NAV per unit is calculated at the end of each trading day using what inputs?

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Multiple Choice

NAV per unit is calculated at the end of each trading day using what inputs?

NAV per unit represents the value of a single unit based on the fund’s net assets at the end of the day. The correct inputs are end-of-day total assets and end-of-day total liabilities, combined to give net assets, which is then allocated across all units outstanding. In formula form: NAV per unit = (Total assets minus Total liabilities) divided by Units outstanding. This reflects what would be available to investors if the fund were liquidated at that moment. Why the other options don’t fit: using the last traded price isn’t appropriate for open-ended funds, since their price is set by end-of-day valuation rather than market trades. Taking liabilities divided by assets gives a liability ratio, not the per-unit value. Simply assets divided by units outstanding ignores liabilities, overstating the per-unit value.

NAV per unit represents the value of a single unit based on the fund’s net assets at the end of the day. The correct inputs are end-of-day total assets and end-of-day total liabilities, combined to give net assets, which is then allocated across all units outstanding. In formula form: NAV per unit = (Total assets minus Total liabilities) divided by Units outstanding. This reflects what would be available to investors if the fund were liquidated at that moment.

Why the other options don’t fit: using the last traded price isn’t appropriate for open-ended funds, since their price is set by end-of-day valuation rather than market trades. Taking liabilities divided by assets gives a liability ratio, not the per-unit value. Simply assets divided by units outstanding ignores liabilities, overstating the per-unit value.

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