Ch.7 · NAV Calculation Rules · medium
What is a 'bonus unit' declaration in mutual funds and how does it impact NAV?
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EXPLANATION
A bonus unit declaration increases the number of units held (e.g., 1:1 bonus doubles units) while proportionally reducing NAV (halved in a 1:1 bonus). The total value remains identical — an investor with 100 units at NAV ₹50 (₹5,000 total) gets 100 additional units; now holds 200 units at NAV ₹25 (still ₹5,000). Bonus declarations are cosmetic — there is no economic benefit.
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