 Personal finance practice problem using OneNote. Mutual fund net asset value per share calculation. Prepare to get financially fit by practicing personal finance. You're not required to, but if you have access to OneNote, would like to follow along. We're in the icon left-hand side and the practice problems tab and the 1310 mutual fund net asset value per share tab. Also, take a look at the immersive reader tool, the practice problems typically in the text area too. Same name, same number, but with transcripts. Transcripts that can be translated into multiple languages either listened to or read in them. We're imagining we have investments in a mutual fund, remembering that as individual investors we could invest in individual stocks and bonds, but more likely we're going to be utilizing tools like mutual funds and ETFs, allowing us to put money and pool it together with other investors into a fund. The fund manager then allocating that money across multiple or different assets, giving us diversification within the mutual fund is the general idea. Also remember that if you have money in like a 401k plan or an IRA, then usually those are something like a mutual fund that is now under the umbrella of a 401k plan or IRA and giving you some tax benefits, but also giving you some restrictions over the funds that are under that particular umbrella, that's gonna be basically the trade off there. Now, when we're thinking about our investments in a mutual fund, we've gotta kind of wrap our mind around how we're gonna be using some calculations and tools to be valuing the mutual fund, some being similar to the tools we would use to value say an individual stock, for example, but we wanna keep in mind what is actually going on, what's actually the investment that we're putting money into. So if we have the mutual fund which has assets, not just the assets that we put into the mutual fund, but we're talking the total value of the mutual fund assets at 842,300,000. Now that asset valuation could be a combination of stocks and bonds, for example, depending on the type of mutual fund that we are talking about, and we can typically value those possibly at the end of a trading day, for example, based on the underlying value of the stocks that the mutual fund is holding. So we're talking about a mutual fund which has holdings of other securities, other stocks and bonds, for example, which we can value because those are publicly traded, stocks and bonds possibly valuing them, say at the end of the trading day, for example. We may also have the mutual fund having liabilities of 25,700,000, and we're gonna say that the number of shares outstanding are 35 million shares outstanding. So this looks similar to how you might value, say, a corporation, right? If I was to value a corporation, we can look at their balance sheet and I can say, okay, you have assets of so much, you've got liabilities of so much, you have equity, which is basically the net assets, assets minus liabilities, and we're gonna break out that equity, the net asset value in essence into a standard number of units that are all equivalent in nature, the number of shares. Similar kind of thing here, except that the mutual fund is now simply owning other shares which are investments, if you're talking shares could be bonds too and other kinds of securities, but if you're talking shares, the shares then being ownership interests in corporations. And then we can break that ownership interest out in a similar fashion to a corporation into standardized units, the number of shares, but now we're not talking number of shares of a corporation, but of a mutual fund. Okay, so the net asset value per share then is gonna be the assets, we're just gonna take the 842,300,000, minus of course the liabilities, 25,700,000, that's gonna give us the difference. The net assets equivalent similar to what we would do for a corporation, that would be like the equity or total equity section of a corporation, the net value, net assets, which we might determine in a mutual fund, basically at the end, like I say of the trading day based on the underlying securities within the fund, which we should be able to determine if publicly traded, fairly easy based on the trading activity. Then we're gonna say the number of shares is 35 million, that's the equal kind of chunks of ownership, which we've broken out in a similar way as shares to a corporation into equal ownership units. So we can simply take this 816,600,000, divided by the 35,000,000, and that's gonna give us the 23, so the 23.33, $23.33, the net asset value per share. And you can imagine a calculation like this being something that would be used to determine basically the price of the shares that would be calculated possibly at the end of say the trading day. So you can imagine at the end of the trading day that you're gonna say, okay, what's the asset value in the mutual fund, which you can calculate based on the market value of the underlying assets, stocks and bonds, for example, what are the current liabilities as of this point in time, the net assets being the net asset value. And then of course you can take into consideration the number of shares and divide that out to get to the net asset value per share calculation.