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Difficulty: EasyInvestment Companies and Managed Funds

An open-end management investment company has total assets of $150,000,000\$150,000,000 and total liabilities of $10,000,000\$10,000,000. If the fund has 10,000,00010,000,000 shares outstanding, what is the fund's Net Asset Value (NAV) per share in dollars?

Answer: 14 USD

Answer

The Net Asset Value (NAV) per share is $14.00\$14.00.
The Net Asset Value (NAV) per share is calculated using the formula NAV=Total Assets−Total LiabilitiesShares Outstanding\text{NAV} = \frac{\text{Total Assets} - \text{Total Liabilities}}{\text{Shares Outstanding}}. Subtracting liabilities from assets gives net assets of $140,000,000\$140,000,000. Dividing $140,000,000\$140,000,000 by 10,000,00010,000,000 shares yields an NAV per share of $14.00\$14.00.

Step-by-Step Solution

1
Subtract total liabilities from total assets to calculate the net asset value of the fund portfolio.
$150,000,000−$10,000,000=$140,000,000\$150,000,000 - \$10,000,000 = \$140,000,000
Net assets represent the total portfolio market value remaining after deducting all fund liabilities.
2
Divide the total net assets by the number of shares outstanding to find NAV per share.
$140,000,00010,000,000=$14.00\frac{\$140,000,000}{10,000,000} = \$14.00
NAV per share measures the per-share value of an open-end investment company.

Key Concept

Net Asset Value (NAV) Calculation
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Topics

Investment Companies and Managed Funds

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