In: Finance
Suppose today a mutual fund contains 2,000 shares of JPMorgan
Chase, currently trading at $73.75, 1,000 shares of Walmart,
currently trading at $72.10, and 2,500 shares of Pfizer, currently
trading at $40.50. The mutual fund has no liabilities and 10,000
shares outstanding held by investors.
a. What is the NAV of the fund?
b. Calculate the change in the NAV of the fund if
tomorrow JPMorgan’s shares increase to $75, Walmart’s shares
increase to $77, and Pfizer’s shares decrease to $39.
c. Suppose that today 1,000 additional investors
buy one share each of the mutual fund at the NAV of $32.085. This
means that the fund manager has $32,085 in additional funds to
invest. The fund manager decides to use these additional funds to
buy additional shares in JPMorgan Chase. Calculate tomorrow’s NAV
given the same rise in share values as assumed in (b).
(For all requirements, do not round intermediate calculations.
Round your answers to 3 decimal places. (e.g.,
32.161))