CFA Level 1: Offering Price Calculation

Calculating Offering Price for a Fund

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Question

A fund to be purchased had a net asset value (NAV) of $72.40 and a load of 5 percent. What is the offering price per share?

Answers

Explanations

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A. B. C. D.

A

To calculate the offering price per share, we need to take into account the net asset value (NAV) and the load.

The net asset value (NAV) represents the value of each share of the fund without any additional fees or charges. In this case, the NAV is given as $72.40.

The load is a fee charged by the fund for purchasing shares. In this scenario, the load is stated as 5 percent.

To find the offering price per share, we need to add the load to the NAV. The load is calculated as a percentage of the NAV.

First, calculate the load amount: Load amount = Load percentage × NAV Load amount = 0.05 × $72.40 Load amount = $3.62

Next, add the load amount to the NAV to get the offering price per share: Offering price per share = NAV + Load amount Offering price per share = $72.40 + $3.62 Offering price per share = $76.02

Therefore, the correct answer is C. $76.020.

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