n NISM Certifications
V-A NISM Series V-A
Medium

When a dividend is paid, the NAV of the units ______ to that extent.

Practice question from Nism VA Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    rises

  2. falls

    Correct answer

  3. C

    There is no change

Why this is the answer

When a mutual fund distributes a dividend, the NAV falls by the dividend amount. This is because the fund’s total assets decrease as the dividend is paid out. The NAV post-dividend is known as the ex-dividend NAV.

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