Question

An open-end mutual fund has the following stocks:

Stock Shares Stock Price
A 9,500 $91
B 33,000 20
C 10,000 75
D 68,000 13

There are 57,000 shares of the mutual fund, and liabilities of $150,000. What is the NAV of the fund?

Answer 1

To calculate the NAV of the mutual fund, you multiply the number of shares each stock has by its stock price, sum these values, subtract liabilities, and divide by the total number of mutual fund shares. The NAV for this mutual fund is approximately $52.78 per share.

Step-by-step explanation:

To calculate the Net Asset Value (NAV) of a mutual fund, we follow these steps:

• Firstly, we determine the market value of the mutual fund's assets by multiplying the number of shares each stock has by its stock price, and then summing the totals.
• Secondly, we subtract any liabilities from the total market value of the assets.
• Finally, we divide the net value by the total number of mutual fund shares to find the NAV per share.

For this particular fund:

• Stock A: 9,500 shares * $91 = $864,500
• Stock B: 33,000 shares * $20 = $660,000
• Stock C: 10,000 shares * $75 = $750,000
• Stock D: 68,000 shares * $13 = $884,000

Total market value of assets = $3,158,500

Subtract liabilities: $3,158,500 - $150,000 = $3,008,500

NAV = $3,008,500 / 57,000 shares = approximately $52.78 per share.To find the NAV, you first determine the total market value of assets and subtract liabilities. Then, you divide this net value by the number of mutual fund shares, resulting in an NAV of approximately $52.78 per share for this mutual fund.