An open-end investment company has $510 million of assets, $10 million of liabilities, and 50 million shares outstanding

What is its NAV?

What will be an ideal response?

An investor in a pooled investment vehicle owns a proportional interest in the portfolio's value. The portfolio value is equal to the market value of the assets in the fund's portfolio reduced by the fund's liabilities. When this difference is divided by the number of equity shares that have a claim on the fund's assets, the net asset value (NAV) is obtained. For an open-end bond fund, its NAV or price is determined at the close of each day with the "market value" of fund shares being sold and redeemed based on this price. Thus, for our problem the $510 million of assets would be valued at its NAV, which practically speaking is its market value. Thus, in equation form, we have:

Inserting our given values into our NAV equation, we have:

Thus, the net asset value or NAV is $10.00 per share.