Assume that a closed-end investment company has a portfolio worth $650 million. It also has liabilities of $30 million and 8 million shares outstanding.
A. What is the net asset value (NAV)?
B. If the fund sells for $62 per share, what is its premium or discount as a percent of NAV?
C. Assume over the course of a year, the company receives dividends totaling $50 million, pays out $25 million in capital distributions, earns a return of 8% on its portfolio, has an expense ratio of 0.7 percent and 12b-1 fees equal to 0.3%. What is the rate of return? What is the NAV at the end of the year?