USN

Alva’s Institute of Engineering & Technology

P G Department of Business Administration
1st Internal Assessment

Semester: 3-Scheme 2018 (CFM) Date: 23 Nov 2020

Subject: INVESTMENT MANAGEMENT (18MBAFM302) Time: 03:00 PM - 04:30 PM
Faculty: Dr. Vishnu Prasanna K N Max Marks: 50

Instructions to Students:
Answer any two questions from Part A
Part B is Compulsory

PART A

Q. No Marks CO BT/C
L
1 a How term plan is different from endowment policy? 3 CO1 L2

b How do you classify the stock markets? 7 CO1 L2

c What are the different approaches to investment decision making? 10 CO2 L2

Explain.

2 a What is the difference between money market and capital market? 3 CO1 L2

b You are considering the purchase of MVM Company. The current price per 7 CO1 L2
share is Rs. 10. You expect the dividend a year hence to be Rs. 1. You
expect the price per share of MVM stock a year hence to have the
following probability distribution.

Price a hear hence in 1 11 12

Rupees 0

Probability 0 0.4 0.2

4

What is the expected price per share and risk hence?

c Describe briefly the key steps involved in the portfolio management 10 CO1 L2
process.

3 a What is dematerialization? 3 CO1 L2

 b What are the different measures of returns and risk? Explain. 7 CO1 L2

C What are the common errors in investment management? Explain. 10 CO1 L2

PART B

The stock of alpha performs well relative to other stocks during the recessionary periods. The stock of beta
company on the other hand, does well during the growth periods. Both the stocks are currently selling for
Rs.50 per share. Rupee returns of these stocks including dividend plus price changes for the next year would
be as follows:

Economic condition

High Low Stagnation Recession

growth growth

Probability 0.3 0.3 0.2 0.2

Return on alpha 55 50 60 70
stock

Return on beta stock 75 65 50 40

Calculate the expected return and standard deviation of:

i. Rs. 1000 in the equity stock of Alpha

ii. Rs. 1000 in the equity stock of beta
iii. Rs. 500 in the equity stock of Alpha and Rs. 500 in the equity stock of Beta
iv. Rs. 700 in the equity stock of Alpha and Rs. 300 in the equity stock of Beta

Which of the above four options would you choose? Why?

 USN
Alva’s Institute of Engineering & Technology
P G Department of Business Administration
1st Internal Assessment

Semester: 3-Scheme 2018 (FHRM) Date: 25 Nov 2020

Subject: INVESTMENT MANAGEMENT (18MBAFM302) Time: 09.30 AM – 11.00 AM
Faculty: Dr. Vishnu Prasanna K N Max Marks: 50

Instructions to Students:
Answer any two questions from Part A
Part B is Compulsory

PART A

Q. No Marks CO BT/CL
1 a How bonus issue is different from rights issue? 3 CO1 L2

b What are the functions of financial markets? 7 CO1 L2

c Discuss various types of government deposit schemes. 10 CO2 L2

2 a What is mutual fund? 3 CO1 L2

b What are the key features of NSE and BSE? 7 CO1 L2

c Calculate the expected return and standard deviation of the following 10 CO1 L2
investments “A” and “B” exclusively and also if the total investment is
divided to one half each. The economic predictions are:

Economic Probability of Returns from A Returns from B

climate economic climate in percentage in percentage

Recession 0.2 12 10

Stable 0.5 15 16

expansion 0.3 20 12

1.00
 3 a What do you understand by the terms put option and call option? 3 CO1 L2

b Discuss various types of money market instruments. 7 CO1 L2

C Explain different sources and types risks. 10 CO1 L2

PART B

A stock prices are as follows for different years, where as in the year 0, price was Rs. 284:
Year 1 2 3 4 5
Price in Rs. 291 305 275 294 321

Calculate the following:

i. Average return
ii. Total Return
iii. Relative return
iv. Cumulative wealth index
v. Standard deviation