QUESTION 1 The World Income Appreciation Fund has current assets with a market v
ID: 2655657 • Letter: Q
Question
QUESTION 1
The World Income Appreciation Fund has current assets with a market value of $4.6 billion and has 160 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 3.9 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 $36.15. What is the front-end load in percentages?
Explanation / Answer
Answer:1 NAV=Current market value/No. of shares outstanding
$4600000000/160,00,0000
$28.75
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 96.1 percent of the offering price. Since the NAV is $47, the offering price is $47/0.961 = $48.91. You will pay $4891 in all, of which $191 is a load.
Answer:3 NAV=$4.5 billion/$0.130billion
=$34.62
=(($36.15-$34.62)/$34.62)*100
=4.42%
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