The net asset value Select one a is reduced by the loading

The net asset value ____________________ .

Select one:

a. is reduced by the loading fee

b. declines if the value of the fund\'s assets are reduced.

c. measures the quality of the fund\'s management

d. is the price of an investment company\'s shares

Solution

b. declines if the value of fund\'s assets are reduced. This is because the net asset value is arrived at by dividing the total value of net assets with number of units.

Net Asset Value per unit=Total Value of net assets of the fund/No.of units of the fund

Thus, the net asset value per unit is directly proportionate to value of net assets and it declines when the value of assets is reduced.