MoneyKraft

1. Accrual income of a debt fund refers to the

Interest income earned from its debt investment

Income earned from money market investments in its debt portfolio

Capital gains accrued from its debt investments

2. The accrual income of a fund will rise when

Yield of the fund goes up

Modified duration of the fund rises

Policy interest rates decline

3. For a fund with a modified duration of 3, an interest rate drop of 0.5% will result in

A rise in NAV of 1.5%

A rise in NAV of 3%

A rise in NAV of 6%

4. The NAV of which of these funds is likely to fall the most with an increase an interest rates

A fund with a modified duration of 3

A fund with a modified duration of 2

A fund with a modified duration of 1

Impact of duration on debt nav

debt funds: how accrual and duration impact the nav?

Watch this video to know how accrual and duration impact the returns of a debt fund.