A closed-end fund has total assets of $495 million and liabilities of $280,000.

Question

A closed-end fund has total assets of $495 million and liabilities of $280,000. Currently, 28 million shares are outstanding. What is the NAV of the fund? If the shares currently sell for $18.45, what is the premium or discount on the fund? (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round the NAV to 2 decimal places. Enter the premium or discount as a percent rounded to 2 decimal places. Omit the "$" & "%" signs in your response.)

A closed-end fund has total assets of $495 million and liabilities of $280,000. Currently, 28 million shares are outstanding. What is the NAV of the fund? If the shares currently sell for $18.45, what is the premium or discount on the fund? (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round the NAV to 2 decimal places. Enter the premium or discount as a percent rounded to 2 decimal places. Omit the "$" & "%" signs in your response.)

Explanation / Answer

Net Asset value (NAV) can be calculated as follows

NAV = (Assets -Liabilities) / Number fo shares outstanding

NAV = (495,000,000 - 280,000) / 28,000,000 = $17.67

Each share of this fund is currently selling at $18.45

Since the market price is more than the NAV, this share is selling at a premium

And premium = (18.45 - 17.67) / 17.67 = 4.42% premium

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

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