Final answer:
To calculate the redemption amount of open-end investment company shares, use the NAV minus any redemption fees that may apply. Fees are meant to discourage short-term trading and can vary by fund.
Step-by-step explanation:
To calculate the amount to be received on redemption of open-end investment company shares, the correct formula would be the NAV, minus the redemption fee. This is because the open-end investment companies typically redeem shares at the current net asset value (NAV) and may subtract any redemption fees if applicable. Redemption fees are designed to discourage short-term trading and are paid back into the fund. It is important to note that these fees are not always applicable and can vary from fund to fund.
The process works by taking the net asset value per share and subtracting any redemption fee that the fund charges. For example, if the NAV is $20 per share and there is a 2% redemption fee, the amount received would be $20 - ($20 * 0.02) = $19.60 per share.