1. Conceptual questions & answers; a) What do you mean by Markowitz Efficient Frontier? b) What is Corner Portfolio?

c) Constant Rupee Plan is a passive management strategy whereas Rupee Cost Averaging is an active one explain. d) What is Leveraged Portfolio? e) Can there be existence of short-sale in optimum portfolio? If so, why so? f) Why Information Asymmetry blurs the significance of SML? g) What do you mean Arbitraged Portfolio? h) What is Optimum Portfolio? i) As per CAPM Model, explain why CML is a special case of SML? j) Is optimum portfolio always the combination of Lending Portfolio and Borrowing Portfolio? Justify, what else, it can be? 2. Show, how William Sharpes Single Index Model of portfolio construction, is an improvement over Markowitzs Mean-Variance Theorem. 3. There are two stocks ABC and XYZ. The returns in case of ABC may be 11% and 17% with probability 0.5 for each return and in case of XYZ may be 20% and 8% with probability 0.5 each for each return. Show, how with skilful balancing of proportions of the two stocks in a portfolio, the portfolio return can be maximised and the portfolio risk can be reduced to a minimum. 4. Elucidate Sharpe-Linter-Mossin Capital Asset Pricing Model of asset pricing, with presence of financial leverage (leveraged portfolio) in asset purchase. 5. Portfolio Expected Return bi1 Bi2 A 12% 1 0.5 B 13.4% 3 0.2 C 12% 3 -0.5 Meticulously calculate the arbitraged portfolio gain and show with the help of Stephen Rosss Arbitrage Pricing Theory of asset pricing that arbitraged portfolio has necessarily a gain without systematic risk. 6. Portfolio A B C Market Index Rp (Portfolio Return) 15 12 15 12 (Market Risk) 1.2 0.8 1.5 1.0 Rf (Risk-free rate) 5% 5% 5% 5%

Following Jensens Measure, evaluate the performances of all three managed funds. 7. What is Mutual Fund? What are Open-ended and Close-ended funds? What is NAV (Net Asset Value)? How does Exchange Traded Fund (ETF) differ from Mutual Fund? 2+4+2+2 =10