The manager shall value securities at which values, whichever is less?

• A. Par value and Market value
• B. Par value and Book value
• C. Market value and Cost
• D. Book value and Cost

Answer: (A)

In SIP valuation, the idea is to be prudent about asset values by using the lower of two figures: the par value and the market value. Par value is the security’s face amount, while market value is what you could actually sell it for today. Using the lesser of these two prevents overstating assets on financial statements, which helps ensure there are enough reserves to cover liabilities.

So, if a security has a par value of 1,000 and a current market value of 900, you value it at 900. If the market value rises to 1,100, you still value it at 1,000 (the par value) because that’s the lower of the two. This approach reflects a conservative, regulation-aligned treatment of securities for solvency purposes.