Chyra Redeemed 175 Shares Of Stock She Owned In The Fund Shown Below.${ \begin{tabular}{|c|c|c|} \hline Name Of Fund & NAV & Offer Price \ \hline CAH Group & $15.83 & $16.27 \ \hline \end{tabular} }$What Were Chyra's Proceeds?A.

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Understanding the Problem

Chyra has decided to redeem 175 shares of stock she owns in the CAH Group fund. To determine her proceeds, we need to calculate the value of the shares she is redeeming. The fund's NAV (Net Asset Value) is $15.83, and the offer price is $16.27.

Calculating Proceeds

To calculate Chyra's proceeds, we need to multiply the number of shares she is redeeming by the NAV of the fund.

Proceeds = Number of Shares * NAV

In this case, the number of shares is 175, and the NAV is $15.83.

Proceeds = 175 * $15.83

Proceeds = $2,767.25

However, we also need to consider the offer price, which is $16.27. Since Chyra is redeeming her shares, she will receive the offer price per share.

Proceeds = Number of Shares * Offer Price

Proceeds = 175 * $16.27

Proceeds = $2,846.25

The Correct Proceeds

Since Chyra is redeeming her shares, she will receive the offer price per share. Therefore, the correct proceeds are $2,846.25.

Conclusion

In conclusion, Chyra's proceeds from redeeming 175 shares of stock in the CAH Group fund are $2,846.25.

Key Takeaways

  • To calculate proceeds, multiply the number of shares by the NAV or offer price.
  • When redeeming shares, the offer price is used to calculate proceeds.
  • Chyra's proceeds from redeeming 175 shares of stock in the CAH Group fund are $2,846.25.

Real-World Application

This problem has real-world applications in finance and accounting. When investors redeem their shares in a mutual fund or other investment vehicle, they receive the current market value of those shares. This value is typically calculated using the fund's NAV or offer price.

Common Mistakes

When calculating proceeds, it's essential to use the correct value per share. In this case, the offer price is used since Chyra is redeeming her shares. If the NAV were used instead, the proceeds would be incorrect.

Best Practices

To ensure accurate calculations, follow these best practices:

  • Use the correct value per share (NAV or offer price) when calculating proceeds.
  • Multiply the number of shares by the correct value per share.
  • Verify the calculations to ensure accuracy.

Conclusion

Frequently Asked Questions

Q: What is the difference between NAV and offer price?

A: The NAV (Net Asset Value) is the total value of a fund's assets minus its liabilities, divided by the number of outstanding shares. The offer price, on the other hand, is the price at which investors can buy or sell shares in a fund.

Q: Why is the offer price used when redeeming shares?

A: When investors redeem their shares, they are essentially selling their shares back to the fund. In this case, the offer price is used to calculate the proceeds because it represents the current market value of the shares.

Q: Can I use the NAV to calculate proceeds when redeeming shares?

A: No, when redeeming shares, the offer price should be used to calculate proceeds. Using the NAV would result in an incorrect calculation.

Q: How do I calculate proceeds when redeeming shares?

A: To calculate proceeds, multiply the number of shares being redeemed by the offer price.

Q: What if the number of shares being redeemed is a fraction?

A: If the number of shares being redeemed is a fraction, you can still calculate the proceeds by multiplying the fraction by the offer price.

Q: Can I use a calculator to calculate proceeds?

A: Yes, you can use a calculator to calculate proceeds. Simply multiply the number of shares by the offer price.

Q: What if I make a mistake when calculating proceeds?

A: If you make a mistake when calculating proceeds, you may end up with an incorrect amount. To avoid this, double-check your calculations and use the correct values.

Q: Can I use a spreadsheet to calculate proceeds?

A: Yes, you can use a spreadsheet to calculate proceeds. Simply set up a formula to multiply the number of shares by the offer price.

Q: What if I need to calculate proceeds for a large number of shares?

A: If you need to calculate proceeds for a large number of shares, you can use a calculator or a spreadsheet to make the calculation easier.

Q: Can I use a financial calculator to calculate proceeds?

A: Yes, you can use a financial calculator to calculate proceeds. Simply enter the number of shares and the offer price, and the calculator will give you the proceeds.

Conclusion

In conclusion, calculating proceeds when redeeming shares is a straightforward process. By using the offer price and multiplying it by the number of shares, you can easily determine the proceeds. Remember to double-check your calculations and use the correct values to avoid mistakes.

Key Takeaways

  • Use the offer price to calculate proceeds when redeeming shares.
  • Multiply the number of shares by the offer price to calculate proceeds.
  • Double-check your calculations to avoid mistakes.
  • Use a calculator or spreadsheet to make the calculation easier.
  • Consider using a financial calculator for more complex calculations.

Real-World Application

Calculating proceeds when redeeming shares is a common task in finance and accounting. By understanding the and using the correct values, you can ensure accurate calculations and make informed decisions.

Common Mistakes

  • Using the NAV instead of the offer price when redeeming shares.
  • Making arithmetic errors when calculating proceeds.
  • Failing to double-check calculations.

Best Practices

  • Use the offer price to calculate proceeds when redeeming shares.
  • Double-check your calculations to avoid mistakes.
  • Use a calculator or spreadsheet to make the calculation easier.
  • Consider using a financial calculator for more complex calculations.