Introduction to Financial Markets (405) — CBSE Class 10 board question

Net Asset Value (NAV):

NAV or Net Asset Value is the cumulative market value of the assets of a mutual fund, net of its liabilities.

$$\text{NAV per unit} = \frac{\text{Net Value of Assets}}{\text{Number of Units Outstanding}}$$

Buying and selling into funds is done on the basis of NAV-related prices. As per SEBI regulations, the NAV of an open-end scheme must be disclosed on a daily basis, while the NAV of a close-end scheme must be disclosed at least on a weekly basis. NAV is required to be published in newspapers.

Source: Chapter 7, What is NAV?

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• Examiners expect the definition, the formula, and the disclosure frequency (daily for open-end; weekly for close-end) — these are the three scorable points in most NAV questions.
• Write the formula clearly; it shows conceptual understanding.
• "Net of liabilities" is a key phrase — don't omit it.
• If the question is 1 mark, give only the definition. For 2–3 marks, include the formula and disclosure norms.