How does the Net Asset Value (NAV) of a mutual fund scheme reflect the scheme's expenses?
A
The expenses are added to the NAV
B
The NAV reflects the adjustment for the fees and expenses charged to the scheme
C
Expenses do not affect the NAV
D
Expenses are reflected only in the Total Expense Ratio (TER), not in the NAV
Correct Option:
B
Explanation
The NAV is calculated after deducting the scheme's expenses and liabilities from the total value of its assets. As a result, the fees and expenses charged to the scheme are reflected in the NAV, reducing its value accordingly.
