Calculate the updated NAV of the fund

Assignment Help Financial Management

Reference no: EM13847156

Suppose today a mutual fund contains 2,000 shares of JP Morgan Chase, currently trading at $46.75; 1,000 shares of Walmart, currently trading at $70.10; and 2,500 shares of Pfizer, currently trading at $27.50. The mutual fund has 10,000 shares outstanding held by investors.

(a) What is today's NAV of the fund?

(b) Calculate the updated NAV of the fund if tomorrow JP Morgan Chase's shares increase to $50, Walmart's shares increase to $73, and Pfizer shares increase to $30.

(c) Suppose that today 1,000 additional investors buy one share each of the mutual fund at the NAV of $23.235. This means that the fund manager has $23,235 additional funds to invest. The fund manager decides to use these additional funds to buy additional shares in JP Morgan Chase at today's price. Calculate tomorrow's NAV given the same rise in share values as assumed in part b.

Reference no: EM13847156

Questions Cloud

Assume that first withdrawal will be made day you retire : You plan to deposit $2,400 per year for 4 years into a money market account with an annual return of 2%. You plan to make your first deposit one year from today. What amount will be in your account at the end of 4 years? Assume that your first withdr..

Withdraw money at the end of each year : At the end of this year you deposit $3000 into a saving account. Each year you plan to increase the amount by 2%. If you can earn 5% in your savings account, how much money will you have in 20 years? Suppose you have saved $1,000,000. You plan to wit..

Compute the optimal capital budget : The cost of debt for firm XYZ is 6%. Its tax rate is 40%. The cost of retained earnings is 12% and the cost of external common equity is 14%. Retained earnings are $5000. The target capital structure calls for 45% debt and 55% equity. Compute the opt..

Invest lump sum amount in an equity fund : Today, you invest a lump sum amount in an equity fund that provides an 10% annual return. You would like to have $11,700 in 6 years to help with a down payment for a home. How much do you need to deposit today to reach your $11,700 goal?

Calculate the updated NAV of the fund : Suppose today a mutual fund contains 2,000 shares of JP Morgan Chase, currently trading at $46.75; 1,000 shares of Walmart, currently trading at $70.10; and 2,500 shares of Pfizer, currently trading at $27.50. Calculate the updated NAV of the fund if..

Firms target capital structure-debt and common equity : You are given the following data for a company: Cost of debt = 8%, cost of retained earnings = 12%, cost of new common equity = 14%, tax rate = 35% and retained earnings = $1000. The firms target capital structure is 40% debt and 60% common equity.

What must the coupon rate be on the bonds : Page Enterprises has bonds on the market making annual payments, with twelve years to maturity, and selling for $960. At this price, the bonds yield 6.50 percent. What must the coupon rate be on the bonds?

What is the maximum amount of cash that the global satellite : Global Satellite Corp. reported net sales of $450 million last year and generated a net income of $99 million. Last year's accounts receivable increased by $14 million. What is the maximum amount of cash that the Global Satellite Corp. received from ..

Prepare the companys cash budget : Parliman Corporation is preparing its cash budget for August. The budgeted beginning cash balance is $12,000. Budgeted cash receipts total $159,000 and budgeted cash disbursements total $162,000. Prepare the company's cash budget for August in good f..

User Account

All Pages