Porbfolro onstra fión

foncla 2 2 Metho/s
T2adetr ornaf p
app! oaeh
p oc

)Moolun app ooch Markouwiiz model tonvetonal mode

a) Detidle fhe
objectrve o port folio
6) 8tlece the
seruihis
8tepsofper) Caifea betóe pou Holio constauthin
Formulate Ihvestmenl objeefivu pofolio ronstuthin
such wthin
uthin Conafaan
conifAan
a
type., atil et
)Hnalyre the tsle Aetarn of fhe
8fudres re
seturifes to be
whaf uthe
enpeeived ke
level
vel of
o usle
usle 2cbu
2ckun.
Enpeched efurn ii
biohe 4hen 6st aalio hiçh
we have o consiou eade af. (h
bhu)
dame auIn
maaleocuifz model tnd he
SeturihU and no
nooo
weight of sttwrhi
(omb1ne diffeuent
types fsetuihis
SecurHes on fhe bair of Aesl (heeuogemou
etun
Returm
Major duu0o
hat ype. af seewrhe, must
br taken? (homo/heluo)
How many Setutfie
OAu lat in blw 3ecuik
 acfou when
Constaalnts Flmpotant. (onstu fine
poxdtolio)
saftty
liguielidy
tirne hozizon
Hant (Onslcdeuadton

fac fos

i)ntome u n t inome oa fatue. eguusm

c.I fo saty ing (unt futue aegute

Aetile -and aetain , mpsum amount ovua

peatod of 4me
(onstzants
Handarel safron thump ule ti no popr ble
PoPr bl t
Pout folio confauet00 be cauwe. each hvesou
ae ditfuent
-

Ceusd ormte hs portfolio.

Invetaus (onaainls
tnome
.3arings
Othu paoactncal (onideafrps
ltguididy equiat rmenk -

6ome nvesfa
tnvf hel high
ltquieity Thty do not
e
mvesf. in long feum
tnvst ments
 nvesdos ned aftty of tnvtmrnt

Omensti fu tron hov doubt on 4tpay

they aut nof finoncea fly ull brin
Thihi i Jt laird 4o Cd /atng
Crdifaatim AgenetttCRI

heymrarut Cedff ale on thr bat of

Seruity

.Tnori 7on Duration of

moneuo
pmkmgyu money Port
the lonatrrmshorferm We tnves
mony
money
thbrgming cat (tt may wauy) rau ly Hage of
de br caust
w qet mdrt
rauly hage of i

7Pfuin
on (ontide. atron Seme tneitrmfr ovin Ham cxrepfron
am careptron

Potfolio
oo of smourte comb1ne
arh portfo tid
fogothau That xcqurted funds
taken a
spv speril funor edhrla
mud e d nignid Q
ungu
nno wonl Acfurn andhe i llrng to dabr tadorn
iponds on rbnrtaa1ntr
 Objeetves
want o CQular Int ome
. Invesloss.
Seme AUesfoer nttds tapital apptttatron Regulas
cash flow o tonstant Ihcome
i . nveHas eedi quowth in tnome (monthly, guautesly
Qnaauhy). confant tgrourth grourth .m odei

ne) Invetas need capita appeetafton.

mauket valu apprecrafhonmou capital appeLatmhip
Invertoa wanti a1ety 0 money fo be Safe
Then ptovicle hiqh Ceecde Aalc eccukrês

fermprne titeent
Gleps in portdalio confauef1n n sadithona app10ach

a) formulate o bjetevèp
6) 8elect Serurer
c) Combne diffeent sttunki. (dvesifiradrön)

n daadhbi ona app Taa oh (onjicdu Indviduq considleratrd-

(afted inanttal plonning
asse ts
I n podfslio (onsfaueon classes necded
kqwity elas)
Debt clas
 - (apita apprettafton COnsaleLo equity clas
neome oltpend on debt clas whrih
AOCUTh
tnclud d bentau

Mode n approach

Differtnce rom 1adrtrônaf appoath is 'managemenk

Heu needs a fmantial plan.
1 says hatportfo cutomied 0 contkuefed
te be unique, oltpends on the objectrues of finanrat

plan."
Frnanteal: plan grvs ovealt pretur of the nestons

wtnpe bed eeton, anet , tobilihis enpencbture. eh

Tradif ong pproach manimut athum and inmit uik

Finom tal plan should canndu he tonst aunb aluo.

Potfolio should aeausthi undu prattrl eonidbuatiora
144
Fenan Choose a porffolio uncleu high suk eturn.
Ruloyh o t e gou a Auk fake ncuole mae Askq aset.
Rilerpaf1f qoo0 aue ul ovodes tneluoe l iky ajrets.
n herr balomed pofolio 50-50 Popor Fròn.
 evaluation
Portfolio Ivalua troôn /fund
ov a pe tod 8d fim
When you
akea po» 1tolio
vaid on tme e causeof
the &tsk Attarn may
COntaaenh

The (onsfaurfed poxtfolio nof feaible (or sto6)

ox longferm.
-lenee portfol o AVSt0D an tmportant COn ceun
Bofore Rruinoo i should be evalua fed.
Potfolio eva uatrón should be done tordnuowy
HH follow up proces.
Peuformance evaluatdn to be done, 7e.
padonmant offunds

a)NAV
alla2 Net Asse Valut VAY) mut be osideud fov evaluatin
Thusdoy

NAY= Maket vatue of atr All i6s ability

und mean) (orpu

NAV mavkel aleu olal

3er t u ash and eguivalent holding
o tund
- fund liabihhe oany
704al no.oun ouslarl1ng

Most sImple and populo method

 Benetits of evaluafroin

-Uhderstand the eurmnt volu ofunit

(ompau valu of un it uith othe fund.
to buy unit 0 muet entst1n
Hep
Hetp thu rnvevtor new

unt can eposed

NAV helps the mgm and fo e valuale

un
NAVi fhe tndratoy of buy buy neuw

) 8harp inden

Inditato to evaluafe fund perormane

William 3horp
Sharp vatio bad on the alu laton developed by Ahiliamshaup-
Ratto
Ao known a vanabilify
auk of porfolio batd on dota)
-
Meauu the premù
alste
-Risl Adjwted Kefam - Rhurn a Pter deduetng RFR
RFR
a poation of redum a Pter deduting RER (Ri Free

Refurn)
Sharp raio baed on RAR

Re turn of portfolio
 RhR having Method
, 2L
4A1202
Monday Shaup afro /3haup pedormanre Teward to vaviabi
Jensen vaBro
8harp aat1on (onsideus
variapiliky pat only
Note Risk untertavnty of return
i) Bih fiee ehyrn- covist. Yeturn.
i) Ril pr mum changes return.

3harp atio euvd of risk premum

-

Measwd by Std. dovidtion Or vaiante

Sharp rahio
=Return of portfolio RFR,
RAA
RP-RFR

Wheye P is the std deviatfon of portfolio.

Rs premium Called RARl' Rilk Adusted Khurn)
R fynd A

Funl B.

P
 Highe pertorrmante dr Indin Indicate . higher ehu

Jensen pevtormane Indn Ttnsen vatio

Used fo1 predichon of Jewrity ekun

(onsider he Beta of security of CAPM mode odel
Differetfate Yeturn develped by Michael Jensel. K FAp/
-Jenen method developed baed on CAPM mode/, crong
fined

Rp-R
RpRp +p (nAt)

p(Rm-RE) P

Band Maltet rthurn) are vaviable

Dfferent ial setun. (Diffenntiakt setunn arkua l ekurn
and npreted nturn of povtfoia)
-

Dfferen tial re kun =

Achual Reurn- Enpeeked Re kum

Rp-F(R)
 If epyevents diffentia Refurn and a,
dp i
Theyeternindteate superior efurn

p -Ve then performanct brome worst (unfovorod

+Ve then per yôr mance ii rupeor

natya.

Jensen ati0 ndiate the deg of signifranee

P Indicafe syslematit ati.

onsis of more dtuh BasCAPMed moda|on .

BI port folio ih eis
atdey
Cndr 0ne
manaqr's point of vieu
f and qet more rwad to syrtematit uist (B). te
P>I
then mote &yle and mo4e 0furn.

Risk vave with retun

f f Rp higher thrn i +ve H ndicate
p .

higher performar
entc R tu rn

d) Tseynor Katió eyno Performantt thdrn

Deve lopedby Jack. Tieynor.
for RAR
 on CAPM model.
. Based
Risk premum (Rp) (ompaved withp.
RRe Teuno vatio Rp-R

R F u n dA

t u n d&

0-5
S

m0Te Yuk
f fund n's value> fund B's valut. fund A having pemue

e)Sertne Sor tino. Ratio

Modi Ficatton of sharp 7atio

Ctve) C-ve
Sharp atio eva lubeti both upslde and downid of
variabili ty.
-
Mayket potial potential - to earn moue. (pside).
-
Sortno Yatio appy downside semivariank signiFrant

-
n downside a fin a boundary I1k tolerance level.
- Beyond he
minImum aceptance level
 Sortnor tonside componen t o r aith :

9Noqative rolatility
ipositive
iposit ve Volahi hy - help the oean
Investor to ean
moTe
more
Varidbily must be (onsidmed nto

a) downside ul
Upside potential.( posítrve vaiability).
Down side y1sle aatio
Sortnor Ratio 7-,
down.
mimum nputecked isk
Upide potentia) zatto

6own
where Yu upside deviahon (07 upside rekurn)
doun ownside i l

74l202

Mean.
The
heu a two mutudf funds. has ajutcy
A
an S . and has o. 27: The fund & has
A

13
double the t a of Pund 's
The sdd.deviation of fund A and fund B aLe,
and at:43 Rspecfuety. The man efura
 marked Inden ù 1a and t 3.D S 7
The esk RLR ate i Y (ompu te Tegnor,
and
and
Jenson edn fo tunds. and inte prek
shonp
the ejulk 2

Solutron
aIeyn0 Ratio Rp-R

Fund A: Rp 15 Rehurn of furd portfolfeo :Rr

Re Rok au atum
1S
P
TReyno 20tt 5 -46
5

Fund B:Rp a
RE
Pp 5 X2 3

TLey n o tatto -8 4 66

Sharp atio
Fund n's sharpkatio - Rp-R 15-8 o466
15

Fund 's shaupiatio Rp-Rp 2-8 0 6 3

1-43
 Note: Tey no zafto nof applred fo mahe
puormante analys Bis onty for
Individual putormont masuuing

Maylet putormance

3.D 7.

Mauleet tnden -8 057

7

Fund A is unoles pe lormng and fund B OVu

puforming.

Jense
JenstnAatio

pRt+RCRR)
Riul free
Rpp tB R RE) Acturm

Fund A p 8 Kp Enpected

Rp8+ 1S (12-8) 19

Fund BRp: 6t 3(12-8) 2o

 ntupe Faton
Jenson says that ue take oluPfeuna blw Ackuol
attun and enpeeted Aafunn
Achual puformanea > enpeefed Hesout putovming
undu pex Forming

Fund A Actual Refurn - Enpeeted aetrn

15-4 17.
Fund B -20 2%

Fund B is out perpexforming . Hene fund 8-i putormng

bette

has. a unit in ma fual fand for the

Gn. Mr Anand
(He wants fo valuafe. the Perto rmame
bast3 years
by Comparing fo the mauleeb
tund Markeb
fayticu tau
70.6 414
Return
41 31 (9.4 4
dfandgud
oleura

RER

Beta 119

the shorp and freynor mdttes and (omnnh

Findout
on the Lerult2
 Sofutron
Teynor Ratio Rp-R
Fund 's Triynor atio =70-6 -

2 6 5
11

harp aatro

Fund pevtormance:
hayp aatfo Rp-R 70-6- 66.
41 3

Mavtetpuformane
3harp 4atio R-R Al4 .02
19.4 4

Insharp 2atio, tend performanct i les) than maeet

pertarmance. hencee fund peuformanee y no wetl.
Accaxdinq fo fryn01 Ratro, no diffuna in (ndividua
and mauket
puformane. both aue egually
moving. Trynos Latio does nof (onsiolei Ru
Bst adusted atfurn. i . if dou not coniclued p.
 undamcntal Fnalysi
Studted he stngth and urate of sfoch.
Heips the rivestor fo undusdand he aura uwhere

Jtocles at s10ng and weak .

IC
Tonomy, lIndustuy, ompamyAualyni.
hes tcon omy as whol, ndusty a whol
and
(ompany pecitie avnatystu
Seuriky nalysis
EIC
Technical Anatysi
Technital Anolyi

984

Forcasfing pedictron
Diffunu blw
Fundamintaf Teehnial Analtysi
Analyt'r
forecast prednhon
Reality (m0ve Aal) Pa obo bilty
Based on tn tunmn
ancd hutori daba . tdtrube thing
Nof atuat
g0od foY invuting Market prce of sfod
wtalt. to under prred
.marlket
 A)BOU Theory
A
Developed on the ttrm hypothesis hat ngle
buyey or sellea CAn influrne an fhe prmarg end
of mavttt

Developed by Bull mavlet

Trend at, 3
) Primary trend.
T
i) Jeeondany trnd
N
Ri) Minor frend

- Trend Beay mar k

Me ans draee trOn
of move ment

14may move up o -
docwA

Pasiapy trnd
-Trend at veynal - Markef always movu wifh
tnt'orrmation When faiggau happens trnd mag he
 8tappedrom moved u
9 TB,Tz->B
Bull maste -The primary fnd moves up (T,
Prumary 4yend with fhe (omhinrd rattión of
Jetondavg trend. 3ttondauy frend aluays 1uekotng

Mtnoy 4rnd
doyHo doy lactuadionu of marke
eg : 4rom T foB,,T2 B ,B,-T
-Primary trend is called og term trrnd.
-

Secondavy trend i called marke rorruptiorn . Rr bound|

OVery/corvuption may happened in ghortterm fend
- Market will not
beyond move
beyond a level 07 down
aftu a level.
AOwJt boundar called dupport leve! break lerei
Uppe bouodany is nown a Pestskance levet. When
mav beyond break level henefu Called
huufant
byrak ou
B)ElliotE Throryy
 moves he a wave
Maulce
waves Indteate
main fyend of nalet
5
(0YeCttve waUes ABC
he
.equal and oppork,
ry ac hon CaeateQn
Every
Eve
Ths alro appheable tn
n

manleut

The tur talen #o wave u okelfeunt fon eath

fo
twaves

.Nowadadys A AL based soffwaug aue huu, For

thi
n l a ( 2 2

Trend ofrnarke
Monday
Mo Volume of buying demand -

Volume of selling -supP

Tend venersal
.Volume luads thu prie of movemint.
Advantes no.oseuhu prtce mwt be inaass
Prlce

Deeline denae
Andlyse Advance deelhie
Ratio à called,
Baeadfth of #he Market

8hout sals- Who sell purchaJe a a short rate .

Bid aate
Asl sate.
 Thiu t a sperulations
Se ll at h1ghex pNce and huy i al a lous p

1 called sho«t sel salur

SEBI banned shout sales.
14is moLt atjky
Not alowed in (ash maylhek

Aunillato
ndicate shaxt
Indcatau of staipk momunbum
pphtable to 0veumanket and tatculay marke
Over botfom condihon tyend dhe manke b to tvend veersal-hen te
i s called aunillaBory"
Movement of pavhular share /pauthrular marlket can ke

predtcted

c)EFfrrent- Mavket Theory (EMT)

Aso called efhenent man ke hypothesis
Also ae lated to Aandom walt theory
he ory
/95 7 and 970(mockfhed)
Says that f the mauktk aLt efhent/apetehuir
Sturiky priCes veffecl the hormal retum for thetr

levet of ul
 .Ru ku i tommon (not aken tou Rewaud Attun
Kik premum () pout u olende the, mauket rekurn

high high visk (B)

modeuae. aik.

I Low Auk

EMT Can be dtwided nfo 3 (ategouy

)Weale
n)Semi 8i4or
m)812on
Kevel ol tnformation consicbed tn the madcet is
th base othiu clainfnahon.
812ong Hirrent mankel-
AlIntormathons aie eflerted on
pris
All paatHu should get he tnformaton foc deturion
making
No mase
chang huded
Accep table by buyus anelselle
Semi fAong Maube
A Informathons au
ae flecked on
publ1
-iOnly publie intoraat1ons e avalabl
-

Publtè tnformatons au egually aptabe by nvestors

Some tntormation at hidden

Wealc
Bosed on past informahon , take the decivion
-

hutori cal data musk be wed

-Alady analysed by enpevt s4 rong
Serni st r o
pria

Weak

Thoe tuho have having the skill of onalyre

EMT Says tha

the markel nformation Qnd wr thu Informahon for their

deeiuionget more on stoc manlket

When larl of tnformaton then manlet o highly volafile

heu
When avazlable nformatons then multel skabilsi
Maulut betomu asymmetue when Infomatton aiymmetui
sYmmetui
Symmetui