An investment fund has $ 1 million in cash and $ 9 million invested in securities. It

Question:

An investment fund has $ 1 million in cash and $ 9 million invested in securities. It currently has 1 million shares out-standing.
a. What is the NAV of this fund?
b. Assume that some of the shareholders decide to cash in their shares of the fund. How many shares, at its current NAV, can the fund take back without resorting to a sale of assets?
c. As a result of anticipated heavy withdrawals, it sells 10,000 shares of IBM stock currently valued at $ 40. Unfortunately, it receives only $ 35 per share. What is the net asset value after the sale? What are the fund’s cash assets after the sale?
d. Assume after the sale of IBM shares, 100,000 shares are sold back to the fund. What is the current NAV? Is there a need to sell more to meet this redemption?

Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...