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 $3.3 billion and has 180 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 $47 per share. It charges a 3.1 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 $35.36. What is the front-end load in percentages?

QUESTION 4

You are going to invest in a stock mutual fund with a 7 percent front-end load and a 1.4 percent expense ratio. You also can invest in a money market mutual fund with a 4 percent return and an expense ratio of 0.1 percent. If you plan to keep your investment for 3 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 $41.56. At the end of the year the fund paid $0.38 in short-term distributions and $1.25 in long-term distributions. If the NAV of the fund at the end of the year was $43.91, what was your return for the year?

QUESTION 6

A closed-end fund has total assets of $310 million and liabilities of $800,000. Currently, 20 million shares are outstanding. If the shares currently sell for $15.41, 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

Answer:1 NAV=Current market value/No. of shares outstanding

$3300000000/180,00,0000

$18.33

Answer:2 You will pay 200 times the offering price. Since the load is computed as a percentage of the offering price, we can compute the offering price as follows:

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

In other words, the NAV is 96.9 percent of the offering price. Since the NAV is $47, the offering price is $47/0.969 = $48.50. You will pay $4850 in all, of which $150 is a load.

Answer:3 NAV=$4.5 billion/$0.130billion

=$34.62

=(($35.36-$34.62)/$34.62)*100

=2.14%

Answer:5=[(NAV at the end-NAV at the begining)+short term gain+long term gain]/Nav at the begining

=[($43.91-$41.56)+$0.38+$1.25]/$41.56

=9.576%

Answer:6

NAV=Total assets-Total liabilities/No. of shares outstanding

=$310million-$0.8 million/20 million

=$15.46 per share

Discount or premium=(Funds share value/NAV)*100

=$15.41*100/$15.46

=99.68%

This means shares sell for 99.68 percent of NAV, which is at a discount to NAV.

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