Question

An open-end mutual fund has the following stocks: stock shares stock price a 8,500 $ 93 b 33,000 22 c 6,000 80 d 76,000 13 the fund has 54,000 shares and liabilities of $145,000. assume the fund is sold with a front-end load of 5.75 percent. what is the offering price of the fund?

Answer 1

$3,002,951.25

Step-by-step explanation:

To calculate the offering price of the fund, we need to consider the total value of the stocks, liabilities, and the front-end load.

Calculate the total value of the stocks:

For each stock, multiply the number of shares by the stock price, and sum up the values:

Value of stock a = 8,500 shares * $93 = $790,500

Value of stock b = 33,000 shares * $22 = $726,000

Value of stock c = 6,000 shares * $80 = $480,000

Value of stock d = 76,000 shares * $13 = $988,000

Total value of the stocks = $790,500 + $726,000 + $480,000 + $988,000 = $2,984,500

Calculate the total liabilities:

Total liabilities = $145,000

Calculate the net asset value (NAV) of the fund:

NAV = Total value of the stocks - Total liabilities

= $2,984,500 - $145,000

= $2,839,500

Calculate the front-end load:

Front-end load = NAV * 5.75%

= $2,839,500 * 0.0575

= $163,451.25

Calculate the offering price of the fund:

Offering price = NAV + Front-end load

= $2,839,500 + $163,451.25

= $3,002,951.25

Therefore, the offering price of the fund is approximately $3,002,951.25