1. Assume that 100,000 shares are outstanding for the fund and the fund currently holds cash value of $50,000 and has a liability of $30,000. What is the net asset value (NAV) for the fund? 

(2) A new investor sends the fund a check for $12,500 before 4 PM on January 1st. The fund charges 4% front-end load. Assume that the manager uses the received money to purchase 50 shares of Deere & Co. and 400 shares of Ford Motor at the closing price, and the rest (if there is any) is held as cash.

Question: What will happen to the number of shares outstanding for the fund?

A.The number of shares outstanding will increase by 1,060 shares.

B.The number of shares outstanding will increase by 1,000 shares.

C.The number of shares outstanding will not change.

D.The number of shares outstanding will increase by 1,042 shares.

3.Question: What will be the NAV for the fund on January 2nd? Assume that, on January 2nd, Vanguard Willington Fund still has a liability of $30,000 and still holds initial cash value of $50,000 plus left-over cash (if there is any) after the purchase of shares of Deere & Co. and Ford Motor on January 1st.

A.$10.65

B.$12.00

C.$11.00

D.$11.80

4.Question: The same investor decides to redeem all fund shares that he/she has bought on January 1st and submits an order to redeem before 4 PM on January 2nd. Assume that the fund also charges 1% back-end load. What is this investor's one-day rate of return?

A.-12.88%

B.-9.25%

C.1.65%

D.-15.43%

Answer rating: 100% (QA)

The detailed answer for the above question is provided below Step 1 Initial NAV calculation Total as... View the full answer