
| Certificate validity | 3 years · from the date of the examination |
| Marks for this unit | 5 of 150 marks (3.3%) |
Source: July 2026 Annexure I, Chapter 7: Net Asset Value, Total Expense Ratio and Pricing of Units
NISM Series V-D Mutual Fund - Specialized Investment Fund Distributors
Exam rules read on NISM's site on 30 October 2026. Check the current rules on NISM's site (opens in a new tab)
What these answers assume, and when it was last checked
Each question uses the rules listed below. We last checked them on 5 September 2026. A Budget or SEBI circular can change a rate, lot size or expiry day. If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.
- NSE uses Tuesday expiry and BSE uses Thursday expiry. This applies from 1 September 2025.
- The January 2026 index lot sizes are NIFTY 65, BANKNIFTY 30, FINNIFTY 60, MIDCPNIFTY 120 and NIFTYNXT50 25.
- The October 2024 SEBI framework sets a minimum index contract value of Rs 15–20 lakh. Each exchange may list one weekly benchmark index.
- Option buyers pay the premium upfront from 1 February 2025. A short index option has an extra 2% Extreme Loss Margin on expiry day from 20 November 2024.
- Equity short-term capital gains are taxed at 20%. Long-term gains are taxed at 12.5% above Rs 1.25 lakh. Both rates apply from 23 July 2024.
- F&O income is non-speculative business income in ITR-3. NSE equity derivatives trade from 9:15 a.m. to 3:40 p.m.
- The final ten-minute session began on 3 August 2026. It aligns with the cash market Closing Auction Session.
- Most Securities Transaction Tax questions test the base and who pays. On an option sale, it is the premium and the seller pays. On a futures sale, it is the traded value and the seller pays.
- On exercise, Securities Transaction Tax uses intrinsic value: settlement price minus strike price. The buyer pays it.
- Two questions test the current rate. From 1 April 2026, option sales carry 0.15% on the premium and futures sales carry 0.05% on traded price. The earlier rates were 0.10% and 0.02% from 1 October 2024.
- This section uses the T+1 rolling settlement cycle. Obligations are fixed on T+1. A short delivery goes to buy-in auction on T+1 and settles on T+2.
- The trade-for-trade surveillance segment uses direct close-out. Funds pay in by 10:30 a.m. and pay out on or after 1:30 p.m. on settlement day.
- Securities pay in to the settlement pool by 10:30 a.m. They pay out directly to the client’s demat account by 3:30 p.m.
- The 3:30 p.m. deadline replaced 1:30 p.m. under SEBI’s 10 October 2024 circular. Direct client credit was required by SEBI’s 5 June 2024 circular.
- The optional T+0 cycle trades until 1:30 p.m. Obligations are fixed by 2:30 p.m. on the trade day. An early pay-in shortage is closed out directly.
- Cash-market Value at Risk margin is six times exponentially weighted moving-average volatility. It has a 9% floor for Group I, a 21.5% floor for Group II, and a fixed 50% or 75% level for Group III.
- Extreme Loss Margin is 3.5% for a share and 2% for a broad-market-index exchange traded fund. Mark-to-market margin is collected before the next day’s trading. The trade-for-trade segment has 100% upfront margin.
- Close-out uses the higher of the highest price from trade day to auction day and 20% above the auction day’s official close.
- A funds shortage costs 0.07% a day. The trading facility is withdrawn at a shortage of Rs 5 lakh or more.
- SCORES allows 21 calendar days, then two 15-day review levels. Online Dispute Resolution moves from conciliation to arbitration after the market participant and SCORES steps.
- At NSE, the Investor Protection Fund limit is Rs 35 lakh per investor for each defaulting or expelled member. This applies to claims arising after 13 August 2024.
- A Basic Services Demat Account has no annual maintenance charge up to Rs 4 lakh of holdings. It costs up to Rs 100 above that, until the Rs 10 lakh eligibility ceiling. These slabs apply from 1 September 2024.
- The rupee pairs are USD-INR, EUR-INR, GBP-INR and JPY-INR. The cross-currency pairs are EUR-USD, GBP-USD and USD-JPY.
- Each contract covers 1,000 units of the foreign currency, except JPY-INR. JPY-INR covers 100,000 yen and is quoted in rupees per 100 yen.
- The tick is 0.25 paise, or Rs 0.0025. It equals Rs 2.50 a contract.
- Rupee pairs trade from 9:00 a.m. to 5:00 p.m. A monthly contract stops trading at 12:30 p.m. two working days before the expiry month’s last business day.
- Final settlement is in cash at the FBIL reference rate on expiry day. FBIL, Financial Benchmarks India, has published this rate in place of the Reserve Bank since 2018. Premium-style European options are quoted in rupees. The buyer pays the premium in cash on T+1.
- Daily settlement is on T+1 and final settlement is on T+2.
- NSE Clearing circular 026/2020 sets SPAN margin plus Extreme Loss Margin. The futures margin is 0.50% for USD-INR, 0.15% for EUR-INR, 0.25% for GBP-INR and 0.35% for JPY-INR. A short option has 0.75%. These figures apply from 1 June 2020.
- A USD-INR client may hold 6% of total open interest or USD 20 million, whichever is higher. A trading member may hold 15% or USD 100 million.
- A resident user has one USD 100 million equivalent limit across all rupee pairs and exchanges. No document is needed below that limit, but a valid underlying contracted exposure must still exist. This clarification applies from 3 May 2024.
- The currency segment has no Securities Transaction Tax.
The exam figures (questions, time, pass mark, negative marking and certificate validity) come from NISM's own pages, read on 30 October 2026. Timed practice uses the same figures. Study with the official workbook as well.
The written-out answers on this page are hidden while your timed set runs.
All 5 questions on Net Asset Value, Total Expense Ratio and Pricing of Units, with answers
Q1A scheme has investments and other assets of ₹51 crore, liabilities of ₹1 crore and 2 crore units outstanding. What is NAV per unit?
Option A. ₹50
Why it is wrong: This treats the net assets of ₹50 crore as if only 1 crore units were outstanding, instead of the stated 2 crore units.
Option B. ₹25 — Correct answer
Option C. ₹25.50
Why it is wrong: This ignores liabilities.
Option D. ₹26
Why it is wrong: This adds liabilities instead of subtracting them.
Answer: B. NAV = (₹51 crore − ₹1 crore)/2 crore units = ₹25 per unit. The same scale must be used for assets and units. Remember: A unit represents a share of net assets, after liabilities.
Hint, shown before you answer in practice mode: Use net assets, then divide by the number of units.
V-D-031easynumerical
Q2An investor redeems 2,000 units at an applicable NAV of ₹30. The stated scheme terms charge an exit load of 1% of the gross redemption amount for these units. Ignore taxes and other charges. What cash is paid? Assumptions: The 1% exit load is an explicitly supplied scheme term. No tax or other deduction applies.
Option A. ₹60,600
Why it is wrong: This adds the load rather than deducting it.
Option B. ₹59,980
Why it is wrong: This treats the 1% load as ₹0.01 per unit instead of 1% of value.
Option C. ₹60,000
Why it is wrong: This is the gross value before the exit load.
Option D. ₹59,400 — Correct answer
Answer: D. Gross proceeds are 2,000 × ₹30 = ₹60,000. The ₹600 exit load leaves ₹59,400. Remember: A transaction price or net payout can differ from the quoted NAV.
Hint, shown before you answer in practice mode: Calculate gross proceeds and deduct 1% of that amount.
V-D-032mediumnumerical
Q3For an expense-accrual illustration, assume a scheme has a constant expense base of ₹20 crore, an annual expense rate of 1.50%, and accrues expenses on actual days divided by 365. What is the 30-day expense, rounded to the nearest rupee? Assumptions: The base is constant and the actual/365 convention is supplied for this illustration.
Option A. ₹2,50,000
Why it is wrong: This assumes each month is exactly one-twelfth of a year instead of using the stated day basis.
Option B. ₹2,46,575 — Correct answer
Option C. ₹24,658
Why it is wrong: This understates the specified ₹20 crore base by a factor of ten.
Option D. ₹30,00,000
Why it is wrong: This is the expense for a full year, not 30 days.
Answer: B. Expense = ₹20,00,00,000 × 1.50% × 30/365 = ₹2,46,575.34, rounded to ₹2,46,575. Actual accrual calculations must follow the applicable expense base and day convention. Remember: Annual expense percentages must be converted to the relevant period consistently.
Hint, shown before you answer in practice mode: Apply the annual rate to the stated base and multiply by 30/365.
V-D-033hardnumerical
Q4A credit event leads to an authorised segregated portfolio. An investor now has units in both the main and segregated portfolios, with disclosed NAVs of ₹18 and ₹2 respectively and the same 1,000-unit entitlement in each. What is the sound interpretation of the ₹2 segregated NAV? Assumptions: Segregation and unit entitlements are validly established as stated. The question tests interpretation rather than the eligibility rules.
Option A. It means the investor must automatically pay ₹2,000 more into the segregated portfolio
Why it is wrong: A reported NAV is not itself a new subscription obligation.
Option B. It is a valuation of the separated exposure, not a guarantee that ₹2 per unit will be recovered — Correct answer
Option C. It proves that the main portfolio is now free of every future investment and credit risk
Why it is wrong: Removing one exposure does not remove all other risks.
Option D. It is guaranteed extra income unrelated to the original holding, payable on a fixed date
Why it is wrong: Segregation separates existing exposure. It does not create free additional wealth.
Answer: B. The segregated portfolio represents the separated assets and their risks. Its NAV is a valuation estimate under the applicable process. Actual recoveries and timing may differ. Remember: Segregation changes how exposure is tracked, not the certainty of its recovery.
Hint, shown before you answer in practice mode: Separate valuation and entitlement from certainty of recovery.
V-D-034mediumconceptual
Q5For a simplified valuation, a perpetual bond pays ₹80 annually forever, with the next payment one year from now. If its required annual yield rises from 8% to 10%, what happens to its value? Assume no default, call option or other feature. Assumptions: This is a mathematical level perpetuity, not a claim about valuation conventions for every regulatory capital bond.
Option A. It stays at ₹80 because the coupon is unchanged
Why it is wrong: A coupon payment is not the value of the entire payment stream.
Option B. It falls from ₹1,000 to ₹800, a 20% decline — Correct answer
Option C. It falls by only 2% because the yield rose by two percentage points
Why it is wrong: A yield change in percentage points is not the same as the percentage price change.
Option D. It rises from ₹800 to ₹1,000, a 25% gain
Why it is wrong: This reverses the price effect of a higher required yield.
Answer: B. Initial value is ₹80/0.08 = ₹1,000. Revised value is ₹80/0.10 = ₹800. The fall of ₹200 is 20% of the original value. Remember: A fixed payment stream becomes less valuable when its required yield rises.
Hint, shown before you answer in practice mode: For this perpetual level payment, value equals annual coupon divided by required yield.
V-D-035hardnumerical
Net Asset Value, Total Expense Ratio and Pricing of Units: common questions
How many practice questions are there on Net Asset Value, Total Expense Ratio and Pricing of Units?
5 questions, all written out on this page with the correct answer and why each other option is wrong. This unit is one of the 22 practice topics for NISM Series V-D, which has 150 questions in total.
Are these real NISM Series V-D questions on Net Asset Value, Total Expense Ratio and Pricing of Units?
No. LearnNifty wrote every question from NISM's public syllabus. NISM does not publish its question bank, so nobody can offer you the real paper. Use these questions to check that an idea has gone in. Use the official NISM workbook to see what is examined.
How much of the NISM Series V-D exam is Net Asset Value, Total Expense Ratio and Pricing of Units?
NISM's published syllabus outline gives it 5 of the paper's 150 marks, or 3.3% of the exam. It is quoted from the outline, not estimated. The published unit it comes from: July 2026 Annexure I, Chapter 7: Net Asset Value, Total Expense Ratio and Pricing of Units
Does negative marking apply to NISM Series V-D?
Yes. NISM takes off 10% of a question's marks for a wrong answer. On a 1-mark question that is 0.1 marks off. A blank question earns nothing and loses nothing, so a wrong guess costs marks on this paper. Timed practice here uses the same rule.
Are these practice questions kept up to date?
Each question is written against the rules printed on this page, last checked on 5 September 2026. A Budget or a SEBI circular can change a rate, a lot size or an expiry day. If one of those rules changes before your exam, treat the questions that use it as out of date. Then check NISM's current workbook.
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