Suppose today a mutual fund contains 2,000 shares of JPMorgan Chase, currently trading at $67.75, 1,000 shares of Walmart, currently trading at $66.10, and 2,500 shares of Pfizer, currently trading at $34.50. The mutual fund has no liabilities and 10,000 shares outstanding held by investors. a. What is the NAV of the fund? b. Calculate the change in the NAV of the fund if tomorrow JPMorgan's shares increase to $69, Walmart's shares increase to $71, and Pfizer's shares decrease to $33. c. Suppose that today 1,000 additional investors buy one share each of the mutual fund at the NAV of $28.785. This means that the fund manager has $28,785 in additional funds to invest. The fund manager decides to use these additional funds to buy additional shares in JPMorgan Chase. Calculate tomorrow's NAV given the same rise/fall in share values as assumed in part (b). (For all requirements, do not round intermediate calculations. Round your answers to 3 decimal places. (e.g., 32.161)) a NAV of the Fund b. Change in NAV C. Tomorrow's NAV

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
icon
Related questions
Question
Suppose today a mutual fund contains 2,000 shares of JPMorgan Chase, currently trading at $67.75, 1,000 shares of Walmart, currently
trading at $66.10, and 2,500 shares of Pfizer, currently trading at $34.50. The mutual fund has no liabilities and 10,000 shares
outstanding held by investors.
a. What is the NAV of the fund?
b. Calculate the change in the NAV of the fund if tomorrow JPMorgan's shares increase to $69, Walmart's shares increase to $71, and
Pfizer's shares decrease to $33.
c. Suppose that today 1,000 additional investors buy one share each of the mutual fund at the NAV of $28.785. This means that the
fund manager has $28,785 in additional funds to invest. The fund manager decides to use these additional funds to buy additional
shares in JPMorgan Chase. Calculate tomorrow's NAV given the same rise/fall in share values as assumed in part (b).
(For all requirements, do not round intermediate calculations. Round your answers to 3 decimal places. (e.g., 32.161))
a. NAV of the Fund
b. Change in NAV
C. Tomorrow's NAV
Transcribed Image Text:Suppose today a mutual fund contains 2,000 shares of JPMorgan Chase, currently trading at $67.75, 1,000 shares of Walmart, currently trading at $66.10, and 2,500 shares of Pfizer, currently trading at $34.50. The mutual fund has no liabilities and 10,000 shares outstanding held by investors. a. What is the NAV of the fund? b. Calculate the change in the NAV of the fund if tomorrow JPMorgan's shares increase to $69, Walmart's shares increase to $71, and Pfizer's shares decrease to $33. c. Suppose that today 1,000 additional investors buy one share each of the mutual fund at the NAV of $28.785. This means that the fund manager has $28,785 in additional funds to invest. The fund manager decides to use these additional funds to buy additional shares in JPMorgan Chase. Calculate tomorrow's NAV given the same rise/fall in share values as assumed in part (b). (For all requirements, do not round intermediate calculations. Round your answers to 3 decimal places. (e.g., 32.161)) a. NAV of the Fund b. Change in NAV C. Tomorrow's NAV
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

Blurred answer
Knowledge Booster
Mutual Funds
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education