What is known as the net asset value (NAV)?
A) The closing price of the securities that comprise a particular fund's portfolio plus the value of any uninvested cash that the fund manager maintains for the fund
B) A concept used in finance and economics, defined as a rational and unbiased estimate of the potential market price of a good, service, or asset
C) The value of an entity's assets less the value of its current liabilities at the end of the trading day
D) The difference between the replacement cost of a fixed asset and its book value appearing on the balance sheet

Question

Quizplus · Accepted Answer

The net asset value (NAV) of a fund is calculated by adding up the total value of the fund's assets, including any cash holdings, and then subtracting any liabilities. This calculation is done at the end of each trading day and the resulting NAV is used to determine the price at which shares in the fund can be bought or sold. Therefore, option A is the most accurate description of NAV. Option B describes the concept of fair value, while options C and D describe other financial concepts that are not relevant to NAV.

What Is Known as the Net Asset Value (NAV)