QUESTION 1 The World Income Appreciation Fund has current assets with a market v

Question

QUESTION 1

The World Income Appreciation Fund has current assets with a market value of $4.7 billion and has 190 million shares outstanding. What is the net asset value (NAV) for this mutual fund?

QUESTION 2

The Madura HiGro Fund has a net asset value of $42 per share. It charges a 3.2 percent load. How much will you pay for 200 shares?

QUESTION 3

The World Income Appreciation Fund has current assets with a market value of $4.5 billion and has 130 million shares outstanding. The fund has a current market price quotation of $35.15. What is the front-end load in percentages?

QUESTION 4

You are going to invest in a stock mutual fund with a 5 percent front-end load and a 1.4 percent expense ratio. You also can invest in a money market mutual fund with a 6 percent return and an expense ratio of 0.1 percent. If you plan to keep your investment for 2 years, what annual percentage return must the stock mutual fund earn to exceed an investment in the money market fund?

QUESTION 5

You invested $10,000 in a mutual fund at the beginning of the year when the NAV was $41.53. At the end of the year the fund paid $0.31 in short-term distributions and $1.27 in long-term distributions. If the NAV of the fund at the end of the year was $43.27, what was your return for the year?

QUESTION 6

A closed-end fund has total assets of $330 million and liabilities of $800,000. Currently, 20 million shares are outstanding. If the shares currently sell for $16.06, what is the percentage premium or discount on the fund? (Note: Enter premium as a positive number and a discount as a negative number.)

Explanation / Answer

As per the rule, I can do first four questions only.

NAV = (Total fund assets – total fund liabilities) / total shares outstanding

         = ( 4.7 billion – 0)/ 190 million

         =$24.74

2. We have the following formula for nav using the front end load:

Net asset value = (1 - Front-end load) × Offering price

Here front end load is 3.2% that means

NAV = (1-0.032) x offering price

NAV = 96.80% offering price.

It means NAV is 96.80% of offering price. Now we have NAV =42 per share. That means offering price would be:

Offering price = 42/0.968 = 43.38843

Total amount paid = offering price x no. of shares

                  = 43.38843 x200

                  = 8677.69

3.First we need to calculate NAV

NAV = (Total fund assets – total fund liabilities) / total shares outstanding

         = ( 4.5 billion – 0)/ 130 million

         =$34.6154

Offer price = 35.15

Net asset value = (1 - Front-end load) × Offering price

              34.6154 = (1- Front end load) x35.15

            1- front end load = 0.9845

            Front end load = 1.52%

4.

Net return = gross return – front end load/n – expense ratio

We should have net return on both stock fund and liquid fund equal.

Net return on stock fund = net return on liquid fund

Gross return -5%/2 -1.4% = 6% -0%/2 -0.1%

Gross return on stock fund -3.9% = 5.9%

Gross return on stock fund = 9.80%

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.