Canadian Securities Course (CSC) Level 2 Practice Exam

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Prepare for the Canadian Securities Course Level 2 Exam with our comprehensive quiz. Assess your knowledge with multiple choice questions designed to test your understanding of the Canadian securities industry. Get the insights you need to achieve success!

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How is the Net Assets per Shares (NAVPS) calculated in a mutual fund?

NAVPS = assets - liabilities / outstanding shares
NAVPS = liabilities - assets / outstanding shares
NAVPS = assets + liabilities / outstanding shares
NAVPS = liabilities + assets / outstanding shares

The correct answer is: NAVPS = assets - liabilities / outstanding shares

The calculation of Net Assets per Share (NAVPS) in a mutual fund is fundamental to understanding the fund's value on a per-share basis. NAVPS reflects the fund's total net assets allocated to each outstanding share and is expressed as: NAVPS = (Total Assets - Total Liabilities) / Outstanding Shares. This formula begins with the total assets of the mutual fund and subtracts total liabilities to determine the net assets. These net assets are then divided by the number of outstanding shares to find the value per share. This calculation gives investors insight into the worth of their investment in the mutual fund. The other formulations provided do not accurately reflect the relationship between assets, liabilities, and outstanding shares, leading to erroneous interpretations of a fund's value. Therefore, your answer correctly identifies the appropriate method to calculate NAVPS.