Which term describes the price per share of a mutual fund or ETF calculated as (Assets minus Liabilities) divided by the number of shares?

Which term describes the price per share of a mutual fund or ETF calculated as (Assets minus Liabilities) divided by the number of shares?

• A. Net Asset Value (NAV)
• B. Expense Ratio
• C. Exchange Traded Fund (ETF)
• D. Cryptocurrency

Answer: (A)

Net Asset Value (NAV) describes the price per share of a mutual fund or ETF. It’s calculated as (assets minus liabilities) divided by the number of shares outstanding, giving the value of one share based on the fund’s actual holdings and obligations. This value is what you use to understand the fund’s per‑share price and, for mutual funds, to determine the price at which you buy or redeem shares. For ETFs, the market price you see on an exchange can differ throughout the day, but the NAV is still calculated daily and provides a reference point, with authorized participants using it for creations and redemptions to keep the market price aligned with value. The other terms don’t describe share pricing: the expense ratio is the ongoing annual fee, an ETF is the fund type, and cryptocurrency is a separate asset class.

Net Asset Value (NAV) describes the price per share of a mutual fund or ETF. It’s calculated as (assets minus liabilities) divided by the number of shares outstanding, giving the value of one share based on the fund’s actual holdings and obligations. This value is what you use to understand the fund’s per‑share price and, for mutual funds, to determine the price at which you buy or redeem shares. For ETFs, the market price you see on an exchange can differ throughout the day, but the NAV is still calculated daily and provides a reference point, with authorized participants using it for creations and redemptions to keep the market price aligned with value. The other terms don’t describe share pricing: the expense ratio is the ongoing annual fee, an ETF is the fund type, and cryptocurrency is a separate asset class.