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Question
the net asset value of shares in a closed-end investment company is $36. an investor buys the shares for $34 in the secondary market. the company distributes $1 and after one year, the net asset rises to $4 the investor sells the shares for $44 in the secondary market.
a. what is the discount?
b. what is the percentage return on the investment?
c. in both problems 1 and 2, the investment companys net asset value rose from $36 to $42 and the company distributed $1. why are the percentage returns different?
Answer
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