A mutual fund has 400 shares of General Electric, currently trading at $10, and

Question

A mutual fund has 400 shares of General Electric, currently trading at $10, and 500 shares of Microsoft, Inc., currently trading at $35. The fund has 1,200 shares outstanding.

What is the NAV of the fund? (Round your answer to 1 decimal place. (e.g., 32.1))

If investors expect the price of General Electric to increase to $20 and the price of Microsoft to decline to $20 by the end of the year, what is the expected NAV at the end of the year?

Assume that the price of General Electric shares does change to $20. What is the lowest price to which Microsoft can decline that will still maintain the same NAV as estimated in (a)? (Do not round intermediate calculations.)

A mutual fund has 400 shares of General Electric, currently trading at $10, and 500 shares of Microsoft, Inc., currently trading at $35. The fund has 1,200 shares outstanding.

Explanation / Answer

A) The formula to calculate NAV (Net Asset Value) of a mutual fund is = (Total Assets of the fund

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