Premium To Net Asset Value

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Definition of 'Premium To Net Asset Value'

A pricing situation that occurs when the stock value of a closed-end mutual fund is trading at a premium to the net asset value (NAV) of its components. The premium arises from the optimistic sentiment of investors toward the fund, which may be due to excellent management and investment strategies.
Investopedia Says

Investopedia explains 'Premium To Net Asset Value'

Only closed-end funds can trade at premiums or discounts to their net asset values. Open-end mutual funds are not affected by supply and demand because they are purchased and sold at their current NAVs.

Because premiums are fueled by investor opinions, popular funds with successful past performances will be favorably valued. Similarly, new closed-end funds can often begin trading at a premium due to market optimism and hype. The premium represents the market's belief that the fund managers' continual ability to produce excess returns is a result of their superior market timing and stock selections.
Search results for

'Premium To Net Asset Value'

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    ... Intuition tells us that a mutual fund's net asset value (NAV) (the net value of
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    14.27 Asset-Backed Securities ... 14.37 Bond Value and Price; 14.38 Arbitrage-free ...

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    ... 11.10 Payback Period; 11.11 Net Present Value (NPV) and ... 14.26 Other Types of Bonds;
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  • Big Stocks Trading Below Book Value

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    ... favored stocks trading below net current asset value, since current ... cap is $280 million
    and net cash is ... branding and marketing deserve a premium valuation, but ...

  • Triangle Capital Yields Good Results

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    ... Something tells me the institutions don't mind buying at a premium to net
    asset value. That should tell you all you need to know. ...

  • CFA Level 1 Study Guide - Corporate Finance - Net Present Value ...

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    ... 11.10 Payback Period; 11.11 Net Present Value (NPV) and ... 14.26 Other Types of Bonds;
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  • CFA Level 1 Study Guide - Fixed Income Investments - Bond Value ...

    http://www.investopedia.com/exam-guide/cfa-level-1/fixed-income-investments/bond-vaue-price.asp
    ... 11.10 Payback Period; 11.11 Net Present Value (NPV) and ... 14.26 Other Types of Bonds;
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  • ETF Tracking Errors: Is Your Fund Falling Short?

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    ... Discounts to Net Asset Value Premiums or discounts to net asset value (NAV) may ... In
    the case of a premium, the authorized participant typically arbitrages it ...

  • Series 7 Study Guide - Municipal Securities - Muni Pricing ...

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    ... 6.6 Net Asset Value (NAV); 6.7 Dollar Cost Averaging; 6.8 ... 12.2 Diversification; 12.3
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