Security Analysis and Portfolio Management
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Q1. Explain the characteristics of investment. Differentiate between investment andspeculation.Answer: Characteristics of Investment
While choosing an investment, an investor should know the features to look for. Theprominent features are:
Q2. What do you understand risk and measurement of risk? Explain the factors that affectrisk.Answer: Meaning of Risk
Risk is the likelihood that your investment will either earn money or lose money. It is the degree of uncertainty regarding your expected returns from your investments, including the possibility of losing some or all of your investment.
Q3. Compare and contrast the fundamental and technical analysisAnswer: Differences between fundamental and technical analysis:1. Charts vs. financial statements:
A technical analyst approaches a security via the charts,while a fundamental analyst studies the financial statements. Technical analysis is the studyof price action and
, while fundamental analysis focuses the company’s performance in
the backdrop of industry and economy conditions.
Q4. Write the assumptions of CAPM. Explain the limitations of CAPM.Answer:
Assumptions of CAPM
-variance approach, i.e. the risk-averseinvestor will ascribe to the methodology of reducing portfolio risk by combining assets withcounterbalancing correlations.
Q5. Write about emerging markets. Explain the risks involved in international investing.Answer: Emerging Markets
These are capital markets in developing countries, typically with low per capita GDP. While
developing countries make up over 80% of the world’s population, they make up less than 1
0% of the stock market capitalization.
Q6. What is economy analysis? Explain the factors to be considered in economy analysis.Answer: Economy Analysis
Economic analysis is done for two reasons: