Question

An investor reading the open-end investment company section of today's "The Wall Street Journal" sees that Bull in the Teashop Fund has a NAV of $10.65 and an offering price of $11.15. He knows that he would have received which of the following if his redemption order had been received by the fund prior to yesterday's market close?

A)$10.65.
B)$10.65, less redemption fee, if any.
C)$11.15, less redemption fee, if any.
D)$10.65, less commission.

Answer 1

The correct answer is B) $10.65, less the redemption fee, if any, since the investor would receive the NAV minus any applicable fees upon redemption.

Step-by-step explanation:

The investor looking at Bull in the Teashop Fund in "The Wall Street Journal" sees a net asset value (NAV) of $10.65 and an offering price of $11.15. If the investor's redemption order had been received before yesterday's market close, they would have received the NAV of $10.65, less any redemption fee that may apply. Therefore, the correct answer is B) $10.65, less the redemption fee, if any.

When calculating the net profit from stock transactions, you need to account for both the purchase and selling prices, as well as any transaction fees. For example, buying 1000 shares of Nike at $24.50 and selling at $39.75 with a company transaction fee of $9.99 would result in a net profit calculation of (1000 shares * $39.75) - (1000 shares * $24.50) - (2 * $9.99).