Question

An open-end mutual fund invests in a mixed of major stocks in the US market. Each share of the mutual fund contains the following assets:

Stock	shares	price
A	1	15.00
B	1	17.00
C	1	43.00
D	1	35.00
E	1	28.00

The front-end load is $5 and the back-end load is $4.

a) The Net Asset Value per share =   

b) To buy one share of the mutual fund, the cost is =   

c) For a person who sells one share of the mutual fund today, the net proceeds (net revenue) =   

Answer 1

Answer a)

Net asset value per shares = Total value of asset (No. of Share*Market price) - Total Liabiblites / No of unints outstadning

As the information mation about the no, of unit is not availavle therefore it is presumed that the no of share in the question is equal to no of units outstadning.

NAV = (15*1)+(17*1)+(43*1)+(35*1)+(28*1) - 0/5 (Liabiities is 0 as no liabilities given in the question)

NAV = $27.6

Answer b)

COst of Purchase of Mutual fund = No.of share *NAV Value + No. of share* Front end load per share (In our case it is expressed in absolute terms, generally in real life the same is expressed in percentage)

Cost = 27.6*1+5*1 = $32.6

Answer C

Net proceeds = NAV* No. of shares sold - No. of share*BAck end load per share (In our case it is expressed in absolute terms, generally in real life the same is expressed in percentage)

Net proceeds = 27.6*1 -4*1 = $23.6