Net asset value (NAV) of an investment fund is calculated as total portfolio value divided by number of fund shares. Accordingly, if the total portfolio value is 100.000 $ and the number of shares is 55.000, then the NAV would be 100.000 $/55.00 : 1,818 $. Now, suppose that you are a portfolio manager of a bond fund that has 20.000 fund shares outstanding. You consider 3 investments for your portfolio: (a) A T-bill that has a 194 day maturity with a face value of 10.000 $. (b) A zero-coupon bond that has a 10 year maturity with a face value of 100.000 $. (c) A bond that pays quarterly coupon payments with an annual coupon rate of 12%, a face value of 50.000 $ and a maturity of 5 years. You know that the annual market yields are 10%. If you invest them all right now, what would be the NAV of your fund at the time of investment? (1 year = 360 days)
Net asset value (NAV) of an investment fund is calculated as total portfolio value divided by number of fund shares. Accordingly, if the total portfolio value is 100.000 $ and the number of shares is 55.000, then the NAV would be 100.000 $/55.00 : 1,818 $. Now, suppose that you are a portfolio manager of a bond fund that has 20.000 fund shares outstanding. You consider 3 investments for your portfolio: (a) A T-bill that has a 194 day maturity with a face value of 10.000 $. (b) A zero-coupon bond that has a 10 year maturity with a face value of 100.000 $. (c) A bond that pays quarterly coupon payments with an annual coupon rate of 12%, a face value of 50.000 $ and a maturity of 5 years. You know that the annual market yields are 10%. If you invest them all right now, what would be the NAV of your fund at the time of investment? (1 year = 360 days)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter2: Risk And Return: Part I
Section: Chapter Questions
Problem 10P
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![Net asset value (NAV) of an investment fund is calculated as total portfolio value
divided by number of fund shares. Accordingly, if the total portfolio value is 100.000
$ and the number of shares is 55.000, then the NAV would be 100.000 $/55.000 =
1,818 S. Now, suppose that you are a portfolio manager of a bond fund that has
20.000 fund shares outstanding. You consider 3 investments for your portfolio: (a) A
T-bill that has a 194 day maturity with a face value of 10.000 $. (b) A zero-coupon
bond that has a 10 year maturity with a face value of 100.000 $. (c) A bond that
pays quarterly coupon payments with an annual coupon rate of 12%, a face value
of 50.000 $ and a maturity of 5 years. You know that the annual market yields are
10%. If you invest them all right now, what would be the NAV of your fund at the
time of investment? (1 year = 360 days)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fed9109c0-5d1a-4ac3-aeab-19efcc32bf14%2Fed8dce91-62f9-443b-b380-d14aa4dbce37%2F42wp1oe_processed.png&w=3840&q=75)
Transcribed Image Text:Net asset value (NAV) of an investment fund is calculated as total portfolio value
divided by number of fund shares. Accordingly, if the total portfolio value is 100.000
$ and the number of shares is 55.000, then the NAV would be 100.000 $/55.000 =
1,818 S. Now, suppose that you are a portfolio manager of a bond fund that has
20.000 fund shares outstanding. You consider 3 investments for your portfolio: (a) A
T-bill that has a 194 day maturity with a face value of 10.000 $. (b) A zero-coupon
bond that has a 10 year maturity with a face value of 100.000 $. (c) A bond that
pays quarterly coupon payments with an annual coupon rate of 12%, a face value
of 50.000 $ and a maturity of 5 years. You know that the annual market yields are
10%. If you invest them all right now, what would be the NAV of your fund at the
time of investment? (1 year = 360 days)
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