Question

In: Finance

Open-end Fund A has 191 shares of ATT valued at $48 each and 43 shares of...

Open-end Fund A has 191 shares of ATT valued at $48 each and 43 shares of Toro valued at $88 each. Closed-end Fund B has 88 shares of ATT and 85 shares of Toro. Both funds have 1,000 shares outstanding.

a. What is the NAV of each fund using these prices? (Round your answers to 3 decimal places. (e.g., 32.161))
b. If the price of ATT stock increases to $49.25 and the price of Toro stock declines to $85.292, how does that impact the NAV of both funds? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))
c. Assume that another 168 shares of ATT valued at $48 are added to Fund A. The funds needed to buy the new shares are obtained by selling 623 more shares in Fund A. What is the effect on Fund A’s NAV if the prices remain unchanged from the original prices?

Solutions

Expert Solution

Solution a
Description Fund A Fund B
ATT shares
No of shares                                    191                              88
Shrae price $                                  48 $                         48
Share value $                            9,168 $           9,168 $                    4,224 $                    4,224
Toro shares
No of shares                                      43                              85
Shrae price $                                  88 $                         88
Share value $                            3,784 $           3,784 $                    7,480 $                    7,480
Total Fund value $         12,952 $                  11,704
No of shares in fund               1,000                        1,000
NAV for each fund (Fund value/No of shares) $         12.952 $                 11.704
Solution b
Description Fund A Fund B
ATT shares
No of shares                                    191                              88
Shrae price $                            49.25 $                    49.25
Share value $                      9,406.75 $     9,406.75 $              4,334.00 $              4,334.00
Toro shares
No of shares                                      43                              85
Shrae price $                          85.292 $                    85.29
Share value $                      3,667.56 $     3,667.56 $              7,249.82 $              7,249.82
Total Fund value $   13,074.31 $            11,583.82
No of shares in fund               1,000                        1,000
NAV for each fund (Fund value/No of shares) $         13.074 $                 11.584
NAV before price change $      12.9520 $               11.7040
NAV after price change $      13.0743 $               11.5838
Change in price $         0.1223 $                (0.1202)
Solution C
Description Fund A
ATT shares
No of shares                                    191
Shrae price $                            48.00
Share value $                      9,168.00 $     9,168.00
New shares purchased of ATT
No of shares                                    168
Shrae price $                          48.000
Share value $                      8,064.00 $     8,064.00
Total Fund value $   17,232.00
No of shares in fund (1000+623)               1,623
NAV for fund A (Fund value/No of shares) $         10.617

Related Solutions

Open-end Fund A has 171 shares of ATT valued at $38 each and 33 shares of...
Open-end Fund A has 171 shares of ATT valued at $38 each and 33 shares of Toro valued at $78 each. Closed-end Fund B has 78 shares of ATT and 75 shares of Toro. Both funds have 1,000 shares outstanding. a. What is the NAV of each fund using these prices? (Round your answers to 3 decimal places. (e.g., 32.161)) b. If the price of ATT stock increases to $39.25 and the price of Toro stock declines to $75.292, how...
Open-end Fund A has 171 shares of ATT valued at $38 each and 33 shares of...
Open-end Fund A has 171 shares of ATT valued at $38 each and 33 shares of Toro valued at $78 each. Closed-end Fund B has 78 shares of ATT and 75 shares of Toro. Both funds have 1,000 shares outstanding. a. What is the NAV of each fund using these prices? (Round your answers to 3 decimal places. (e.g., 32.161)) b. If the price of ATT stock increases to $39.25 and the price of Toro stock declines to $75.292, how...
Open-end Fund A has 177 shares of ATT valued at $41 each and 36 shares of...
Open-end Fund A has 177 shares of ATT valued at $41 each and 36 shares of Toro valued at $81 each. Closed-end Fund B has 81 shares of ATT and 78 shares of Toro. Both funds have 1,000 shares outstanding. a. What is the NAV of each fund using these prices? (Round your answers to 3 decimal places. (e.g., 32.161)) b. If the price of ATT stock increases to $42.25 and the price of Toro stock declines to $78.292, how...
Eveningstar open-end fund has 1,000 shares outstanding and has the following assets in the portfolio: 200...
Eveningstar open-end fund has 1,000 shares outstanding and has the following assets in the portfolio: 200 shares of P&G priced at $20; 250 shares of Intel priced at $60; and 300 shares of Microsoft priced at $50. The Morningstar closed-end fund has the following stocks in its portfolio: 200 shares of P&G and 200 shares of Microsoft. It has a total of 500 shares outstanding. What is the NAV of both funds? $45.33; $14.00 $34.00; $28.00 $17.00; $17.50 $34.00; $35.00...
Suppose an open end mutual fund has $10000 worth of assets. There are 1000 shares outstanding....
Suppose an open end mutual fund has $10000 worth of assets. There are 1000 shares outstanding. (10 points) If the fund value rises by 8% and there is a 25 basis point management fee that is subtracted from the asset value at the end of the year, what is the return on a share of the fund? (10 points) Suppose that at the beginning of the year a new investor comes in and invests another $1000. If the same return...
Suppose an open end mutual fund has $10000 worth of assets. There are 1000 shares outstanding....
Suppose an open end mutual fund has $10000 worth of assets. There are 1000 shares outstanding. a. If the fund value rises by 8% and there is a 25 basis point management fee that is subtracted from the asset value at the end of the year, what is the return on a share of the fund? b. Suppose that at the beginning of the year a new investor comes in and invests another $1000. If the same return and fees...
An open-end mutual fund has the following stocks: Stock Shares Stock Price A 10,000 $ 90...
An open-end mutual fund has the following stocks: Stock Shares Stock Price A 10,000 $ 90 B 33,000 19 C 10,000 73 D 71,000 14 If there are 58,000 shares of the mutual fund, what is the NAV? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Use the following information to answer the following questions. Eveningstar open-end fund has 1,000 shares outstanding...
Use the following information to answer the following questions. Eveningstar open-end fund has 1,000 shares outstanding and has the following assets in its portfolio: 100 shares of Procter & Gamble (P&G) priced at $30.00, 300 shares of Intel priced at $50.00 and 200 shares of Microsoft priced at $60.00. The Morningstar closed-end fund has the following stocks in its portfolio: 300 shares of P&G and 300 shares of Microsoft. It has a total of 500 shares outstanding. a) What is...
An open-end mutual fund has the following stocks: Stock Shares Stock Price A 6,000 89 B...
An open-end mutual fund has the following stocks: Stock Shares Stock Price A 6,000 89 B 33,000 22 C 5,200 91 D 73,500 13 If there are 50,000 shares of the mutual fund, what is the NAV? Suppose the fund in the previous problem has liabilities of $110,000. What is the NAV of the fund now? In the previous problem (#2), assume the fund is sold with a 5.50 percent front-end load. What is the offering price of the fund?...
An open-end fund has a net asset value of $8.09 per share. It is sold with...
An open-end fund has a net asset value of $8.09 per share. It is sold with a front-end load of 4%. What is the selling price? Round your answer to the nearest cent (2 decimal places).
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT