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Finance: What is Net Asset Value (NAV)? 5 Views
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Description:
NAV isn't a cool new navigation app...it's how mutual fund shares are valued or priced at the end of each trading day.
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Transcript
- 00:00
finance a la shmoop what is net asset value or nav nav is how mutual fund
- 00:09
shares are valued or priced at the end of each trading day take a look at this
- 00:14
mutual fund right here it has fourteen hundred seventy shares of Google and [mutual funds document]
- 00:18
three hundred shares of Amazon and five hundred shares of IBM and while you get
- 00:22
the idea at the end of each day the ask prices in
Full Transcript
- 00:25
the bid-ask spread ie the ask is the price at which somebody will sell these
- 00:29
shares are added up and yep totaled in this case there are a hundred fourteen
- 00:33
different names in the portfolio and seven million bucks in cash all of which
- 00:38
total eighty-two point three million dollars in value at the end of this day
- 00:41
well there are two million shares outstanding exactly at this moment so
- 00:47
the nav at today's close well it's eighty two point three million divided
- 00:51
by two million shares outstanding to get forty one dollars fifteen cents per
- 00:55
share that 4115 is the nav of the mutual fund and what happens when more
- 01:01
investors join by you know putting in cash well like let's say somebody
- 01:06
invests a million dollars at the end of today well then the fund goes from [money lining up in rows]
- 01:09
having seven million bucks in cash to having eight million bucks in cash and
- 01:14
that investor just bought 1 million / 4115 4 nav share self that mutual fund
- 01:21
company printed out of thin air an incremental twenty four thousand
- 01:25
three hundred one shares bringing its total the two million twenty four
- 01:28
thousand three hundred one the total value of the fund is now eighty three
- 01:32
point three million bucks up from yesterday's eighty two point three
- 01:35
million and the shares outstanding in the fund are now two million twenty four
- 01:40
thousand three hundred one and yeah the nav didn't change just the shares
- 01:43
outstanding and it's nav not not pronounced nav although it'd be kind of
- 01:50
a cool name for a mutual fund anything never like find where you're going nav [tiny red car on map]
- 01:55
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