C1T6L2 · Revised 2026-10-26

Decision and objectives

Practical task: Evaluate a BYF quote when its reference market is partly closed

Objectives: Distinguish exchange quote NAV and indicative value; Calculate matched-time premium and discount; Identify stale-value comparisons.

Required prior knowledge: C1T6L1. Classification: domestic. Revision: 2026-10-26. All fictional names, prices, rates, fees, calendars and tax schedules below are hypothetical unless explicitly identified as a dated document observation.

A BYF can display several prices at once, each answering a different question. The exchange bid is what a seller might receive for the quoted size; the ask is what a buyer might pay. Published NAV is an accounting valuation at a specified time. An indicative value is an estimate updated under a stated methodology. It is not a guaranteed dealing price.

Mechanics

Trace each number to its timestamp, units, currency and calculation. Last traded price can be old and may have occurred for a small lot. NAV can use closing prices from different markets, and an indicative estimate can contain stale components or delayed exchange rates. Corporate actions, accrued income and liabilities also matter. A precise-looking screen does not make unlike inputs contemporaneous.

For an investor's purchase, use the ask and realistic size; for immediate sale, use the bid. The midpoint is a diagnostic reference between them, not a promise that either side can transact there. A market order can walk through several price levels.

Price and return drivers

Premium or discount = exchange price / matched per-unit value − 1. State which exchange price is used. Positive is a premium; negative is a discount. If the denominator is stale or measures a different portfolio/currency, the arithmetic may be right but the economic conclusion wrong. A premium can disappear through price falling, value rising or both. It is not a separate fund asset owed to the buyer.

Worked case

Hypothetical simultaneous data: bid TRY 99.60, ask TRY 100.40, published comparable indicative value TRY 100.00. Midquote is (99.60 +100.40)/2 = TRY 100.00. Buyer premium at the ask is 0.4%; seller discount at the bid is −0.4%. A 200-unit purchase requires TRY 20,080 before commission; an immediate sale at the bid produces TRY 19,920, an TRY 160 spread loss even with unchanged portfolio value.

Now compare the same ask with yesterday's NAV of TRY 98.00: apparent premium is 100.40/98 −1 = 2.4490%. That figure does not establish mispricing if the basket has risen since yesterday. Label both observation times and prefer the best available comparable estimate without calling it an execution guarantee.

Adverse case

Suppose the indicative value remains TRY 100 while several important holdings stop trading after adverse news. An executable basket estimate later falls to TRY 95 and the BYF bid falls to TRY 94.50. A buyer who paid TRY 100.40 now faces a 94.50/100.40 −1 = −5.8765% price loss before fees. “Only 0.4% above indicative value” was not a downside limit. If indicative calculations are interrupted, use current disclosures and depth rather than assuming the last displayed estimate remains valid.

Practical use

Retrieve the domestic BYF's indicative-value methodology, valuation timetable, underlying market hours and official disclosures. Obtain bid/ask timestamps from a suitable market-data source for a historical case, clearly separating quote from execution. This lesson uses fictional quotes only. Check settlement and withdrawable cash with the intermediary. Total cost includes entry/exit spread, commission, embedded fund expenses and investor tax; verify income year, status, acquisition date and effective rule before applying actual rates. The immediate round trip here excludes those additional charges to isolate the spread.

Decision boundaries

This comparison is useful when values are aligned and size is realistic. It fails during stale or interrupted valuation or when underlying assets cannot be traded. A premium may be acceptable if the exposure is otherwise costly, but it must be budgeted. Defer an order when the value reference is unreliable and the objective does not require immediate execution. A limit order can cap the purchase price, while introducing non-execution risk; it cannot guarantee that the chosen limit represents fair value.

Practice and references

Exercise: hypothetical bid TRY 49.50, ask TRY 50.50, matched indicative value TRY 50.00. Answer: midpoint TRY 50; buyer premium 1%; seller discount −1%. Buying and immediately selling 300 units loses 300 ×(50.50−49.50) = TRY 300 before other charges, equal to 1.9802% of the TRY 15,150 purchase. Explain why the 2% midquote spread and the 1.9802% cash loss use different denominators.

Takeaway: identify what each displayed value measures before labeling a premium or discount.

Reference guide: domestic-byf; premium-discount; indicative-value; net-asset-value; premium; discount. Next: C1T6L3. Topic test.

Sources: SPK Communique III-52.2 — Articles 3–4 definitions; creation/redemption and index tracking sections; date 2013-11-27; checked 2026-10-26; Borsa Istanbul Equity Market Products — BYFs; real-estate certificates; commodity certificates / ALTIN.S1; date not stated; retrieved 2026-10-26; checked 2026-10-26. Source records: sources.json. Check the cited rule dates and confirm current dealing terms before any transaction.

Shared reference guide