Open-Ended Fund Price Calculation

Fund Share Selling Price Calculation

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Question

The NAV of an open-ended fund is $31.22. The fund charges a 6.3% sales charge and no redemption charges. The price at which you can sell a share of the fund equals ________.

Answers

Explanations

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Explanation

The price at which you can redeem an open-ended fund equals its NAV (in the absence of any redemption charges).

To determine the price at which you can sell a share of the fund, we need to take into account the sales charge of 6.3%.

The sales charge is deducted from the Net Asset Value (NAV) to calculate the selling price. The formula to calculate the selling price is:

Selling Price = NAV / (1 - Sales Charge)

Given that the NAV is $31.22 and the sales charge is 6.3%, we can substitute these values into the formula:

Selling Price = $31.22 / (1 - 0.063) Selling Price = $31.22 / 0.937

Calculating this, we get:

Selling Price ≈ $33.295

Therefore, the correct answer is not provided in the options given.

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