Suppose that a mutual fund has the following assets and liabilities. Item Amount Stock (at current market value) Rs. 20,000,000 Bonds (at current…
BBS Management of Financial Institutions · 2078 · Solved Question with Answer
Suppose that a mutual fund has the following assets and liabilities.
| Item | Amount |
| Stock (at current market value) | Rs. 20,000,000 |
| Bonds (at current market value) | Rs. 10,000,000 |
| Cash | Rs. 500,000 |
| Total value of shares | Rs. 30,500,000 |
| Less: Liabilities | Rs. 300,000 |
| Net worth | Rs. 30,200,000 |
Number of outstanding shares : 10 million
a. What is the net asset value (NAV)?
b. If the value of stock held in portfolio rises by 10 percent and value of bond held in the portfolio falls by 2 percent, and cash and liabilities remain the same, what will be net asset value?
c. What will be the yield on your investment in the mutual fund if you purchase the mutual fund at NAV calculated in part 'a' and sell the unit at NAV calculated in part 'b'?