Question

The net asset value of stock in a mutual fund had increased by $20 per share when an investor decided to redeem them. The investor had purchased 100 shares of the stock for $2,316 and redeemed them for $4,301. What can you conclude about the fund?
a.
The fund is a no-load fund.
b.
The offer price of the fund was $0.15 less than the net asset value when purchased.
c.
The offer price of the fund was $0.15 more than the net asset value when purchased.
d.
The offer price of the fund was $0.15 more than the net asset value when sold.

Answer 1

c.

Per-share purchase = $2,316/100 = $23.16; per-share redemption = $4,301/100 = $43.01. NAV rose by $20, so NAV at purchase = $43.01 − $20 = $23.01. The investor paid $23.16, which is $0.15 above the NAV at purchase.