R5/NR

Code No: R5/NR-308/MBA
M.B.A. III-Semester Examinations, December-2006. SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT Time: 3 hours Max. Marks: 60 Answer any FIVE questions All questions carry equal marks --1.a) Distinguish carefully between investing and speculating. Is it possible to incorporate investment and speculation with in the same security? Explain. b) Compare briefly the traditional and modern approaches to security analysis to portfolio management. 2. Compute the expected return for each of the following stocks when the risk free rate is 0.08 and the expected return on the market is 0.15 Stock Beta Green 1.72 Blue 1.14 Black 0.76 Brown 0.44 Orange 0.03 Red -0.79 Pointout the differences between the efficient frontier under capital market theory and under the Markowitz approach. What are the relative advantages and disadvantages to a U.S investor of buying U.S.-pay versus foreign-pay bonds? What is meant by the term re-investment risk? Explain the following: (a) Price Earning Ratio (b) Discounted Cash Flow (c) Bond immunization (d) Intrinsic Value. With all the concern shown for the income statement of what significance to an investor is the book value of assets and the amount of debt on the balance sheet? Differentiate options from futures interms of risk and return exposure and rights/obligations of the parties to the contract. Distinguish stock index options from stock index futures options. Many people advocate Mutual Funds for small investors. They suggest that the best strategy for small investors is to buy shares in a good mutual fund and put them away. What do you think of this advice? ---

3. 4.a) b) 5.

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7.a) b) 8.

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