What is Net Asset Value

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What is Net Asset Value?

2008-08-05 16:30:20 Net Asset Value (NAV)  Net Asset Value is the market value of the a ssets of the scheme minus its liabilities. The per unit N AV is the net asset value of the scheme divided by the number of units outstanding on t he Valuation Date. Thus, NAV of a mutual fund unit is nothing but the 'book value.' How NAV is c alculated

 NAV = The total market of all the se curities in the mutual fund divided by the number of units in the mutual fund. Example:

Units = slices of pie and Mutual fund = total pie. Say you have one or more units, you bought 10 units of the mutual fund at 10 per unit = 100 total. Value per unit is now 16, Total = 160 (10 units x 16 per unit). Profit = 60% (16 divided by 10) plus a ny distributions (cash) you received over you holding period. NAV and its impact on the returns

It is often felt that MF with lower NAV will give better returns. This again is due to the wrong perception about NAV. An example will make it clear that returns are independent of the NAV. Say, you have Rs 10,000 to invest. Say one Fund A has an NAV of Rs 10 a nd another Fund B has NAV of Rs 50. You will get 1000 units of  Fund A or 200 units of Fund B.After one year, both funds would have grown equally as their portfolio is same, say by 25%. T hen NAV after one year would be Rs 12.50 for Fund A and Rs 62.50 for Fund B. The value of your investment would be 1000*12.50 = Rs 12,500 for Fund A and 200*62.5 = Rs 12,500 for Fund B. Thus your returns would be same irrespective of the NAV. An FMCG company share at, say, Rs 1,000 may give a better return than say a jute company share at Rs 50, since IT sector would show a much higher growth rate than jute industry (Rs 1000 may basically be over or under priced, which will not be the case with MF NAV). What Does Equity Mean?

1. A stock or any other security representing an ownership interest. 2. On a company's balance sheet, the amount of the funds contributed by the owners (the stockholders) plus the retained earnings (or losses). Also referred to as "shareholders' equity". 3. In the context of margin trading, the value of securities in a margin account minus what has been borrowed from the brokerage. 4. In the context of real estate, the difference between the current market value of the property and the amount the owner still owes on the mortgage. It is the amount that t he owner would receive after s elling a property and paying off the mortgage. 5. In terms of investment strategies, equity (stocks) is one of the principal asset classes. The other two are fixed-income (bonds) and cash/cashequivalents. These are used in ass et allocation planning to structure a desired risk an d return profile for an investor's portfolio. What Does Equity Does Equity Market Mean? Market Mean? The market in which shares a re issued and traded, eit her through exchanges or over-the-counter markets. Also known as the stock market, it is one of the most vital areas of a market economy because it gives companies a ccess to capital and investors a slice of ownership in a company with the potential to realize gains based on its future performance. Investopedia explains explains Equity  Equity

Market  This market can be split into two main sectors: the primary and secondary market. The primary market is where new issues are first offered. Any subsequent trading takes place in the

What Does  Debenture Mean? A type of debt instrument that is not secured by physical asset or collateral. Debentures are backed only by the general creditworthiness and reputation of the i ssuer. Both corporations and governments frequently issue this type of bond in order to secure capital. Like other t ypes of bonds, debentures are documented in an i ndenture. Investopedia explains  Debenture

Debentures have no collateral. Bond buyers generally purchase debentures based on the belief that t he bond issuer is unlikely to default on the repayment. An example of a government debenture would be a ny government-issued Treasury bond (T-bond) or Treasury bill (T-bill). T-bonds and T-bills are generally considered risk free because governments, at worst, can print off more money or raise taxes to pay these type of debts. What Does  Bond Mean? A debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a de fined period of time at a fixed interest rate. Bonds are used by companies, municipalities, states a nd U.S. and foreign governments to finance a variety of projects and activities.

Bonds are commonly referred to as fixed-income securities and are one of the three main asset classes, along with stocks and cash equivalents.. Investopedia explains  Bond 

The indebted entity (issuer) issues a bond that states the interest rat e (coupon) that will be paid and when the loaned funds (bond principal) are to  be returned (maturity date). Interest on bonds i s usually paid every six months (semi-annually). The main categories of bonds are corporate  bonds, municipal bonds, and U.S. Treasury bonds, notes and bills, which are collectively referred to a s simply "Treasuries". Two features of a bond - credit quality and duration - are the principal determinants of a bond's interest rate. Bond maturities range from a 90-day Treasury bill to a 30-year government bond. Corporate and municipals a re typically in t he three to 10-year range.

BANK RECONCILIATION STATEMENT what does bank reconciliation statement mean? a form that allows individuals to compare their p ersonal bank account records to t he bank's records of the i ndividual's account balance in order to uncover any possible discrepancies. investopedia explains bank reconciliation statement since there are timing differences between when data is entered in the banks systems and when data is entered in the individual's system, there is sometimes a normal discrepancy b etween account balances. the goal of reconciliation is to determine if the discrepancy is due to error rather than timing.

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