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If an Investor Buys Shares in a Closed-End Investment Company

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If an investor buys shares in a closed-end investment company for $46 and the net asset value is $53, what is the discount? If the company distributes $1, the net asset value rises to $58, and the investor sells the shares for a premium of 5 percent over the net asset value, what is the percentage earned on the investment?


Definitions:

Succeeding Fiscal Years

The periods following the current fiscal year, typically referring to future financial or budgetary planning years.

Lessor's Implicit Rate

The interest rate a lessor effectively charges a lessee in a lease agreement, often used to calculate the present value of minimum lease payments.

Incremental Borrowing Rate

The interest rate a company would have to pay if it borrows funds to finance a lease or purchase of an asset.

Discount

A reduction from the usual cost of something, often applied to incentivize purchase.

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