A mutual fund owns 400 shares of Fiat, Inc., currently trading at $7, and 400 shares of Microsoft, Inc., currently trading at $70. The fund has 100 shares outstanding.

a. What is the net asset value (NAV) of the fund?

b. If investors expect the price of Fiat shares to increase to $9 and the price of Microsoft shares to decrease to $55 by the end of the year, what is the ex- pected NAV at the end of the year?

c. Assume that the expected price of the Fiat shares is realized at $9. What is the maximum price decrease that can occur to the Microsoft shares to real- ize an end-of-year NAV equal to the NAV estimated in (a)?