Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Focus Fund is a mutual fund that holds long-term positions in a small number of nondividend paying stocks. Its holdings at the end of

image text in transcribed
image text in transcribed
The Focus Fund is a mutual fund that holds long-term positions in a small number of nondividend paying stocks. Its holdings at the end of two recent years are as follows: Stock B c D E F G 1 3 L M Cash Expenses At the end of both years, Focus Fund had 5,480,000 shares outstanding, YEAR 1 Shares Price 110,000 $45.30 205,000 $26.08 380,000 $14.70 125,000 $87.88 144,000 $56.60 165,000 $66.50 215,000 $32.80 250,000 $15.90 460,000 $9.68 90,000 $71.45 85,000 $42.83 137,000 $20.83 0 $17.50 $3,558,000 $710,000 YEAR 2 Shares Price 110,000 $48.95 205,000 $25.00 380,000 $12.43 125,000 $99.20 144,000 $63.50 165,000 $73.00 215,000 $38.73 250,000 $8.60 460,000 $27.60 90,000 $76.08 85,000 $49.13 0 $27.93 175,000 $19.70 $2,842,000 $818,000 2. Calculate the net asset value for a share of the Focus Fund at the end of Year 1, being sure to include the cash position in the net total portfolio value. Do not round intermediate calculations. Round your answer to the nearest cent. b. Immediately after calculating its Year 1 NAV, Focus Fund sold its position in Stock Land purchased its position in Stock M (both transactions were done at Year 1 prices). Calculate the Year 2 NAV for Focus Fund, and compute the growth rate in the fund share value on a percentage basis. Do not round intermediate calculations. Round your answer for NAV to the nearest cent and for the growth rate to two decimal places Year 2 NAV: $ Growth rate: c. At the end of Year 2, how many fund shares of the Focus Fund could the manager redeem without having to liquidate her stock positions that is using only the cash account)? Do not round Intermediate calculations. Round your answer to the nearest whole number. Use unrounded values from previous parts. shares d. If immediately after calculating the Year 2 NAV the manager received investor redemption requests for 530,000 shares, how many shares of each stock would she have to sell in order to maintain the same proportional ownership position in each stock? Assume that she liquidates the entire cash position before she selts any stock holdings. Do not round Intermediate calculations, Round your answers to the nearest whole number. If your answer is zero, enter "o". Use unrounded values from previous parts. Stock Number of shares Sold A D E F G 1 M

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

The Oxford Handbook Of Entrepreneurial Finance

Authors: Douglas Cumming

1st Edition

0195391241, 978-0195391244

More Books

Students also viewed these Finance questions

Question

For a 2-curve with df = 10, determine a. 2 0.05. b. 20.975.

Answered: 1 week ago