Question

An open end fund has the following holdings. Stock Shares Stock Price

A 25,000 $90

B 35,000 $28

C 30,000 $45

D 75,000 $25

There are liabilities of $475,000 [salaries, audit fees, etc], and 150,000 shares outstanding. What is the NAV?

a. $95 to $100

b. Less than $80

c. $90 to $95

d. $80 to $85

e. $85 to $90

f. More than $100

Answer 1

The NAV is computed as shown below:

= (Total value of shares - Total liabilities) / Number of shares outstanding

Total value of shares is computed as follows:

= Number of shares of A x Price per share of A + Number of shares of B x Price per share of B + Number of shares of C x Price per share of C + Number of shares of D x Price per share of D

= 25,000 x $ 90 + 35,000 x $ 28 + 30,000 x $ 45 + 75,000 x $ 25

= $ 6,455,000

So, the NAV will be computed as follows:

= ($ 6,455,000 - $ 475,000) / 150,000

= $ 39.87 Approximately

So, the correct answer is option b.

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