Question

What is the net asset value of the Merrill Schwab Contra Fund, which has five million shares outstanding and a total portfolio that is valued at $775 million, if its liabilities are $25 million

Answer 1

The net asset value (NAV) of the Merrill Schwab Contra Fund is calculated by subtracting the fund's liabilities from its total portfolio value, and then dividing by the number of outstanding shares. With $775 million in assets, $25 million in liabilities, and 5 million shares outstanding, the NAV per share is $150.

Step-by-step explanation:

To calculate the net asset value (NAV) of the Merrill Schwab Contra Fund, we need to subtract the fund's total liabilities from its total portfolio value, and then divide the result by the number of outstanding shares. In this case:

• Total portfolio value: $775 million
• Liabilities: $25 million
• Outstanding shares: 5 million

First, we find the net assets of the fund by subtracting the liabilities from the total portfolio value:

Net assets = Total portfolio value - Liabilities
= $775 million - $25 million
= $750 million

Then, we calculate the net asset value per share by dividing the net assets by the number of outstanding shares:

NAV per share = Net assets / Outstanding shares
= $750 million / 5 million shares
= $150 per share