DECEMBER 2013

P/ID 77522/PMEF/
PMBF2

Time : Three hours

Maximum : 100 marks

PART A (5 6 = 30 marks)
Answer any FIVE questions.
All questions carry equal marks.
1.

How do you evaluate fixed income securities?

2.

What are the differences between investment and

speculation?

3.

Clearly discuss the factors determining financial

risk.

4.

Explain the advantages of company analysis.

5.

Yogeshwar has a portfolio of shares of three

companies with following market values and
return. Calculate the expected rate of return.
Shares of
Market value
Return %
Rs.
V Ltd.

10,000

10

S Ltd.

20,000

14

M Ltd.

30,000

16

6.

Explain the
construction.

modern

approach

to

portfolio

7.

Explain the Jenson Index of portfolio performance.

8.

Distinguish between the capital market line and

security market line.
PART B (5 10 = 50 marks)
Answer any FIVE questions.
All questions carry equal marks.

9.

What is real investment? Illustrate and discuss.

10.

Discuss about the factors responsible for creating

the internal risks in investment.

11.

A portfolio consisting of five securities is shown

below. Calculate each stocks expected return.
Then using these individual securitys expected
returns. Calculate the portfolios expected return.
Initial
Expected end of
Proportion of
Stock
investment
period
portfolios
value (Rs.)
investment
initial market
value (Rs.)
value
A
4,000
6,000
15%
B
2,000
3,500
9%
C
3,500
4,500
14%
D
9,000
11,000
38%
E
3,000
4,500
11%
2

P/ID 77522/PMEF/
PMBF2

12.

Enumerate the procedure and limitations of

fundamental analysis.

13.

Discuss the
management.

14.

Develop and explain Capital Asset Pricing Model.

15.

Explain the problems in measuring the portfolio

performance.

16.

How are data on the number of shares that

advance and decline on a given trading day used
by technical analyst? Does knowing the number in
advance and declines for only one day convey
meaningful information? Explain.

Markowitz

model

of

portfolio

PART C (1 20 = 20 marks)
(Compulsory)
17.

Assume you have been put in charge of a mutual

fund with a large staff of fundamental analyst an
million of rupees spread over more than
150 different common stocks. The funds gross
return is about average for the industry, but its
management expenses are high, so its net yield to
its investors as slightly below average, the
previous management did not try to specialize as a
growth or income fund, but ran the firm as a
growth purpose fund. What do you plan to do with
your fund?
Explain why?

3
P/ID 77522/PMEF/

PMBF2