Consider the recent performance of the Closed Fund, a closed-end fund devoted to
ID: 2700814 • Letter: C
Question
Consider the recent performance of the Closed Fund, a closed-end fund devoted to finding<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
undervalued, thinly traded stocks:
Period NAV Premium/Discount
0 $10.00 0.0%
1 11.25 %u22125.0
2 9.85 +2.3
3 10.50 %u22123.2
4 12.30 %u22127.0
Here, price premiums and discounts are indicated by pluses and minuses, respectively,
and Period 0 represents Closed Fund%u2019s initiation date.
a. Calculate the average return per period for an investor who bought 100 shares of the
Closed Fund at the initiation and then sold her position at the end of Period 4.
b. What was the average periodic growth rate in NAV over that same period?
c. Calculate the periodic return for another investor who bought 100 shares of Closed
Fund at the end of Period 1 and sold his position at the end of Period 2.
d. What was the periodic growth rate in NAV between Periods 1 and 2?
Explanation / Answer
a, value of 1 share at the end of 1 period: 11.1
value of 1 share at the end of 2 period: 12.4
value of 1 share at the end of 3 period: 13.54
value of 1 share at the end of 4 period:15.04
so, for 100 shares:
$1504 for 100 shares
b. rate:the average growth rate is 11,1 % for 1 period but is 50.4% for the season
c. for the one who brought closed shares:
he will get the other rates as mentioned and the calculation will depend on it
d. the periodic growth rate : 11.4% from the above results!
answer!