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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 ?