In: Accounting
Question No. 1 If the underwriter agreed to underwrite a new issue of a fund for a commission of 2%, the issue size is 50000 shares of OMR 3 each. After the issue date 500 units of shares are still left. Calculate how much is underwriters profit or loss?
Question No 2 If a dealer bought 15000 shares of stock at OMR 5 per share, then sold 4000 of them at OMR 5.30, 4000 at OMR 5.15 and remaining shares at 4.85 per share. a. What is the dealers gross profit or loss? b. What is the dealers average bid-ask spread.
Question 3 If the NAV of ‘Gold Mutual Fund’ is OMR 4.4, The total assets is OMR 30,000 and the Total Liabilities is OMR 8000, How many mutual fund units are there?[
Q1) Underwriters commission is paid on the agreed issue size. Therefore, commisiion will be paid | |||||||||
value of 50000 shares | |||||||||
Underwriters commission = 50000 share * OMR 3 * 2% | |||||||||
= OMR 30000 | |||||||||
Q2) Weighted average selling price of the shares | |||||||||
= (4000*5.30 + 4000*5.15 + 7000*4.85)/15000 | |||||||||
=OMR 5.05 per share | |||||||||
Therefore, profit = (5.05-5)*15000 | |||||||||
= OMR 750 | |||||||||
bid-ask spread = 5.05-5 = OMR 0.05 | |||||||||
Q3) Given NAV of the mutual fund = OMR 4.4 | |||||||||
Net asset = Total Assets - Total liabilities | |||||||||
=30000- 8000 | |||||||||
= OMR 22000 | |||||||||
No of units = 22000/4.4 | |||||||||
=5000 units | |||||||||