Pricing

What this video covers

• How net asset value (NAV) is calculated: total fund assets minus total liabilities, divided by shares outstanding
• Why open-end mutual fund NAV is calculated once daily at 4:00 PM Eastern, and why midday orders get that closing price
• The public offering price (POP) formula: NAV divided by one minus the sales charge percentage, not NAV multiplied by one plus the sales charge
• Why the sales charge is based on POP, not NAV, and how the exam plants the wrong answer based on NAV
• What premiums and discounts are for closed-end funds: market price above or below NAV, with no creation or redemption mechanism to force alignment
• Why closed-end funds commonly trade at a discount, and why that discount can persist indefinitely
• How authorized participants (APs) use creation and redemption to arbitrage ETF prices back toward NAV, and why ETFs therefore rarely stray far from fair value
• What intraday indicative value (IIV) measures, and that it updates every 15 seconds during trading hours