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Episode 85: NAVPS (The Blind Commitment)
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Episode Summary
If you buy an individual stock, you can instantly see the bid-ask book and know precisely what price you are going to pay. But when you place an order to buy or sell a mutual fund, you are forced to make a blind commitment: you agree to the transaction first, and you only discover the price you paid after the markets close for the day. In this episode, we pull back the curtain on Net Asset Value Per Share (NAVPS) and explain why this forward pricing model is actually an…
The skinny
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