1. A mutual fund owns 500 shares of X currently trading at $ 12 and 300 shares of Y currently trading at $ 24. The fund has 900 shares outstanding.
a. What is the Net Asset Value of the fund ?
b. If investors expect the price of X shares to increase to $ 14 and Y shares to decrease to $ 23 at the end of the year what is
the new NAV ?
c. Assume that the expected price of X shares is realized at $ 14. What is the maximum price decrease that can occur if Y realize an
end of year NAV equal to the NAV estimated in (a) ?
2. An investment bank pays $ 20.50 per share for 3 million shares of X. It then sells these shares to the public for $ 22.50 per
share. How much money does X receive ? What is the profit to the investment bank ? What is the stock price of X ?
3. An investment bank agrees to underwrite a $ 100000000 8-year 7% semiannual bond issue for X Corporation. If interest rates rise 0.03% or 3 basis points
overnight what will be the impact on the profits of the investment bank ?