Problem 4-9 Closed-End Funds (LO2, CFA3) A closed-end fund has total assets of $

Question

Problem 4-9 Closed-End Funds (LO2, CFA3) A closed-end fund has total assets of $300 million and liabilities of $150,000. Currently, 15 million shares are outstanding. What is the NAV of the fund? If the shares currently sell for $17.65, what is the premium or discount on the fund? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round the NAV answer to 2 decimal places. Enter the premium or discount as a percent rounded to 2 decimal places.) Answer is complete but not entirely correct. 19.99 (13.26) 31% Net asset value Premium(discount)

Explanation / Answer

Net asset value=(300-15000/1000000)/15=19.99

Discount as share price is lower than NAV

Discount=(17.65-19.99)/19.99=-11.705%

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