You are going to invest in a closed-end mutual fund and are told that the net asset value of the fund is $20.40, and the share price is $18.20. What is the discount you would receive or the premium that you would pay? A) 0.1209. B) -0.1078. C) -0.1209. D) 0.1078.
C 18.2 - 20.4/18.2
do you consider it a discount? and you use (face value- price)/face value? schweser answer: Your answer: A was incorrect. The correct answer was B) -0.1078. 18.20 − 20.40 = -0.1078 20.40
Guess I mess that one up. The NAV is higher than the share price so you are getting a small discount. FV - Price/Price Ugh, this exam is killing me!
(price - NAV) / NAV = -10.78% So you get a 10.78% discount from NAV