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19 January, 14:14

The Closed Fund is a closed-end investment company with a portfolio currently worth $200 million. It has liabilities of $3 million and 5 million shares outstanding. a. What is the NAV of the fund? (Round your answer to 2 decimal places.) NAV $ b. If the fund sells for $36 per share, what is its premium or discount as a percent of NAV? (Input the amount as a positive value. Round your answer to 2 decimal places.) The fund sells at a (n) % from NAV.

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  1. 19 January, 14:37
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    a. $39.40 per share

    b. 8.63%

    Explanation:

    a. The computation of the NAV of the fund is shown below:

    = (Assets - liabilities) : (Number of outstanding shares)

    = ($200 million - $3 million) : (5 million shares)

    = ($197 million) : (5 million shares)

    = $39.40 per share

    b. The computation of the premium or discount as a percent of NAV is shown below:

    Since the selling price is $36 but its NAV is $39.40

    So, the discount would be equal to

    = $39.40 - $36

    = $3.40

    The discount percentage equals to

    = $3.40 : $39.40

    = 8.63%
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