SAPM QB

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SAPM QB

Attribution Non-Commercial (BY-NC)

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SAPM

SECURITY ANALYSIS AND PORT FOLIO MANAGEMENT QUESTION BANK (5YEARS) 2 marks UNIT I 1. What is investment? 2. What are the steps involved in evaluation of a portfolio?

3. What are the two major types of information necessary for security analysis? 4. What are the features of preference shares? 5. What is the difference between business risk and financial risk? 6. Mention any four features which are important for choosing specific investment. 7. Distinguish between investment and speculation. 8. List down ay four sources of investment information.

UNIT II 1. What are the objectives of a capital issue? 2. What is the relationship between primary and secondary market? 3. Mention any four features of BSE. 4. What is depository? 5. What do you mean by underwriting? 6. What is demutualization of stock exchanges? 7. Define private subscription.

UNIT III 1. What is bearish trend in a market? 2. What do you mean by leading indicator? Give two examples.

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3. What happens in the pioneering stage of industry cycle? 4. What do you understand by fundamental approach to security analysis? 5. Define Multiplier? 6. Interest rates affect cost of financing explain. 7. Explain the valuation ratios.

UNIT IV 1. Explain the differences between technical and fundamental analyses. 2. Discuss the Dow Theory. 3. Explain the three types of trends in stock process? 4. What do you infer from the moving average theory of technical analysis? 5. What are the three basic types of charts used in technical analysis? 6. What is a support and resistance level? 7. Mention the stages in industry life cycle. 8. How is technical analysis different from fundamental analysis?

UNIT V

1. What are the parameters for evaluating a portfolio? 2. List down the advantages of close ended mutual funds. 3. Define an efficient portfolio. 4. Expand CML and define its role? 5. What is an index fund? 6. What is the difference between SML and CML?

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5 years QB 7. What criteria are involved in selection of bonds? 8. What are the motives of trade?

SAPM

SECURITY ANALYSIS AND PORT FOLIO MANAGEMENT QUESTION BANK (5YEARS) 16 marks UNIT I 1. There are several investment alternatives for a keen investor Explain 2. What are the attributes in evaluating investment avenues? 3. Describe the provisions of security contract regulation act relating to the investor protection. 4. Explain the various types of risk? And how do you calculate risk measurement? 5. Explain in detail about steps of stages in investment process.

UNIT II 1. Who are the key players involved in the new issues market? 2. What is the procedure for buying shares? Explain the stock market indices. 3. What are the money market instruments? Explain initiatives taken by SEBI to reform Indian capital market. 4. Explain the major reforms in the Indian capital market? 5. Compare and contrast institutional investment and individual investment. 6. What are the objectives and functions of SEBI? Explain the organization of SEBI? 7. Discuss the recent policy initiatives and developments in the capital market in India.

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UNIT III 1. Industry life cycle exhibits the status of the industry and gives the clue to entry and exit for investors Elucidate? 2. How does ratio analysis reflect the financial health of a company? 3. Why is industry life cycle important to investors? Explain the different stages of the industry life cycle? 4. Discuss the various types of risks being covered in economic analysis. 5. Explain the factors influencing the earnings per share (EPS) of a company. 6. Discuss the factors affecting present and future values of stock. Explain the macro economic factors the need to be analyzed. UNIT IV 1. Write short notes on: support and resistance level, Breadth of market, odd lot trading, Oscillators. 2. Explain the charts used in technical analysis. 3. Explain the bond price theorem. 4. What is fundamental analysis and technical analysis? Distinguish between the two approaches. 5. Write short notes: charting methods, moving averages and MACD. 6. Compare and contrast bar charting and point-and- figure charting. 7. Technical analysts believe that investors can use past price changes to predict future price changes. How do they justify this belief? 8. How would you use ROC to predict the stock price movement? Kindly elucidate with an example. 9. Chart patterns are helpful in predicting the stock price movement comment. 10. Explain in detail the Dow Theory and how it might be used to determine the direction of the stock market. 11. Elaborately deal with the different tools of technical analysis. 12. Describe the inter linkage between the efficient market hypothesis and the mutual fund performance.

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UNIT V

1. Explain the different types of risks and returns in portfolio management. 2. Deal at length with the steps in portfolio management. 3. Explain how the efficient frontier is determined using the Markowitz approach. What are the characteristics of assets that lie on the efficient frontier? What are the strengths and weakness of the Markowitz approach? 4. What are the basic assumptions of CAPM? What are the advantages of adopting CAPM model in the portfolio management? 5. Explain the traditional approach to portfolio construction. Explain the CAPM model. 6. What is the essential difference between the Sharpes and Treynors model of portfolio performance? Discuss in detail. 7. Discuss the Markowitz portfolio theory and the capital market theory.

1. From the following out the required rate of return. DPS Rs 0.75 per share. Growth rate for first 5 years - 25% Growth rate for first 5 to 10 years 5% Current market price Rs 25/2. From the following find out the portfolios risk and return Nature probability annual return (%) Rs L 1 2 3 4 0.2 0.4 0.3 0.1 (5) 10 (4) 7 Rs M 6 (2) 8 (9)

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3. The following data is offered on two stock: Stock P Q Expected return 0.15 0.10 SD 0.30 0.20

Determine the expected return and risk on the following combination of these two stocks.

% Stock P a. b. c. d. 70 50 30 10

% Stock Q 30 50 70 90

4. If the risk free returns is 10% and the expected returns on BSE Index is 18% risk measured by standard deviation is 5% how would you construct an efficient portfolio to produce a 16% expected returns? What would be its risk?

5. After a detailed analysis of both the aggregate stock market and the stock of RL. Company Ltd an investor has developed the following figures: Economic Conditions Good Fair Poor Stock Market returns 16% 12% 03% Returns of RL company Ltd.stock 20% 13% -5% Probability 0.4 0.4 0.2

The present risk free rate of return is equal to 7%. Would you recommend an investment in the stocks of RL Company Ltd? MBA SYED AP

5 years QB

SAPM

6. Stocks L & M have follow up returns for past two years. Years Return % L M 2008 12 14 2009 18 12 a. What is expected return for portfolio made up of 60% L & 40% M? b. Find standard deviation of each stock. c. What covariance and coefficient of correlation is between stock L & M? d. What is portfolio risk for portfolio consisting of 60% L and 40% M? 7. Following is the information of ABC Company. Rs. In millions. 1990 Long term debt (11%) Preferred stock (10%) Common stock (par Rs.10) Capital surplus Retained earnings Dividend paid 12.27 0.13 0.01 5.67 33.93 3.005 1995 9.46 0.13 0.14 6.35 60.31 3.684 1998 11.19 0.12 12.06 6.19 125.2 10.08

The price of share now is Rs.450. there is a rumour that the company may issue a bonus share. Investor wants to know: a. Is there a ground for rumour? b. Is capital structure sound? c. Is the proper to purchase shares? d. Advise him the P/E ratio e. Prepare common size statement. 8. The following three portfolios provide the particulars given below. Portfolio A B C Market average annual return 18 14 15 13 standard deviation 27 18 08 12 correlation co-efficient 0.8 0.6 0.9 ----

Risk free rate of interests 9% Rank these portfolios Suring Sharpes and Treynors methods. Compare both the indices.

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5 years QB 9. Suppose you are to analyse two portfolios having the following characteristics: Observed Return Portfolio A Portfolio B 0.18 0.12 Beta 2.0 1.5 Residual Variance 0.03 0.00

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The risk free rate is 0.07. The return on the market portfolio is 0.15. The standard deviation of the market is 0.06.

Compute the Jensen Index for Portfolio A & B Compute the Sharpe Index for market portfolios Compute the Sharpe Index for portfolios A & B Compute the Treynor index for the portfolio A & B.

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