Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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
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))
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started