Net Asset Value

CFA Level I
#1

EDIT: Sorry about the format. It looks fine in the preview box but prints in a single column. The number in each column represent stock name, shares, price, book value.

I am confused by the following question:

Based on the following information, what is the net asset value (NAV) per share. There are currently no expenses and no load.

Cap Stock Sold $109,000 Price per share $10 Stock Shares Price__Book Value A 1,051 $10 $5 B 2,420 $35 $29 C 1,851 $9 $8 D 900 $69 $63 A) $13.26. B) $27.03. C) $15.96.

The correct answer is ‘C’ and it is derived by mutiplying each price by the number of shares and dividing by 10,900 (=$10,900/$10). I have two questions:

  1. Why are the shares multiplied by the price and not the book value. Isn’t NAV = assets - liabilities = book value?

  2. Why do you divide by 10,900 instead of the sum of the shares in the table?

Thanks.

#2

  1. The funds reflect market asset prices i.e fair value

  2. It is the amount of shares outstanding from the fund not the individual stocks.

I hope this helps.