A closed-end fund has total assets of $315 million and liabilities of $160,000.
ID: 2722689 • Letter: A
Question
A closed-end fund has total assets of $315 million and liabilities of $160,000. Currently, 16 million shares are outstanding. What is the NAV of the fund? If the shares currently sell for $17.8, what is the premium or discount on the fund? (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round the NAV to 2 decimal places. Enter the premium or discount as a percent rounded to 2 decimal places. Omit the "$" & "%" signs in your response.)
A closed-end fund has total assets of $315 million and liabilities of $160,000. Currently, 16 million shares are outstanding. What is the NAV of the fund? If the shares currently sell for $17.8, what is the premium or discount on the fund? (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round the NAV to 2 decimal places. Enter the premium or discount as a percent rounded to 2 decimal places. Omit the "$" & "%" signs in your response.)
Explanation / Answer
Total value of assets = 315 million
Total Liability = $160,000
Number of share outstanding = 16 million
NAV of each share is calculated below:
NAV = ($315,000,000 - $160,000) / 16,000,000
= $19.6775
NAV of each share is $19.68.
Current market price is $17.8.
Market price is less than of NAV so share is sell on discount.
Discount = $19.68 -$17.80
= $1.88
Hence, value of discount is $1.88.
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