Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

can someone solve this on urgent basis .... Q4. A mutual fund has $1 million in cash and $8 million invested in securities. It currently

can someone solve this on urgent basis ....
image text in transcribed
image text in transcribed
Q4. A mutual fund has $1 million in cash and $8 million invested in securities. It currently has 2 million shares outstanding. What is the net asset value (NAV) of this fund? a. 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? b. As a result of anticipated heavy withdrawals, the fund sells 12,000 shares of IBM stock currently valued at $40. Fortunately, it receives only $42 per share. What is the net asset value after the sale? What are the cash assets of the fund after the sale? c. Assume that after the sale of IBM shares, 100,000 shares are bought back to the fund. What is the current NAV? Is there a need to sell more securities to meet this redemption? (20 marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions