Open-end Fund A owns 1,000 shares of Canadian Tire currently valued at $36.84 each, 2,000 shares of Air Canada currently valued at $43.22 each and 1,500 shares of CIBC currently valued at $46.34. Closed-end Fund B owns 950 shares of Canadian Tire and 2,500 shares of CIBC. Each fund has 15,000 shares of stock outstanding held by investors.

1.What is the NAV of Fund A?

2.What is the NAV of Fund B?

3.Assume that in one month the price of Canadian Tire shares has increased to $43.83 and the price of CIBC has decreased to $42.7.

4.What is the new NAV of fund A implied by these changes?

5.What would be the percentage return from investing in fund A if it was purchased at the NAV prices in part (a) and sold at month end ? (the month end NAV price is the one you just calculated above)

6.Assume that the price of Air Canada rises to $47.32. To what level should the price of CIBC shares decline in order for the NAV of open-end Fund A to remain equal to the NAV estimated in part (a)? (The required answer refers to the new price level not the change in price)

7.Suppose that today 1000 additional investors buy one share each of the open-end Fund A at the NAV of $14.17. The fund manager decides to use these additional funds to buy additional shares in Air Canada.

8.How many shares of Air Canada can be bought using the additional funds? Assume the same share price for Air Canada as that used in part (a).

9.What is the new NAV of the fund given the same share values as those assumed in the estimation of the NAV in part (a).