Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose today a mutual fund contains 2 , 0 0 0 shares of JPMorgan Chase, currently trading at $ 7 0 . 7 5 ,

Suppose today a mutual fund contains 2,000 shares of JPMorgan Chase, currently trading at $70.75,1,000 shares of Walmart,
currently trading at $69.10, and 2,500 shares of Pfizer, currently trading at $37.50. The mutual fund has no liabilities and 10,000 shares
outstanding held by investors.
a. What is the NAV of the fund?
b. Calculate the change in the NAV of the fund if tomorrow JPMorgan's shares increase to $72, Walmart's shares increase to $74, and
Pfizer's shares decrease to $36.
c. Suppose that today 1,000 additional investors buy one share each of the mutual fund at the NAV of $30.435. This means that the
fund manager has $30,435 in additional funds to invest. The fund manager decides to use these additional funds to buy additional
shares in JPMorgan Chase. Calculate tomorrow's NAV given the same rise/fall in share values as assumed in part (b).
(For all requirements, do not round intermediate calculations. Round your answers to 3 decimal places. (e.g.,32.161))
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Recommended Textbook for

Financial Management Principles And Applications

Authors: J William Petty, Sheridan Titman, Arthur J Keown, John D Martin, Peter Martin, Michael Burrow, Hoa Nguyen

6th Edition

1442539178, 9781442539174

More Books

Students also viewed these Finance questions

Question

What are the pros and cons regarding Angelica joining the union?

Answered: 1 week ago