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Fudgin [204]
3 years ago
9

The Closed Fund is a closed-end investment company with a portfolio currently worth $195 million. It has liabilities of $20 mill

ion and 5 million shares outstanding. a. What is the NAV of the fund? (Round your answer to 2 decimal places.) b. If the fund sells for $40 per share, what is its premium or discount as a percent of net asset value? (Input the amount as a positive value. Round your answer to 2 decimal places.)
Business
1 answer:
7nadin3 [17]3 years ago
4 0

Answer:

NAV is $35 per share

premium is 14.30%

Explanation:

The formula for net asset value can be  used in calculating the NAV of thi closed fund before comparing the NAV with selling price of the fund in order to ascertain whether a discount or premium has been recorded on the fund as shown below:

NAV=Total assets- total liabilities/number of shares

total fund assets is worth $195 million

total fund liabilities is $20 million

there are 5 million shares outstanding

NAV=$195 million-$20 million/5 million

       =$175 million/5 million

         =$35.00 per share

Premium on the fund=($40-$35)/$35

                                     =$5/$35

                                      =14.30% premium

The fund has 14.30% premium

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Answer:

The amount of the last annual dividend paid is <u>$4.3</u>.

Explanation:

Given:

The common stock of Zeta Group sells for $42 per share, has a rate of return of 12.2 percent, and a dividend growth rate of 1.8 percent annually.

Now, to find the amount of last annual dividend paid.

Let the amount of last annual dividend paid be l.

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Now, to get the amount of last dividend paid we put formula:

p=\frac{l(1+g)}{r-g}

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42=\frac{l\times 1.018}{0.104}

<em>Multiplying both sides by 0.104 we get:</em>

<em />4.368=1.018l<em />

<em>Dividing both sides by 1.018 we get:</em>

4.3=l

l=\$4.3.

Therefore, the amount of the last annual dividend paid is $4.3.

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