SIE practice questionmediumMutual Funds — NAV Calculation
A mutual fund has total assets of $500 million, total liabilities of $20 million, and 20 million shares outstanding. What is the NAV per share?
- A$26.00
- B$19.17
- C$25.00
- D$24.00✓ Correct answer
Explanation
Why D — $24.00
NAV per share = (total assets - total liabilities) / shares outstanding = ($500M - $20M) / 20M = $480M / 20M = $24.00 per share. This is the fundamental NAV formula tested on the SIE. Remember to subtract liabilities from total assets before dividing by shares outstanding. The NAV is calculated at the close of each business day and determines the price at which open-end fund shares are bought and redeemed.
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