If the net asset value (NAV) of an open-end investment company is $22.20 with an 8% sales charge, what is the public offering price?

If the net asset value (NAV) of an open-end investment company is $22.20 with an 8% sales charge, what is the public offering price?

• A. $20.42
• B. $22.20
• C. $23.98
• D. $24.13

Answer: (D)

To determine the public offering price (POP) of an open-end investment company, you need to calculate it based on the net asset value (NAV) and the sales charge. The sales charge is typically applied as a percentage of the public offering price. In this case, the NAV is $22.20, and there is an 8% sales charge. The formula to find the POP is: \[ POP = \frac{NAV}{1 - Sales Charge} \] Substituting the given values into the formula: \[ POP = \frac{22.20}{1 - 0.08} \] \[ POP = \frac{22.20}{0.92} \] \[ POP \approx 24.13 \] This calculation shows that the public offering price, after including the sales charge, is approximately $24.13. This reflects the total price that an investor must pay to purchase shares of the open-end investment company, which includes both the NAV and the associated sales charge.

To determine the public offering price (POP) of an open-end investment company, you need to calculate it based on the net asset value (NAV) and the sales charge. The sales charge is typically applied as a percentage of the public offering price.

In this case, the NAV is $22.20, and there is an 8% sales charge. The formula to find the POP is:

[

POP = \frac{NAV}{1 - Sales Charge}

]

Substituting the given values into the formula:

[

POP = \frac{22.20}{1 - 0.08}

]

[

POP = \frac{22.20}{0.92}

]

[

POP \approx 24.13

]

This calculation shows that the public offering price, after including the sales charge, is approximately $24.13. This reflects the total price that an investor must pay to purchase shares of the open-end investment company, which includes both the NAV and the associated sales charge.