The total market value of stocks in an investment company's portfolio divided by total outstanding shares (with no further transactions) is ________.
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A. B. C. D. E.E
The net asset value (NAV) equals the total market value of all the funds assets divided by the number of fund shares outstanding.
The correct answer to the question is E. net asset value (NAV).
Net asset value (NAV) is a measure commonly used in the investment industry to determine the per-share value of an investment company's portfolio. It represents the net value of the company's assets after deducting its liabilities and expenses.
When calculating the NAV, the investment company's total market value of stocks in its portfolio is divided by the total outstanding shares. This division yields the NAV per share, which indicates the intrinsic value of each share in the investment company.
Here's a breakdown of the other answer choices and why they are incorrect:
A. 12b-1 amount: The 12b-1 fee is a mutual fund's distribution and marketing expenses. It is not related to the calculation of the total market value of stocks in an investment company's portfolio divided by total outstanding shares.
B. Forward earnings per share: Forward earnings per share is a measure used to estimate a company's future earnings per share. It is not directly relevant to the calculation mentioned in the question.
C. Market value of an open-end investment company: The market value of an open-end investment company refers to the total value of all the shares in the company, considering the current market prices. However, the calculation mentioned in the question specifically relates to the total market value of stocks in the company's portfolio divided by total outstanding shares, which is different from the overall market value of the company.
D. Market value of a closed-end fund: The market value of a closed-end fund represents the total value of all the shares in the fund, considering the current market prices. It does not specifically pertain to the calculation mentioned in the question.
To summarize, when dividing the total market value of stocks in an investment company's portfolio by the total outstanding shares, we arrive at the net asset value (NAV) per share, which reflects the intrinsic value of each share in the investment company.