Eveningstar open-end fund has 1,000 shares outstanding and has the following assets in its portfolio: 100 shares of Procter & Gamble (P&G)priced at $30.00,300 shares of Intel priced at $50.00 and 200 shares of Microsoft priced at $60.00.The Morningstar closed-end fund has the following stocks in its portfolio: 300 shares of P&G and 300 shares of Microsoft.It has a total of 500 shares outstanding.
-Suppose Morningstar issues another 250 shares and purchases shares of Intel with the funds.What is its new NAV of Morningstar? (Assume the NAV found before the price change in P&G and Microsoft in the previous question).

Question

Eveningstar open-end fund has 1,000 shares outstanding and has the following assets in its portfolio: 100 shares of Procter & Gamble (P&G)priced at $30.00,300 shares of Intel priced at $50.00 and 200 shares of Microsoft priced at $60.00.The Morningstar closed-end fund has the following stocks in its portfolio: 300 shares of P&G and 300 shares of Microsoft.It has a total of 500 shares outstanding. 
-Suppose Morningstar issues another 250 shares and purchases shares of Intel with the funds.What is its new NAV of Morningstar? (Assume the NAV found before the price change in P&G and Microsoft in the previous question).

Quizplus · Accepted Answer

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Morningstar issues 250 shares and collects: $30 (NAV) x 250 shares = $7,500
 Shares of Intel purchased: $7,500 x 50 per share = 150
 
 New net asset value = $30.00
 
 Since issuing new shares brings dollar-for-dollar new investment funds into the portfolio, the Net Asset Value will not change immediately because of the choice of asset to purchase.

Eveningstar Open-End Fund Has 1,000 Shares Outstanding and Has the Following