An investor buys 400 shares of stock in a fund when the net asset value is $23.79 and the offer price is $23.89. The investor sells these shares when the net asset value is $50.34 and the offer price is $50.46. Determine the amount of profit the investor earns.
The net asset value of stock in a mutual fund had increased by $20 per share when an investor decided to redeem them. The investor had purchased 100 shares of the stock for $2,316 and redeemed them for $4,301. What can you conclude about the fund?
Nezzie invests in 300 shares of stock in the fund shown below.Name of FundNAVOffer PriceLKIT Mid-Cap$16.58$16.99Nezzie plans to sell all of her shares when she can profit $5,000. What must the net asset value be in order for Nezzie to sell?
Nezzie invests in 300 shares of stock in the fund shown below.Name of FundNAVOffer PriceLKIT Mid-Cap$16.58$16.99Nezzie plans to sell all of her shares when she can profit $5,000. What must the net asset value be in order for Nezzie to sell?
Explain why the offer price is used to calculate the investment in a load mutual fund instead of the net asset value.
The offer price is used because it includes the mutual fund's sales charge, or load. The NAV only represents the value of the fund's assets per share and does not include this charge, so the offer price determines the amount invested in a load fund.
Which of the following expressions is equal to the total investment of a no-load mutual fund?
Nyromi redeemed 250 shares of stock she owned in the fund shown below.Name of FundNAVOffer PriceUpton Group$18.47$18.96What were Nyromi’s proceeds?
Use the information in the table below to answer the following question.Name of FundNAVOffer PriceUpton Group$18.47$18.96Green Energy$17.29$18.01TJH Small-Cap$18.43$19.05WHI Health$20.96NLPhillipe buys 50 shares of Green Energy and 120 shares of TJH Small-Cap. What is Phillipe’s total investment?
Salazar made an investment in 140 shares of stock in a no-load fund for $2,993.20. After one year the stock had a net asset value of $24.53 per share. If Salazar redeems all 140 shares, which of the following is a correct statement?
You are a financial advisor with a client who purchased 100 shares of stock in a fund with a net asset value of $21.30 and an offer price of $21.45. Your client wants to make $20 per share on the stock when it is sold. The client calls you to find out why you have not sold the shares today, because they saw the stock listed with a net asset value of $41.30 and an offer price of $41.45. Explain to your client why you have not sold the shares.
The shares have not been sold because mutual fund shares are redeemed at the NAV, not the offer price. The client paid $21.45 per share, so to earn $20 per share, the NAV must be $41.45. At the current NAV of $41.30, the profit would be only $19.85 per share.
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