R is holding 2000 units of a equity-oriented scheme of a mutual fund and 1000 units of a debt scheme of a mutual fund. On 7th June, 2020 he is interested to redeem these units. Prevailing net asset value (NAV) of these u

CS Executive · Securities Laws and Capital Markets · PYQS · June 2021
R is holding 2000 units of a equity-oriented scheme of a mutual fund and 1000 units of a debt scheme of a mutual fund. On 7th June, 2020 he is interested to redeem these units. Prevailing net asset value (NAV) of these units are as under: Date | Net Asset Value (NAV) | Equity-oriented scheme (in ₹) | Debt scheme (in ₹) 6th June | 45 | 35 7th June | 46 | 34 8th June | 47 | 33 He makes an application for redemption of above units on 7th June, 2020 at 2:30 pm. Based on given information answer the following: What do you mean by cut-off time? What are the cut-off time for equity-oriented & Debt funds (except liquid funds) ?

Answer & Explanation:

The cut-off time determines the Net Asset Value (NAV) on which an investor buy or sell the units of a mutual fund scheme. Simply, the allotment and redemption of NAV depends on the time of submitting application and/or money with the fund house for purchase or sale. This time is called cut-off time in the mutual fund world. For Equity-oriented & Debt funds (except liquid funds): Purchase & Switch-in (Value < ₹2 Lakhs): Before 3 pm - Same day NAV; After 3 pm - Next Business day NAV. Purchase & Switch-in (Value > ₹2 Lakhs): Before 3 pm - NAV of the business day on which funds are available for utilisation; After 3 pm - NAV of the business day on which funds are available for utilisation. Redemption & Switch-Out: Before 3 pm - Same day NAV; After 3 pm - Next Business day NAV.

Topics: Mutual Funds

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic