Explanation:
The NAV is computed as:
\frac{(\`$1`,500 + \`$625` + \`$58`) - 2.12}{41.8} = \`$52.17`Investors who wish to buy or sell this fund will transact at exactly $52.17 per share. For an open-end mutual fund, the NAV is not calculated until after the market closes on the trading day in question.
(Book 3, Module 29.1, LO 29.c)
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Question 53
Consider an open-end mutual fund that owns $1.5 billion in equities, $625 million in bonds, and $58 million in cash. The fund owes $2.12 million in management fees payable at this point in the quarter, and it has 41.8 million shares outstanding. What is this fund's net asset value (NAV), and how often is this value computed?
A
$22.27 | Close of trading each day
B
$22.27 | Continuously throughout the trading day
C
$52.17 | Continuously throughout the trading day
D
$52.17 | Close of trading each day
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