FM03
Security Analysis and Portfolio Management
Assignment – I
Assignment Code: 2013FM03B1 Last Date of Submission: 15th October 2013
Maximum Marks: 100
Attempt all the questions. All the questions are compulsory and carry equal marks.
Section-A
1. a. ‘No investment is risk free’. In view of this statement, discuss the meaning and
types of investment-risk. Can this be eliminated or minimized, how?
b. Distinguish between the financial and economic meaning of investment. Describe the various stages of investment.
2. Discuss the features of investment avenues available in India. Categorize them into tax saving and non-tax saving avenues and bring out the main features of each avenues.
3. a. Discuss the trading system in stock exchanges in India. Mention some of the recent reforms in the trading system.
b. Explain the institutional structure in Indian capital market.
4. a. Explain the benefit of investment in mutual funds. What are various types of
mutual funds schemes? What are loads and NAV in mutual funds?
b. Use closing price data of June 2013 (from June 1 till June 30) of Sensex and Infosys Ltd. calculate beta of Infosys Ltd. Visit www.bseindia.com for closing price data.
Section-B
Case Study
The following data is offered on two stocks – A and B:
Stock Expected return Standard deviation
A 0.15 0.30
B 0.10 0.20
The correlation between the two stocks is 0.85
Determine the expected return and risk on the following combination of these two stocks:
Combinations % of Stock A % of Stock B
I 70 30
II 50 50
III 40 60
IV 10 90
Case Question:
What will be your conclusion if the correlation between two stocks is negative 0.67 and they are held in the proportion of 60% and 40% respectively?
FM03
Security Analysis and Portfolio Management
Assignment – II
Assignment Code: 2013FM03B1 Last Date of Submission: 15th November 2013
Maximum Marks: 100
Attempt all the questions. All the questions are compulsory and carry equal marks.
Section-A
1. Discuss in detail Fundamental analysis. List out the factors that you would consider for the fundamental analysis of stock of Dabur India for investment.
2. Discuss the Efficient Market Hypothesis (EMH). What are the forms of EMH and implications of each form? Which form of market does the Indian stock market exhibit, why?
3. How does the risk of portfolio of assets differ from the risk of single asset? A portfolio consists of 3 securities: 1, 2 and 3. The proportions / weights (w) of these securities are: w1=0.3, w2=0.5 and w3=0.2. The standard deviations (SD) of returns on these securities (in percentage terms) are: SD1 = 6 SD2 = 9 and SD3 = 10. The correlation coefficients (r) among security returns are: r12=0.4, r13=0.6 and r23=0.7. What is the standard deviation of portfolio return?
4. a. Explain capital asset pricing model (CAPM). What are its assumptions?
b. Explain the dividend discount model of valuing equity shares? What are the merits and demerits of this model?
Section – B
Case Study
You are considering bonds of two companies: A & B. Company A’s bond pays interest at 12% and Company B’s at 6% per year. Both have face value of Rs. 1000 and maturity of three years.
Case Questions:
a. What will be the values of bonds if the market interest rate is 9%?
b. What will be the values of the bonds if the market interest rate rises to 12 %?
c. Which bond declines more in value when the interest rate rises? What is the reason?
d. If the interest rate falls to 6%, what are the values of the bonds?
e. The maturity of two bonds is 8 years (rather than 3 years), What will be the values of two bonds if the market interest rate is 9 %,
Security Analysis and Portfolio Management
Assignment – I
Assignment Code: 2013FM03B1 Last Date of Submission: 15th October 2013
Maximum Marks: 100
Attempt all the questions. All the questions are compulsory and carry equal marks.
Section-A
1. a. ‘No investment is risk free’. In view of this statement, discuss the meaning and
types of investment-risk. Can this be eliminated or minimized, how?
b. Distinguish between the financial and economic meaning of investment. Describe the various stages of investment.
2. Discuss the features of investment avenues available in India. Categorize them into tax saving and non-tax saving avenues and bring out the main features of each avenues.
3. a. Discuss the trading system in stock exchanges in India. Mention some of the recent reforms in the trading system.
b. Explain the institutional structure in Indian capital market.
4. a. Explain the benefit of investment in mutual funds. What are various types of
mutual funds schemes? What are loads and NAV in mutual funds?
b. Use closing price data of June 2013 (from June 1 till June 30) of Sensex and Infosys Ltd. calculate beta of Infosys Ltd. Visit www.bseindia.com for closing price data.
Section-B
Case Study
The following data is offered on two stocks – A and B:
Stock Expected return Standard deviation
A 0.15 0.30
B 0.10 0.20
The correlation between the two stocks is 0.85
Determine the expected return and risk on the following combination of these two stocks:
Combinations % of Stock A % of Stock B
I 70 30
II 50 50
III 40 60
IV 10 90
Case Question:
What will be your conclusion if the correlation between two stocks is negative 0.67 and they are held in the proportion of 60% and 40% respectively?
FM03
Security Analysis and Portfolio Management
Assignment – II
Assignment Code: 2013FM03B1 Last Date of Submission: 15th November 2013
Maximum Marks: 100
Attempt all the questions. All the questions are compulsory and carry equal marks.
Section-A
1. Discuss in detail Fundamental analysis. List out the factors that you would consider for the fundamental analysis of stock of Dabur India for investment.
2. Discuss the Efficient Market Hypothesis (EMH). What are the forms of EMH and implications of each form? Which form of market does the Indian stock market exhibit, why?
3. How does the risk of portfolio of assets differ from the risk of single asset? A portfolio consists of 3 securities: 1, 2 and 3. The proportions / weights (w) of these securities are: w1=0.3, w2=0.5 and w3=0.2. The standard deviations (SD) of returns on these securities (in percentage terms) are: SD1 = 6 SD2 = 9 and SD3 = 10. The correlation coefficients (r) among security returns are: r12=0.4, r13=0.6 and r23=0.7. What is the standard deviation of portfolio return?
4. a. Explain capital asset pricing model (CAPM). What are its assumptions?
b. Explain the dividend discount model of valuing equity shares? What are the merits and demerits of this model?
Section – B
Case Study
You are considering bonds of two companies: A & B. Company A’s bond pays interest at 12% and Company B’s at 6% per year. Both have face value of Rs. 1000 and maturity of three years.
Case Questions:
a. What will be the values of bonds if the market interest rate is 9%?
b. What will be the values of the bonds if the market interest rate rises to 12 %?
c. Which bond declines more in value when the interest rate rises? What is the reason?
d. If the interest rate falls to 6%, what are the values of the bonds?
e. The maturity of two bonds is 8 years (rather than 3 years), What will be the values of two bonds if the market interest rate is 9 %,
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