Examkin

Question

Difficulty: EasyInvestment Companies and Managed Funds

An open-end mutual fund has total assets of $50,000,000\$50,000,000 and total liabilities of $5,000,000\$5,000,000. If the fund currently has 3,000,0003,000,000 shares outstanding, what is its Net Asset Value (NAV) per share?

Answer: 15 $

Answer

The Net Asset Value (NAV) per share is $15.00.
The Net Asset Value (NAV) per share represents the net value of one share of an investment company. It is calculated using the formula: NAV per share=Total Assets−Total LiabilitiesShares Outstanding\text{NAV per share} = \frac{\text{Total Assets} - \text{Total Liabilities}}{\text{Shares Outstanding}}. Subtracting liabilities of $5,000,000\$5,000,000 from gross assets of $50,000,000\$50,000,000 yields total net assets of $45,000,000\$45,000,000. Dividing this by 3,000,0003,000,000 shares outstanding results in an NAV per share of $15.00\$15.00.

Step-by-Step Solution

1
Calculate Total Net Assets of the fund
$45,000,000
Total Net Assets equal Total Assets minus Total Liabilities ($50,000,000−$5,000,000\$50,000,000 - \$5,000,000).
2
Calculate NAV per share
$15.00
NAV per share is computed by dividing Total Net Assets by the total number of shares outstanding ($45,000,000/3,000,000\$45,000,000 / 3,000,000).

Key Concept

Net Asset Value (NAV) Per Share Calculation
Estimated Time:45s
Rate this question

Topics

Investment Companies and Managed Funds

More questions from this topic