Question: Please help with this a. How much would Melanie pay per share for the open-end fund? How much would she pay per share for the
Please help with this
a. How much would Melanie pay per share for the open-end fund? How much would she pay per share for the closed-end fund? b. Is the closed-end fund selling at a discount or a premium to its NAV? c. Given both funds' similar returns and expense ratios, would you recommend that Melanie purchase the closed-end fund? Why or why not? a. The amount Melanie would pay per share for the open-end fund would be \\( \\$ \\quad \\). (Round to the nearest cent.) The amount Melanie would pay per share for the closed-end fund would be \\( \\$ \\quad \\) (Round to the nearest cent.) b. Is the closed-end fund selling at a discount or a premium to its NAV? (Select the best answer below.) A. The closed-end fund is selling at a discount of \\( \\$ 8.90(\\$ 22.37-\\$ 13.47) \\) to its NAV. B. The closed-end fund is selling at a discount of \\( \\$ 6.01(\\$ 22.37-\\$ 16.36) \\) to its NAV. C. The closed-end fund is selling at a premium of \\( \\$ 6.01(\\$ 22.37-\\$ 16.36) \\) to its NAV. c. Given both funds' similar returns and expense ratios, would you recommend that Melanie purchase the closed-end fund? Why or why not? (Select the best answer below.) A. Yes, because the closed-end fund is selling at a discount, which means it is a good value and widely traded. Remember, closed-end funds are bought and sold in the secondary market similarly to stocks and bonds. B. The advantage to purchasing a closed-end fund at a discount is that you are purchasing ownership in international stocks for less than you could buy them outside the fund. However, the fact that the fund is selling at a discount could mean it is possible that the fund is not widely traded and therefore lacks liquidity. Remember, closed-end funds are bought and sold in the secondary market similarly to stocks and bonds. These issues would have to be weighed in making the decision to purchase
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