On January 1, the shares and prices for a mutual fund at 4:00 PM are as follows:
|
Stock
|
Shares owned
|
Price
|
|
1
|
1,000
|
$1.92
|
|
2
|
5,000
|
$51.18
|
|
3
|
2,800
|
$29.08
|
|
4
|
9,200
|
$67.19
|
|
5
|
3,000
|
$4.51
|
|
Cash
|
n.a.
|
$5,353.40
|
Stock 3 announces record earnings, and the price of stock 3 jumps to $32.44 in after-market trading. If the fund (illegally) allows investors to buy at the current NAV, how many shares will $25,000 buy? If the fund waits until the price adjusts, how many shares can be purchased? What is the gain to such illegal trades? Assume 5,000 shares are outstanding.