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The Stone Harbor Fund is a closed-end investment company with a portfolio currently worth $300 million. It has liabilities of $5 million and 9 million shares outstanding. If the fund sells for $30 a share, what is its premium or discount as a percent of NAV

Sagot :

The answer is 8.48% discount.

Given,  portfolio's current worth = $300 million

liabilities = $5 million

shares outstanding = 9 million

Share Price = $30 per share

Value of NAV = (Value of Portfolio - Liabilities) / shares outstanding

Now, substituting the value of the given information in the above mentioned formula we get,

NAV(in millions $) = (300 - 5) / 9

                             = $32.78 millions

Since, Discount = [tex]1 - \frac{share prive}{NAV}[/tex]

                          = [tex]1 - \frac{30}{32.78}[/tex]

                          = 8.48%

Hence, its discount as a percent of NAV is 8.48%.

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