Investments
11th Edition
ISBN: 9781259277177
Author: Zvi Bodie Professor, Alex Kane, Alan J. Marcus Professor
Publisher: McGraw-Hill Education
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Question
Chapter 4, Problem 11PS
Summary Introduction
(A)
Adequate information:
Value of portfolio - $ 200 million
Liabilities - $ 3 million
Number of share outstanding- 5 million
To compute:
Net asset value for the given fund
Introduction:
Net asset value of the fund is the value of the portfolio owned by the fund on a particular date netted off all the liabilities to the outsiders.
Summary Introduction
(B)
Adequate information:
NAV of the fund - $ 39.4 per share
Current selling price of the fund- $ 36 per share
To compute:
Premium of discount as a percentage of NAV
Introduction:
If the fund is selling at a price above its NAV then we will say that fund is selling at premium, while if the fund is selling at a price below its NAV then we will say that fund is selling at discount.
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