Hi, I thought the concept behind unit pricing was clear for me but I seemed to be getting confused at a few things now: If I refer to the numerical Q13.3 solution from the course notes: Its given in part e that $1500 will purchase new units which are 280.321 From here how do I ensure that that the net asset value per unit remains the same to protect the interests of the unit holders. The calculation I have in mind is : The net asset value per unit before the appropriation or the creation of units were:=50000/10000=5( I am very unsure this is the correct formula for NAV per unit because do we include the 750 cash amount and dealing expenses as well?) The appropriation price is 5.1902 and the offer price is 5.351 The investment of 1500 purchases units at the current offer price of 5.351 and total market value would now stand at 50000 + 1500 And the no of units would be 10000+280.321 = 10280.321 Hence the net asset value per unit after creation of units becomes = 5.009 which doesn't of course match up to net asset value before appropriation price Could someone please tell me where I am going wrong with this?
A note for other readers of this thread : this Q does not appear in the 2022 version of the course notes. Hi A couple of tweaks to the steps in your calculation: As you suspect, you should include the 750 cash amount here too. The MV before the new investment is added is (50,000 + 750). And remember that not all of the 1,500 investment goes into the fund, eg the 3% initial charge will be taken off this amount first. Hopefully that helps get things looking closer Best wishes
