A mutual fund has the following assets in its portfolio: $40 million in fixed-income securities and $40 million in stocks at current market values. In the event of a liquidity crisis, it can sell its assets at a 96 percent discount if they are disposed of in two days. It will receive 98 percent if disposed of in four days. Two shareholders, A and B, own 5 percent and 7 percent of equity (shares), respectively. (LG 21-7)

a. Market uncertainty has caused shareholders to sell their shares back to the investment. What will the two share- holders receive if the mutual fund must sell all its assets in two days? In four days?

b. How does this differ from a bank run? How have bank regulators mitigated the problem of bank runs?