A mutual fund's portfolio has securities with a total market value of $120 million. The fund has liabilities of $5 million, and 10 million shares are outstanding. An investor redeems 500 shares at 4:01 PM Eastern Time on a Tuesday. At which price will the redemption be processed?
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BThe NAV calculated at 4:00 PM on Tuesday ($11.50 per share)
CThe NAV calculated at 4:00 PM on Wednesday ($11.50 or the next computed price)
DThe previous day's closing NAV of $11.50
✓ Correct answer: C. The NAV calculated at 4:00 PM on Wednesday ($11.50 or the next computed price)Under forward pricing rules (SEC Rule 22c-1), any order received after the 4:00 PM ET cutoff must be executed at the NEXT computed NAV — meaning Wednesday's 4:00 PM calculation — not Tuesday's closing price.
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