NAV:NET ASSET VALUE
NAV is a term usd by investment companies to calculate their net assets. It is calculated by subtracting liabilities from the value of a fund’s securities and other items of value and dividing this by the number of outstanding shares.
One place where you can see this term NAV is in most mutual fund tables where they use it to assign a price on unit share for the fund. Collective investment fund based on the market price decides the value of collective investment fund. Open Ended Funds are calculated on this basis. Closed asset values do have a NAV, but have a different market value. NAV for each share is calculated by the number of ordinairy shares. Investment trusts can be traded at a premium or at a discount to NAV.
Mutual Fund Value or Purchase Price.
In Mutual Funds, NAV depends on each day of trading in the stock exchange market. It is calculated at the end of the day by taking the closing price of all the securities held plus the additional assets like cash and reducing the liabilities. The final result which is the total net assets is then divided by the number of shares outstanding.
Calculating NAVs - Take the current market value of the fund’s net assets and divide by the number of shares outstanding. So if a fund had net assets of Rs.35 lakh and there are one lakh shares of the fund, then the price per share (or NAV) is Rs.35.00.
