Question

The Closed Fund is a closed-end investment company with a portfolio currently worth $270 million. It has liabilities of $3 million and 4 million shares outstanding.

a. What is the NAV of the fund? (Round your answer to 2 decimal places.)

b. If the fund sells for $63 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.)

Answer 1

a. The NAV of the fund is computed as shown below:

= ( Portfolio current worth - Liabilities ) / Number of shares outstanding

= ( $ 270 million - $ 3 million ) / 4 million

= $ 66.75

b. The premium or discount is computed as follows:

= ( $ 63 - $ 66.75 ) / $ 66.75

= 5.62% Discount

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