If there are 25 million shares outstanding, what is net asset value? If a large
ID: 2744408 • Letter: I
Question
If there are 25 million shares outstanding, what is net asset value?
If a large investor redeems 5 million shares, what happens to the portfolio value? (Enter your answer in millions.)
If a large investor redeems 5 million shares, what happens to shares outstanding? (Enter your answer in millions.)
If a large investor redeems 5 million shares, what is net asset value?
$
The answer for B1 is not 96 million
b2 is 20 million
Need answer for b1 and b3
City Street Fund has a portfolio of $480 million and liabilities of $30 million.Explanation / Answer
a.
Total value of assets = 480 million
Total Liability = $30 million
Number of share outstanding = 25 million
NAV of each share is calculated below:
NAV = ($480 - $30) / 25
= $18
NAV of each share is $18.
b-1.
If an investor redeem 5 million share then portfolio value decrease by:
Decreases value = $18 × 5 million
= $90 million
So the portfolio value is decrease by 90 million.
b-2
If an investor redeem 5 million share then number of share outstanding decrease by 5 million share.
So new share outstanding = 25 million – 5 million
= 20 million
So after redeem of 5 million share total number of share outstanding is 20 million share.
b-3
Net Asset value after redeem = $18 × 20 million
= $360 million
Net assets value after redeem of 5 million share is $360 million.