ACHARYA INSTITUTE OF GRADUATE STUDIES

(NAAC Accredited with A Grade and Affiliated to Bengaluru University)

Soladevanahalli, Bengaluru-560107

DEPARTMENT OF COMMERCE [PG]

II INTERNAL ASSESMENT TEST DECEMBER 2019 FOR III SEMESTER M.Com
SUBJECT: PORTFOLIO MANAGEMENT
Time: 1.5 Hours Max Marks: 40

Section A
1. Answer any 3 Questions out of 4. Each question carries 2 Marks (3 * 2 = 6)
a. Define Mutual Fund?
b. What is personal finance?
c. What is Portfolio Selection?
d. What is efficient frontier ?

Section – B
Answer any 2 Questions out of 3. Each question carries 5 Marks (2 * 5 = 10)
2. Explain fund management in banks.
3. Explain Markowitz’ theory with assumptions.
4. What is a pension fund? Explain its types.
Section –C
Answer any 2 questions out of 3. Each question carries 12 Marks (2 x12=
5. The estimates of the standard deviations and correlation coefficients for three stocks are given below.

Stock Standard Correlation with stock

Deviation A B C
A 32 1.0 -0.8 0.40
B 26 -0.8 1.0 0.65
C 18 0.40 0.65 1.00

If portfolio is constructed with 15 % of stock A, 50 % of stock B and 35%of stock C, What is portfolio’s
standard deviation?

6. Historical rates of return of two securities over the past 10 years are given. Calculate covariance and
correlation of the two securities.

Year Security 1 Security 2

1 12 20
2 8 22
3 7 24
4 14 18
5 16 15
6 15 20
7 18 24
8 20 25
9 16 22
10 22 20
7.

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