Annamalai Assignments/ Exam papers/Case studies: Contact us for answers at assignmentssolution@gmail.com

Logistics and Supply Chain Management-AN1-2015
Logistics and Supply Chain Management-AN1-2015

Only TWO Answers

1. Mr. Aravind has recently opened a logistical service agency. When he enters in to the business, many agencies face different legal problems related to logistical operations. Mr. Aravind does not know how to run the business without any legal problem. As a logistical legal consultant, advise Mr. Aravind about various transport regulations to overcome legal problems.



2. Customer-based inventory management strategies allow the use of different service levels (availability) by the customer. Discuss the rationale for such an approach. Are such strategies discriminatory? Justify your position.



3. Assume that you are a warehouse designer. Mr. Adithya has decided to construct a warehouse in the central part of the state. Counsel Mr. Adithya in designing the warehouse with different sizes and shapes and explain its relationship with material-handling system. Suggest the reason for constructing square design warehouse and rectangular design warehouse.



4. "Operational objectives of logistics are the primary determinants of logistical performance" – Discuss the statement. Select any two operational objectives, and provide examples of how a firm would satisfy those objectives if logistics was positioned as a core competency.
Management Information System-AN1-2015
Management Information System-AN1-2015

Management Information System

Only TWO Questions Solution will provide

Q1. “Different models of decision makers have been proposed to explain their behaviour in decision process; some suggest complete rationality, others suggest bounded rationality”. Describe these models and snow how they contribute to arrive at a decision.

Q2. “In designing structure for information systems, a variety of forms can be used”. Discuss these forms and the situations in which each of these can be usef effectively.

Q3. Draw an interface matrix between following application areas establishing all sub modules in that application. Personnel, finance & production.

Q4. In managing the business of a restaurant , what are some decisions that must be made in the areas of Strategic planning, managerial control, and operational control.
Marketing Management-AN1-2015
Marketing Management-AN1-2015

Q1. Describe "The evolution of retail in India' in your words, highlighting the latest trends in Indian retail. Critically examine the future of Indian retailing if global players are allowed to enter India.



Q2. Many marketers have tried and failed with "Green marketing" programs. Identify and describe the main problems with such campaigns. Recommend suitable remedies to overcome the problems.



Q3. Identify tope three advertising agencies in India, and describe the main reasons for their success. List out recent successful campaigns of these agencies.



Q4. In today’s india the growth of online marketing is going with upward trend. Discuss the pros. & cons. Which segment of consumers and what kind of products dominates online marketing.
Organisational Behaviour-AN1-2015
Organisational Behaviour-AN1-2015

ATTENTION: ONLY TWO ANSWERS WILL PROVIDE

Q1. As an IT manager of a medium sized organization, design an information system for that organization and explain how this system transforms organization and management to address the end–user needs.



Q2. “Honesty and Loyalty are so critical in today’s competitive environment of ecommerce” – Validate the above statement assuming you are a manager in charge of e-commerce in a large scale organization.



Q3. You are appointed as a system analyst in a medium sized sugar mill, conceive and design an HR information system for that company.



Q4. It is widely perceived that government plays a key role in developing ecommerce. As an e-commerce strategist of an organization substantiate the above statement and contribute your ideas and suggestions for furthering ecommerce development.
Organisational Behaviour-AN2-2015
Organisational Behaviour-AN2-2015

Organisational Behaviour

1. While managing workforce, “Participation is an excellent method for identifying differences and resolving conflicts”. Do you agree or disagree? Illustrate with real life examples.

2. Many organizations begun to supplement their traditional pay systems with “Pay – for – Performance”. Of these plans, discuss the role of individual vs. group incentives.

3. “Give specific attentions in implementing employee empowerment”- Discuss its operationalization and implications for effective outcomes.

4. “Learning is involved in almost everything that everyone does”. Substantiate your views and identify the applications of learning in positive and negative reinforcement’s strategy.
Principles of Management-AN1-2015
Principles of Management-AN1-2015

Principles of Management



Q1. ‘Management is the force which leads, guides and directs an organization in the accomplishment of pre-determined objectives’. Do you agree or disagree? Justify.

Q2. Management is regarded as an art by someone, science by others but in reality science should have many more. The truth seems to be somewhere in between. In the light of this statement, explain to exact nature of management.

Q3. ‘The job of the supervisor is many more difficult than that of higher level managers’. Examine the major responsibilities of a supervisor in an agro based Industry.

Q4. “A good leader is not necessarily a good manager”. Take one example from service industry as per your choice and compare the role of leaders and managers

Annamalai Assignments/ Exam papers/Case studies: Contact us for answers at assignmentssolution@gmail.com

International Trade Policies and Documentation-AN1-2015
International Trade Policies and Documentation-AN1-2015

Only TWO Answers

1. "Documentary credit method of payment reconciles the conflicting interests of buyer and seller"- Discuss and also explain the mechanism of realign payment under documentary credit arrangement.



2. Account for the growing significance of services, both in developed and developing countries. What are the major service areas from the viewpoint of international trade? Suggest measures to boost exports of services from the developing countries.



3. Describe the major changes that have taken place in the composition and direction of India's foreign trade after the country adopted the policy of economic reforms. Also discuss the general provisions regarding import



4. Evaluate critically the industrial policy of India since 1956. Do you think that the industrial policy since 1991 has a favorable impact on the economy? Explain
International Marketing Management-AN1-2015
International Marketing Management-AN1-2015

Solution of only Two Question

1. "Competitive strength of a product in international marketing depends upon several factors" Explain the statement by taking up a particular product



2. "In domestic marketing both variable cost and fixed cost policies are followed, but there is probably not so much use of variable cost pricing as there is in international marketing" Comment on this statement with the aid of some examples



3. The vice president of a export house has asked you to prepare a market profile of leather-footwears in Saudi Arabia. What factors would you consider in preparing the profile? What sources of information will you look for in preparing the above profile?



4. "A world in which exchange rates fluctuate constantly is a threat to international marketing" - Discuss
International Human Resource Management -AN1-2015
International Human Resource Management -AN1-2015

ATTENTION: ONLY TWO ANSWERS WILL PROVIDE

International Human Resource Management



1. Assume that you are working for a medium-sized, high tech firm that faces intense competition on a daily basis. Change seems to be the only constant in your work place, and each worker's responsibilities shift from project to project. Suppose you have the major responsibilities for filling the job openings in your company. How would you go about recruiting and selecting best people? How would you identify the best people to work in this environment?



2. Some people believe that most employees will act ethically even though they have a chance to take advantages of an incentive system through inappropriate behavior. Do you agree? Explain



3. Do you believe that managers should be given more autonomy to make personnel decisions such as hiring, appraising and compensating subordinates? If so, what are the potential drawbacks to granting them this authority? Explain.



4. Do you agree that an employment approach to improving safety can yield positive results? Do you think the trade off may be worth it? Why or why not? Discuss

Annamalai Assignments/ Exam papers/Case studies: Contact us for answers at assignmentssolution@gmail.com

E-Commerce-AN1-2015
E-Commerce-AN1-2015

Only TWO Answers

1. Discuss the current situation and emerging trends in electronic commerce.

2. Discuss the IT infrastructure necessary to implement e-commerce system for the inventory process.

3. Describe how E-Commerce technologies have allowed firms to achieve global market reach.

4. Describe and evaluate one B2B e-Commerce site and one B2B e-Commerce site in terms by answering the following questions for each site.

          A. What is the role of this site in the firm’s business? That is, is it the sole medium of transactions or supplemental?

          B. What is the medium for transactions on the site? That is , how do customers pay for products/services?

          C. How are prices determined on the site? Does the customer have any influence over price?

          D. In what ways does the design of the site stimulate customer purchases? Fail to do so. Explain your answer


Enterprise Resource Plannig-AN1-2015
Enterprise Resource Plannig-AN1-2015

Only TWO Answers

1. A Leading software company wants to implement ERP Software. Select software of your interest and give the steps of implementing that ERP software in the company.

2. Enlist the general problems faced during implementation of ERP and the solution for it.

3. Draw a business model for an organization with which you are familiar. Identify major processes and entities and show them in figure.

4. Rank the various ERP packages in the order of their market share. Give your reason whether ERP domain is shrinking or expanding.


Financial Management-AN1-2015
Financial Management-AN1-2015

ATTENTION: ONLY TWO ANSWERS WILL PROVIDE



Financial Management



Q1. Select an organistion of your choice and discuss the cash Management system in that organization. Give your Views or suggestions on the prevailing system of cash management in that organization and any suitable changes to be brought about, to improve the present system.



Q2. Discuss the critical decisions that you need to take in working capital management. Emphasize the important ways in which these decisions differ from those concerned with the management of the fixed capital of a business.



Q3. “High dividend payout ratio goes in hand with high price earnings ratio and low dividend payout ratio goes hand in hand with low price earnings ratio.” Comment your views on this statement elobrately.



Q4. Identify the macro factors which are prevailing in the global economy, leading to mergers and acquisitions.
Global Strategic Management-AN1-2015
Global Strategic Management-AN1-2015

Global Strategic Management

Attention: Only 2 Answers

1. Several CEOs of larger corporations in recent times are forced to resign when they are unable to deliver superior performance. Discuss this in the light of nuances of strategy execution.



2. Choose an industry or sector which you are familiar and describe the ways in which new technologies or products diffused into the market. Who have been winners and losers? Why?



3. Six Sigma is just another name for TQM then why applied heavy investment with no clear line of sight to return on Investment. – Discuss



4. What was the situation of the term competitive advantage in India prior to 1991? And also explain how competitive advantage can be leverage with?
Human Resource Management-AN1-2015
Human Resource Management-AN1-2015

ATTENTION: ONLY TWO ANSWERS WILL PROVIDE

Human Resource Management



Q1. “HR Managers should have a seat at the Strategic-Management table, but only when they earn it”. Discuss.



Q2. Suppose a key employee has just resigned and you are the department manager. After you have sent your request for replacement, how could you help the recruiter to find the best replacement?



Q3. Suppose you are going to design a training programme for newly hired first-line sales managers results from the needs assessment indicate that they will need training on company policies and procedures, handling customer complaints, and motivating sales personnel. What learning principles will you build into the programme? What training methods would you choose? Explain your choices.



Q4. A growing number of employees are reluctant to accept overseas assignments. Why do they refuse? What benefits and services would you offer to them to accept such transfer?

International Financial Management-AN1-2015
International Financial Management-AN1-2015

ATTENTION: ONLY TWO ANSWERS WILL PROVIDE

International Financial Management



1. In an Integrated world financial market, a financial crisis in a country can be quickly transmitted to other countries, causing a global crisis. What kind of measures would you propose to prevent the recurrence of an Asia type crisis?



2. How are foreign exchange transactions between international banks settled? Why does most interbank currency trading worldwide involved in US dollar?



3. Researchers found that it is very difficult to forecast future exchange rates more accurately than the forward exchange rates or the current spot exchange rate. How do you interpret this finding?



4. As an investor, what factors would you consider before investing in the emerging stock market of a developing country?

Annamalai Assignments/ Exam papers/Case studies: Contact us for answers at assignmentssolution@gmail.com

Database Management Systems-AN1-2015
Database Management Systems-AN1-2015

Database Management Systems

Only TWO Questions Solution will provide

Q1: A university registrar’s office maintains data about the following entities:

    a) Courses, including member, title, credits, syllabus and prerequisites
    b) Course offerings, including course number, year, semester, section number, instructor, timings and classroom
    c) Students, including student- ID, name, and Program; and
    d) Instructors, including identification number, name, department and title. Further, the enrolment of students in courses and grades awarded to students in each course they are enrolled for must be appropriately modelled.



Construct and E-R diagram for the registrar’s office. Document all assumptions that you make about the mapping constraints.





Q2: Explain in detail about Relational Algebra, Domain Relational Calculus and Tuplr Relational Calculus with suitable examples.



Q3: Describe about the Multi-Valued Dependencies and Fourth normal form with suitable examples.



Q4: Construct a B+ tree to insert the following key elements (order of the tree is 3) 5,3,4,9,7,15,14,21,22,23.

Data Warehousing and Data Mining-AN1-2015
Data Warehousing and Data Mining-AN1-2015

Only TWO Answers

Q1. What is a multiprocessor architecture? List and discuss the steps involved in mapping a data warehouse to a multiprocessor architecture.

Q2. Discuss the typical OLAP operation and types of OLAP server with an example.

Q3. Explain the advantages and disadvantages of decision tree over the classification technique and briefly outline the major steps of decision tree classification.

Q4. With an example, explain the two-category Bayesian classification in data mining.
Business Mathematics and Statistics-AN1-2015
Business Mathematics and Statistics-AN1-2015

ATTENTION: ONLY TWO ANSWERS WILL PROVIDE



Business Mathematics and Statistics



Q1. A random sample of 1000 workers from south India shows that their mean wage is Rs. 47 per week with a standard deviation of Rs. 28. A random sample of 1500 workers from North India gives a mean wage of Rs. 49 per week with a standard deviation of Rs. 40. Is there any significant difference between their mean levels of wages?



Q2. A tea company appoints four salesmen A, B, C, D and observes their sales in three seasons – summer, winter and monsoon. The figures ( in lakhs ) are given in the following table:

Test whether there is any significant difference in the salesman and in the seasons, so far as sales are concerned.



Q3. Fit a straight line trend by the method of least squares to the following data concerning the sales of a certain firm.

Year
   

2005
   

2006
   

2007
   

2008
   

2009
   

2010
   

2011
   

2012
   

2013

Sales Rs(‘000)
   

48
   

55
   

63
   

65
   

72
   

84
   

90
   

87
   

82

Make an estimate of sales for the year 2015.



Q4. A sample of 400 students of undergraduate and 400 students of postgraduate classes is taken to know their opinion about autonomous colleges. 290 of the undergraduate and 310 of postgraduate students favoured the autonomous status. Present these facts in the form of a table and test at 5% level, that the opinion regarding autonomous status of colleges is independent of level of classes of students.

AIMA Assignments: Contact us for solutions at assignmentssolution@gmail.com

DFM 10
FINANCIAL RISK MANAGEMENT
Assignment – I

Assignment Code: 2016DFM10B1                                          Last Date of Submission: 15th November 2016
                         Maximum Marks: 100
Section-A
Each question carries 25 Marks.
Q1. (a) Hedging is one of the tools of risk management under Derivatives. Briefly explain the
term hedging and state its objectives.         (10 marks)
(b) The aim of margin money is to minimise the risk of fault by either counterparty. Briefly explain the term margin money and following types of margin
(i) Initial margin (ii) Variation margin
(iii) Maintenance margin (iv) Additional margin.         (15 marks)

Q2. (a) What do you mean by the term corporate risk management and briefly explain its
components?         (10 marks)
(b) The risk management process consist of a series of activities that, when undertaken in sequence, enable continual improvement in decision making. Briefly explain the steps of risk management process.         (15 marks)

Section-B (50 Marks): Case Study

American Airlines is trying to decide how to go about hedging SFr70 million in ticket sales receivable in 180 days. Suppose it faces the following exchange and interest rates.


Spot rate: $0.6433-42/SFr
Forward rate (180 days): $0.6578-99/SFr
SFr 180-day interest rate (annualized): 4.01%-3.97%
U.S. dollar 180-day interest rate (annualized): 8.01%-7.98%

Required:

a. What is the hedged value of American's ticket sales using a forward market hedge?                (10 marks)
b. What is the hedged value of American's ticket sales using a money market hedge? Assume the first interest rate is the rate at which money can be borrowed and the second one the rate at which it can be lent.                        (15 marks)
c. Which hedge is less expensive?                         (15 marks)
d. Is there an arbitrage opportunity here?                                                                                                   (10 marks)

DFM 10
FINANCIAL RISK MANAGEMENT
Assignment – I

Assignment Code: 2016DFM10B2                                          Last Date of Submission: 15th November 2016
                         Maximum Marks: 100
Section-A
Each question carries 25 Marks.
Q1. (a) What are future contracts and briefly explain its types.         (10 marks)
(b) (i) Briefly explain the term Interest rate SWAP and its types.         (10 marks)
(ii) What are the uses of interest rate SWAPs.         (5marks)
Q2. (a) Legal risk do not arise in vacuum, but owe their origin either to business loopholes or to
subsequent break of the manner a product or service is offered. Briefly explain the types of legal risk in context to the given statement.         (10 marks)
(b) Pricing of options commonly depends upon multiple factors. What are the factors for determining option prices?          (15marks)

Section-B (50 Marks): Case Study

Metal Inc., a leading German metal processor, has scheduled a supply of 20,000 metric tons of copper for October 1. On April 1, copper is quoted on the London Metals Exchange at £562 per metric ton for immediate delivery and £605 per metric ton for delivery on October 1. Monthly storage costs are £10 for a metric ton in London and DM 30 in Hamburg, payable on the first day of storage.

Exchange rate quotations are as follows: The pound is worth DM 3.61 on April 1 and is selling at a 6.3% annual discount. The opportunity cost of capital for Metal Inc. is estimated at 8% annually, and the pound sterling is expected to depreciate at a yearly rate of 6.3% throughout the next 12 months.

Required:

Compute the DM cost for Metal Inc.on April 1 of the following options:

a. Buy 20,000 metric tons of copper on April 1 and store it in London until October 1.      (10 marks)

b. Buy a forward contract of 20,000 metric tons on April 1, for delivery in six months. Cover sterling debt by purchasing forward pounds on April 1.          (15 marks)

c. Buy 20,000 metric tons of copper on October 1.                                                                    (10 marks)

d. Can you identify other options available to Metal Inc.? Which one would you recommend?
         (15 marks)

AIMA Assignments: Contact us for solutions at assignmentssolution@gmail.com

DFM 04
INTERNATIONAL FINANCE
Assignment – I

Assignment Code: 2016DFM04B1                                          Last Date of Submission: 15th November 2016
                         Maximum Marks: 100
Section-A
Each question carries 25 Marks.
Q1. (a) Firm can use six different modes to enter foreign markets. Briefly explain the licensing
strategies, Joint ventures and wholly owned subsidiary as modes of entering foreign markets.           (15 marks)
(b) XYZ Inc, a US company, contemplates an expansion in to same foreign country. What are the three basic entry decisions should it take before entering in to foreign country.                  
         (10 marks)

Q2. (a) Purchasing power parity (PPP) links spot exchange rates to nations free levels” Briefly
explain PPP as one of other theory(s) of Foreign exchange rate determination.                              
         (10 marks)
(b) A very successful innovation in the capital market over the last 20 years has become the growth of the derivative markets. Hedges, speculations and arbitrages have been identified as three types of trades in derivative market. Briefly explain the above types of trades.                                           (15 marks)

Section-B (50 Marks): Case Study

Magnetic, Inc., a U.S. company, owes its Taiwanese supplier NT$205 million in three months. The company wishes to hedge its NT$ payable. The current spot rate is NT$1 = U.S. $0.03987, and the three- month forward rate is NT$1 = U.S. $0.04051. Magnetic can also borrow/lend U.S. dollars at an annualized interest rate of 12 percent and Taiwanese dollars at an annualized interest rate of 8 percent.

Required:

1. What is the U.S. dollar accounting entry for this payable?         (15 marks)

2. What is the minimum U.S. dollar cost that Magnetronics can lock in for this payable? Describe the procedure it would use to get this price.          (15 marks)

3. Briefly explain the Interest rate parity theorem. At what forward rate would interest rate parity hold given the interest rates?         (20 marks)

DFM 04

INTERNATIONAL FINANCE
Assignment – II
Assignment Code: 2016DFM04B2                                          Last Date of Submission: 15th November 2016
                         Maximum Marks: 100
Section-A
Each question carries 25 Marks.
Q1. (a) ‘Political risk in 50% of the exercise but inseparable from economic risk’, says Hans
Belesak, president of political risk consultants. Briefly explain common form of political risk indicators.                                                    (10 marks)
(b) The cost of capital for MNC may differ from that of a fully established domestic firm on account of the characteristics of MNCs that differentiate from domestic firm. How does cost of capital for MNCs and domestic firms differ from each other?                  (15 marks)

Q2. (a) “Despite the liberalisation of foreign portfolio investment around globe since the early
1980s, the home bias phenomenon is still found to exist”. What are the determinants of International portfolio holding in the context of given statement?         (10 marks)
(b) For the management of working capital of MNCs what are the various ways in which cash inflows can be optimised?         (15 marks)

Section-B (50 Marks): Case Study
Carbon Company is considering the acquisition of a unit from the French government. Its initial outlay would be $4 million. It will reinvest all the earnings in the unit. It expects that at the end of 8 years, it will sell the unit for 12 million euros after capital gains taxes are paid. The spot rate of the euro is $1.20 and is used as the forecast of the euro in the future years. Carbon has no plans to hedge its exposure to exchange rate risk. The annualized U.S. risk-free interest rate is 5% regardless of the maturity of the debt, and the annualized risk-free interest rate on euros is 7%, regardless of the maturity of debt. Assume that interest rate parity exists. Carbon’s cost of capital is 20%. It plans to use cash to make the acquisition.

Required:
a. Briefly explain the Net Present Value technique of evaluating Capital Budgeting proposals.
         (15 marks)
b. Determine the NPV under these conditions.         (15 marks)
c. Rather than use all cash, Carbon could partially finance the acquisition. It could obtain a loan of 3 million euros today that would be used to cover a portion of the acquisition. In this case, it would have to pay back a lump sum total of 7 million euros at the end of 8 years to repay the loan. There are no interest payments on this debt. The way in which this financing deal is structured, none of the payment is tax-deductible. Determine the NPV if Carbon uses the forward rate instead of the spot rate to forecast the future spot rate of the euro, and elects to partially finance the acquisition. [You need to derive the 8-year forward rate for this specific question.]                                                                   (20 marks)

AIMA Assignments: Contact us for solutions at assignmentssolution@gmail.com

DFM 03
SECURITY ANALYSIS & PORTFOLIO MANAGEMENT
Assignment – I

Assignment Code: 2016DFM03B1                                          Last Date of Submission: 15th November 2016
                         Maximum Marks: 100
Section-A
Each question carries 25 Marks.
1.   Rakesh inherited the following securities on his uncle’s death:
Types of Security Number Annual Coupon % Maturity  in years Yield %
Bond A (Rs. 1000) 10 9 3 12

Bond B ( Rs.1000) 10 10 5 12

Preference Shares C
(Rs. 100) 100 11 * 13*

Preference Shares D
(Rs. 100) 100 12 * 13*
* Likelihood of being called at a premium over par.
You are required to : Compute the current value of Rakesh’s uncle portfolio


2.   Two bonds - Taxo and Maxo are listed on the national exchange for trading;  both have maturity of 5 years.  Taxo bond has coupon rate of 8.5% and face value of Rs.1000 & has a current market price of Rs. 954.74.  YTM of Taxo bond is 10%.  Maxo bond has coupon rate of 11.5% and face value of Rs.1000 & has a current market price of Rs. 1044.57. YTM of Taxo bond is 10.6%.
You are required to:
(i)   Calculate the duration of Taxo and Maxo bonds.           (10 marks)
(ii)   Calculate the volatility of these bonds (modified duration).           (10 marks)
(iii)   What will be the change in market price of these bonds if interest rates increase by 2%?  
            (5 marks)




Section-B (50 Marks): Case Study

P. Ltd invested on 1.4.2015 in Equity shares as below:

Company Number of Shares Cost (Rs.)
M Ltd. 1000 ( Rs. 100 each) 2,00,000
N Ltd. 500 (Rs. 10 each) 1,50,000

In September 2015, M. Ltd. paid 10% interim dividend and in October 2015 N Ltd.  paid 30% interim dividend.

P Ltd. have been informed by their investment advisers that:

(i)   Final dividends from M Ltd. and N Ltd. for the year ended 31.3.2016 are likely to be 20% and 35% respectively.
(ii)   Probabilities of market quotations on 31.3.2016 are:

Probability Price of Share of M Ltd. Price of Share of N Ltd.
0.20 220 290
0.50 250 310
0.30 280 330

You are required to:

(i)   Calculate the average return from the portfolio for the year ended 31.3.2016         (10 marks)

(ii)   Calculate the expected average return from the portfolio for the year 2015-16         (10 marks)

(iii)   Advise P Ltd. of the comparative risk of two investments by calculating the standard deviation in each case.         (15 marks)

(iv)   Calculate the risk of the portfolio for the year ended 31.3.2016         (15 marks)





DFM 03
SECURITY ANALYSIS & PORTFOLIO MANAGEMENT
Assignment – II

Assignment Code: 2016DFM03B2                                          Last Date of Submission: 15th November 2016
                         Maximum Marks: 100
Section-A
Each question carries 25 Marks.
1.   The following information is available for stocks of ABC and XYZ:
ABC XYZ

Expected Return 12% 16%
Correlation with market 0.5 0.6
Beta 0.9 1.2

Expected return on the market is 14% and standard deviation of market return = 10%.  Risk free rate = 5%.
(a)   Which stock will you prefer to buy according to CAPM?            (5 marks)
(b)   Which will you prefer to buy if you consider the return/total risk?         (10 marks)
(c)   If we want to create a minimum risk portfolio with the two stocks in part (a) what proportion would you recommend in the following two cases: if they have perfect negative correlation (-1) and if they have perfect positive correlation (+1).         (10 marks)


2.   Following information are available for three stocks – A, B & C :
Stock Alpha Beta Variance of Residual
A  -2  1.5 4
B   8 -0.2 0
C   0  0.8 15
Market return = 10% and standard deviation = 5%.  Risk free rate of return = 5%.
(i)   Calculate risk and return for a portfolio of 50% of A and 25% each of B & C according to the market model.         (10 marks)
(ii)   Draw the characteristic line for Stock A, B and C.            (8 marks)
(iii)   What does residual variance of 4 for Stock A and 14 for stock B signify?            (7 marks)


Section-B (50 Marks)

Case Study

A Company has a choice of investment between several different equity oriented mutual funds.  The company has an amount of Rs. 1 crore to invest.  The details of the mutual funds are as follows:
                                 Mutual Fund            Beta
A 1.6
B 1.0
C 0.9
D 2.0
E 0.7

You are required to calculate:
(i)   If the company invests 20% of its investment in the mutual funds A & B and an equal amount in the mutual funds C, D and E what is the beta of that portfolio?         (15 marks)

(ii)   If the company invests 15% of its investment in C, 15% in A, 10% in E and the balance in equal amount in the other mutual funds, what is the beta of that portfolio?                        (15 marks)

(iii)   If the expected return of market portfolio is 12% at a beta factor of 1.0, what will be the portfolios expected return in both the situations given above?         (20 marks)