WIUC - INVESTMENT MANAGEMENT PRACTICE QUESTIONS SET 2 - MUTUAL FUNS (October 26, 2020) NET ASSET VALUE 1) The twenty-first century closed-end fund has GHS350 million in securities, GHSS million in liabilities and 20 million in shures outstanding. It trades at a 10% discount from net asset value (NAV) a) What is the net asset value of the tund? b) What is the current price of the fund? c) Suggest two reasons why the fund may be trading at a discount from net asset value NET ASSET VALUE 2) The new pioneer closed-fund has GHSS20 million in securities, GHSS in liabilities, and 10 million shares outstanding. It trades at a 5% premium above its net asset value (NAV). a) What is the net asset value of the fund? b) What is the current price of the fund? c) Why might a fund trade at a premium above its net asset value? LOAD FUNDS 3) In problem 2, if new pioneer converted to an open-end fund trading at its net asset value with a 6% load (commission), what would its purchase price be? LOAD VS NO-LOAD 4) In problem 2, if new pioneer converted to an open end fund and traded at GHS1.50, would it be a load or no load fund! LOAD FUNDS 5) An open-end fund is set up to charge a load. Its net asset value is GHS8.72 and its offer price is GHS9.25 a) What is the cedi value of the load (commission)? b) What percentage of the offer price does the load represent? c) What percentage of the net asset value does the load represent? d) Do load funds necessarily outperform no-load funds? c) How do no-load funds eam a return if they do not charge a commission? LOAD FUNDS In problem 5 assume the fund increased in value by GHS0.30 the first month after you purchased 300 shares A) What is your total cedi gain or loss? (compare the total current value with the total purchase amount) b) By what percentage would the net asset value of the shares have to increase for you to break even