An Investment fund has $2 million in cash and $8 million Invested in securities. It currently has 2 million shares outstanding. a. What is the NAV of this fund? (Round your answer to 2 decimal places. (e.g., 32.16)) b. Assume that some of the shareholders decide to cash in their shares of the fund. How many shares, at its current NAV, can the fund take back without resorting to a sale of assets? c-1. As a result of anticipated heavy withdrawals, it sells 24,000 shares of IBM stock currently valued at $35. Unfortunately, It receives only $32 per share. What is the net asset value after the sale? (Round your answer to 2 decimal places. (e.g., 32.16) c-2. What are the fund's cash assets after the sale? (Enter your answers in millions rounded to 2 decimal places. (e.g., 32.16)) d-1. Assume after the sale of IBM shares, 200,000 shares are sold back to the fund. What is the current NAV? (Do not round Intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) d-2. Is there a need to sell more stocks to meet this redemption? Answer is not complete. a. NAV $ 5.00 per share b. Number of shares 400,000 °- Net asset value $ 4.96 1. 2. ÓN °- Cash $ 2.77 million Securities $ 7.16 million d- Current NAV 1. d- Should more stocks be sold? No 2.
An Investment fund has $2 million in cash and $8 million Invested in securities. It currently has 2 million shares outstanding. a. What is the NAV of this fund? (Round your answer to 2 decimal places. (e.g., 32.16)) b. Assume that some of the shareholders decide to cash in their shares of the fund. How many shares, at its current NAV, can the fund take back without resorting to a sale of assets? c-1. As a result of anticipated heavy withdrawals, it sells 24,000 shares of IBM stock currently valued at $35. Unfortunately, It receives only $32 per share. What is the net asset value after the sale? (Round your answer to 2 decimal places. (e.g., 32.16) c-2. What are the fund's cash assets after the sale? (Enter your answers in millions rounded to 2 decimal places. (e.g., 32.16)) d-1. Assume after the sale of IBM shares, 200,000 shares are sold back to the fund. What is the current NAV? (Do not round Intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) d-2. Is there a need to sell more stocks to meet this redemption? Answer is not complete. a. NAV $ 5.00 per share b. Number of shares 400,000 °- Net asset value $ 4.96 1. 2. ÓN °- Cash $ 2.77 million Securities $ 7.16 million d- Current NAV 1. d- Should more stocks be sold? No 2.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:An Investment fund has $2 million in cash and $8 million Invested in securities. It currently has 2 million shares outstanding.
a. What is the NAV of this fund? (Round your answer to 2 decimal places. (e.g., 32.16))
b. Assume that some of the shareholders decide to cash in their shares of the fund. How many shares, at its current NAV, can
the fund take back without resorting to a sale of assets?
c-1. As a result of anticipated heavy withdrawals, it sells 24,000 shares of IBM stock currently valued at $35. Unfortunately, It
receives only $32 per share. What is the net asset value after the sale? (Round your answer to 2 decimal places. (e.g., 32.16)
c-2. What are the fund's cash assets after the sale? (Enter your answers in millions rounded to 2 decimal places. (e.g.,
32.16))
d-1. Assume after the sale of IBM shares, 200,000 shares are sold back to the fund. What is the current NAV? (Do not round
Intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
d-2. Is there a need to sell more stocks to meet this redemption?
Answer is not complete.
a.
NAV
S
5.00
per
share
66-62
b.
Number of shares
400,000
C-
Net asset value
S
4.96
1.
C-
Cash
S
2.77
million
2.
Securities
$
7.16
million
PLAN
d-
Current NAV
1.
d-
Should more stocks be sold?
No
2.
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