An Investment fund has $2 million in cash and $8 million Invested in securities. It currently has 2 million shares outstanding. a. What is the NAV of this fund? (Round your answer to 2 decimal places. (e.g., 32.16)) b. Assume that some of the shareholders decide to cash in their shares of the fund. How many shares, at its current NAV, can the fund take back without resorting to a sale of assets? c-1. As a result of anticipated heavy withdrawals, it sells 24,000 shares of IBM stock currently valued at $35. Unfortunately, It receives only $32 per share. What is the net asset value after the sale? (Round your answer to 2 decimal places. (e.g., 32.16) c-2. What are the fund's cash assets after the sale? (Enter your answers in millions rounded to 2 decimal places. (e.g., 32.16)) d-1. Assume after the sale of IBM shares, 200,000 shares are sold back to the fund. What is the current NAV? (Do not round Intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) d-2. Is there a need to sell more stocks to meet this redemption? Answer is not complete. a. NAV S 5.00 per share 66-62 b. Number of shares 400,000 C- Net asset value S 4.96 1. C- Cash S 2.77 million 2. Securities $ 7.16 million PLAN d- Current NAV 1. d- 2. Should more stocks be sold? No
An Investment fund has $2 million in cash and $8 million Invested in securities. It currently has 2 million shares outstanding. a. What is the NAV of this fund? (Round your answer to 2 decimal places. (e.g., 32.16)) b. Assume that some of the shareholders decide to cash in their shares of the fund. How many shares, at its current NAV, can the fund take back without resorting to a sale of assets? c-1. As a result of anticipated heavy withdrawals, it sells 24,000 shares of IBM stock currently valued at $35. Unfortunately, It receives only $32 per share. What is the net asset value after the sale? (Round your answer to 2 decimal places. (e.g., 32.16) c-2. What are the fund's cash assets after the sale? (Enter your answers in millions rounded to 2 decimal places. (e.g., 32.16)) d-1. Assume after the sale of IBM shares, 200,000 shares are sold back to the fund. What is the current NAV? (Do not round Intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) d-2. Is there a need to sell more stocks to meet this redemption? Answer is not complete. a. NAV S 5.00 per share 66-62 b. Number of shares 400,000 C- Net asset value S 4.96 1. C- Cash S 2.77 million 2. Securities $ 7.16 million PLAN d- Current NAV 1. d- 2. Should more stocks be sold? No
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter13: Investing In Mutual Funds, Etfs, And Real Estate
Section: Chapter Questions
Problem 7FPE
Related questions
Question
Bhupatbhai
Transcribed Image Text:An Investment fund has $2 million in cash and $8 million Invested in securities. It currently has 2 million shares outstanding.
a. What is the NAV of this fund? (Round your answer to 2 decimal places. (e.g., 32.16))
b. Assume that some of the shareholders decide to cash in their shares of the fund. How many shares, at its current NAV, can
the fund take back without resorting to a sale of assets?
c-1. As a result of anticipated heavy withdrawals, it sells 24,000 shares of IBM stock currently valued at $35. Unfortunately, It
receives only $32 per share. What is the net asset value after the sale? (Round your answer to 2 decimal places. (e.g., 32.16)
c-2. What are the fund's cash assets after the sale? (Enter your answers in millions rounded to 2 decimal places. (e.g.,
32.16))
d-1. Assume after the sale of IBM shares, 200,000 shares are sold back to the fund. What is the current NAV? (Do not round
Intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
d-2. Is there a need to sell more stocks to meet this redemption?
Answer is not complete.
a.
NAV
S
5.00
per
share
66-62
b.
Number of shares
400,000
C-
Net asset value
S
4.96
1.
C-
Cash
S
2.77
million
2.
Securities
$
7.16
million
PLAN
d-
Current NAV
1.
d-
2.
Should more stocks be sold?
No
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