Question

you are considering the purchase of shares in a closed-end mutual fund. the nav is equal to $26.80 and the latest close is $27.00. is this fund trading at a premium or a discount? how big is the premium or discount?

Answer 1

The closed-end mutual fund is trading at a premium of $0.20 per share, derived from the latest close price of $27.00 being higher than the NAV of $26.80.

Step-by-step explanation:

When considering the purchase of shares in a closed-end mutual fund, the fund is trading at a premium if the latest close price is higher than the net asset value (NAV). In this case, since the NAV is $26.80 and the latest close is $27.00, the fund is indeed trading at a premium. The size of the premium is calculated by subtracting the NAV from the latest closing price. Therefore, the premium is $27.00 - $26.80 = $0.20 per share.

Answer 2

The closed-end mutual fund is trading at a premium of $0.20 per share, which is approximately 0.746% above its net asset value (NAV) of $26.80.

Step-by-step explanation:

If you are considering the purchase of shares in a closed-end mutual fund and you've noticed that the net asset value (NAV) is $26.80 while the latest close is $27.00, this fund is trading at a premium. The premium is calculated by subtracting the NAV from the closing price. In this case:

Premium = Latest Close - NAV
Premium = $27.00 - $26.80
Premium = $0.20 per share

The fund is trading at a premium of $0.20 per share. The percentage of the premium can also be calculated by taking the premium per share and dividing it by the NAV, then multiplying by 100 to convert it to a percentage:
Percentage of Premium = ($0.20 / $26.80) × 100
Percentage of Premium = 0.746% approximately