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12’) The Stone Harbor Fund is a closed-end investment company with a portfolio currently worth $200 million. It has liabilities of $6 million and 10 million shares outstanding. If the fund sells for $25 a share, what is its premium or discount as a percent of NAV?

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Answer: 28.87%

Explanation:

Given the following ;

Portfolio worth = $200,000,000

Liabilities = $6,000,000

Outstanding shares = $10,000,000

Share value = $25 per share

NAV, The Net Asset Value of the Stone Harbor Fund is the difference between total worth of it's asset and it's Liabilities.

Net Asset Value = (portfolio worth - Liabilities) ÷ outstanding shares

NAV = $(200,000,000 - 6,000,000) ÷ $10,000,000

NAV =$194, 000,000 ÷ $10,000,000

NAV = $19.4

Premium = $25 - $19.4 = $5.6

Expressed as a percentage of Net Asset Value:

$(5.76 ÷ 19.4) × 100 = 0.2886 × 100 = 28.87%

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