Final answer:
To calculate the net asset value of a fund, multiply the shares by the price for each stock, add the values, subtract liabilities, and divide by the number of outstanding shares. The NAV per share for the given fund is $7.63.
Step-by-step explanation:
The student's question asks how to calculate the net asset value (NAV) of a fund based on the composition of its portfolio and certain liabilities. To find the NAV, first calculate the market value of each stock by multiplying the number of shares by the price per share. Then, add up those market values to get the total market value of the portfolio. Finally, subtract any accrued fees from the total market value, and divide that result by the number of shares outstanding in the fund. The formula for NAV is: NAV = (Total Value of Assets - Liabilities) / Number of Outstanding Shares.
Example Calculation
Compute the market value of each stock:
Stock A: 280,000 shares × $35 = $9,800,000
Stock B: 380,000 shares × $40 = $15,200,000
Stock C: 480,000 shares × $15 = $7,200,000
Stock D: 680,000 shares × $20 = $13,600,000
Add these values to get the total market value of the portfolio: $9,800,000 + $15,200,000 + $7,200,000 + $13,600,000 = $45,800,000.
Subtract the management fee: $45,800,000 - $20,000 = $45,780,000.
Divide by the number of outstanding shares: $45,780,000 / 6,000,000 shares = $7.63.
Therefore, the NAV per share is $7.63.