The Closed Fund is a closed-end investment company with a portfolio currently worth $215 million. It has liabilities of $6 million and 4 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 $49 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 an % Discount from NAV. |
Explanation:a.
| NAV = | Market value of assets – Market value of liabilities |
| Shares outstanding |
| = | $215,000,000 – $6,000,000 | = $52.25 | |||
| 4,000,000 | |||||
b.
| Premium (or discount) = | Price – NAV | = | $49 – $52.25 | = –0.0622 = –6.22% | ||||
| NAV | $52.25 | |||||||
The fund sells at an 6.22% discount from NAV.