4. A Mutual Fund Owns 400 Shares Of Fiat, Ins., Currently Trading At Rs 7, And 400 Shares Of Microsoft, Inc.,
Currently Trading At Rs 70. The Fund Has 100 Shares Outstanding.
(a) What is the Net Asset Value (NAV) of the fund?
(b) If Investors Expect The Price Of Fiat Shares To Increase To Rs 9 And The Price Of Microsoft Shares To
Decrease To Rs 55 By The End Of The Year, What Is The Expected NAV At The End Of The Year?
Answers
Explanation:
Mutual Fund of Fiat;
Number of shares = 400
Price per share = 7
Microsoft shares;
Number of shares = 400
Price per share = 70
Number of outstanding shares = 100
a)
As per data given, Net asset value would be;
NAV = (400 × 7 + 400 × 70 )/ 100 = 30800/100 = Rs 30.8
b)
As per given information in part b;
NAV = (400 × 9 + 400 × 55 )/ 100 = 25600/100 = Rs 25.6
Hence the Net asset value would see a decrease
Answer:
(a). Net Asset Value (NAV) = Rs 308.00
(b). The Expected NAV = Rs 256.00
Explanation:
Given :
Fiat, Ins. (total share) = 400 Shares
Fiat, Ins. (Currently Trading rate) = Rs 7
Microsoft, Inc. (total share) = 400 Shares
Microsoft, Inc. (Currently Trading rate) = Rs 70
Fund's not received in account = 100 Shares
To find :
Net Asset Value (NAV) of the fund
The Expected NAV At The End Of The Year
Solution:
(a).
NAV stands for Net Asset Value
★ Net Asset Value (NAV) :
⇒ (400 × 7 + 400 × 70) / 100
⇒ 2,800 + 28,000 /100
⇒ 30,800 / 100
⇒ 308
⇒ Rs 308.00
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(b).
★ The Expected NAV :
⇒ (400 × 9 + 400 × 55) / 100
⇒ 3,600 + 22,000 / 100
⇒ 25,600 / 100
⇒ 256
⇒ Rs 256.00
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.°. (a). Net Asset Value (NAV) = Rs 308.00
(b). The Expected NAV = Rs 256.00