Question

CH16&17HWK 0 Help Save & Exit Submit Check my work Suppose today a mutual fund contains 2.000 shares of JPMorgan Chase, currently trading at $66.75, 1,000 shares of Walmart, currently trading at $65.10, and 2,500 shares of Pfizer, currently trading at $33.50. The mutual fund has no liabilities and 10,000 shares outstanding held by Investors. points a. What is the NAV of the fund? b. Calculate the change in the NAV of the fund if tomorrow JPMorgan's shares increase to $68, Walmart's shares increase to $70, and Pfizer's shares decrease to $32. c. Suppose that today 1,000 additional Investors buy one share each of the mutual fund at the NAV of $28.235. This means that the fund manager has $28,235 In additional funds to Invest. The fund manager decides to use these additional funds to buy additional shares in JPMorgan Chase. Calculate tomorrow's NAV given the same rise in share values as assumed in (b). Book References (For all requirements, do not round Intermediate calculations. Round your answers to 3 decimal places. (e.g 32.161)) NAV of the Fund b. Change in NAV Tomorrow's NAV < Prev 10 of 10 Next

Answer 1

A)	Calculation of NAV of the fund
		Particulars	No. of shares	Price per share	Total value (no. of share*market price)
		JP morgan	2000	$66.75	$133,500.00
		Walmart	1000	$65.10	$65,100.00
		Pfizer	2500	$33.50	$83,750.00
				Total	$282,350.00
		NAV	=	toatl value/no. of shares outsatanding
			=	$282,350/10,000
			=	$28.235
b)	Calculation of NAV of the fund
		Particulars	No. of shares	Price per share	Total value (no. of share*market price)
		JP morgan	2000	$68.00	$136,000.00
		Walmart	1000	$70.00	$70,000.00
		Pfizer	2500	$32.00	$80,000.00
				Total value	$286,000.00
		NAV	=	total value/no. of shares outsatnding
			=	$286000/10,000
			=	28.600
		Change in NAV	=	(Current NAV-Previous NAV)/Previous NAV
			=	($28.6-$28.235)/$28.235
			=	0.012927 or 1.29%
c)	Additional fund		=	$28,235
	No. of shares of JP morgan purchased today additionally
			=	Additional fund/today's price
			=	$28235/$66.75
			=	423.00
	total no. of shares of JP morgan		=	Presently held shares + additional purchased shares
			=	2000+423
			=	2423
		toatl no. of shares of fund	=	Present shares + additional issued
			=	10000+1000
			=	11,000 shares
	Calculation of NAV of the fund
		Particulars	No. of shares	Price per share	Total value (no. of share*market price)
		JP morgan	2423	$68.00	$164,764.00
		Walmart	1000	$70.00	$70,000.00
		Pfizer	2500	$32.00	$80,000.00
				Total	$314,764.00
		NAV	=	toatl value/no. of shares outsatnding
			=	$314764/11,000
			=	$28.61
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