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Roll No._________________
MBA Semester III
MBA FM – 101 – SECURITY ANALYSIS &
PORTFOLIO MANAGEMENT
MODEL PAPER
Time: 3 Hrs
MM: 80
Note:
1. All Questions are compulsory in Section A. Section A carries 20 marks.
2. Attempt FIVE questions in all from Section B, selecting ONE question either A or
B from each question. Answer of each question shall be limited up to 250 words.
Each question carries 6 marks.
3. Attempt any 3 questions in all from section C. Answer of each question shall be
limited up to 500 words. Each question carries 10 marks.
1.
SECTION A
India Times Ltd. is evaluating rate of return on two assets A and B. The asset
‘A’ was purchased a year ago at Rs. 4, 00,000/- and since its generated cash
flow was of Rs. 16,000/-. Presently it can be sold at 4, 30,000/-. Asset ‘B’ was
purchased few years back and its market value in the beginning and at the end
was Rs. 2,40,000/- and 2,36,000/- respectively. The asset ‘B’ has generated
cash Rs. 34,000/- during the year. Find out the rate of return on these assets.
SECTION B
2. A Discuss in detail the security forms of investment.
OR
B Write short notes on:
a. Underwriting
b. Private Placement
c. Prospectus
d. Merchant Banker
3. A Define Risk and the factors contributing Total Risk. Explain different types of
Risk in brief.
OR
B Monthly return data (in %) for RELIANCE stock and the NSE index for a 12
month period are presented below:
PTO
Month
1
2
ONGC
-
5.4
0
.
7
5
0
.
3
5
NSE
-
3
4
5
3.4
3
.
0
5
0
.
4
9
5
9.1
1
1.6
1
.
0
3
6
2.3
3
6.6
4
7
6
1.1
7
8
5.5
0
.
4
2
0.7
3
6.8
1
0.8
2
10
9
2.6
0
4.0
4
11
0
1.2
5
12
-1.91
3
.
8
1
0.29
-1.96
1
Calculate alpha and beta for ONGC stock.
4. A What is Industry Analysis? Discuss in detail Industry Life Cycle.
OR
B The following data are extracted from the published accounts of two
companies in an industry.
Particulars
ABC Ltd.
XYZ Ltd.
Sales
32,00,000
30,00,000
Net Profit After Tax
1,23,000
1,58,000
Equity Capital (Rs. 10 Per Share Fully
10,00,000
8,00,000
Paid)
General Reserves
2,32,000
6,42,000
6% Long- Term Debt
8,00,000
6,60,000
Creditors
3,82,000
5,49,000
Tax Paid
50,000
60,000
Bank Credit (Short Term)
60,000
2,00,000
Fixed Assets
15,99,000
15,90,000
Inventories
3,31,000
8,09,000
Other Current Assets
5,44,000
4,52,000
You are required to prepare a statement of Comparative Ratios showing
liquidity, profitability, activity and financial position of the two companies and
give suitable interpretations. (Calculate any 10 ratios from the above
mentioned ratios)
5. A What is portfolio selection? Explain the concept of efficient frontier in context
of portfolio selection.
OR
B
Estimate the stock return by using Capital Asset Pricing Model and Arbitrage
Pricing Model. The particulars are given as under:
Expected return on the market is 15%, equity’s beta is 1.2 and risk free return
is 8%.
PTO
Default Factors
Market Price of Risk
Sensitivity Index
(beta)
Inflation
6%
1.1
Industrial Production
2%
.8
Risk Premium
3%
1.0
Interest Rate
4%
-.9
What explanation can you offer to explain the difference into estimates?
6. A What is portfolio revision? Explain in detail the constraints in portfolio
revision.
OR
B information regarding two mutual funds and a market index are given below:
Fund
Return %
Standard
Beta
Deviation (%)
Gold
7
15
.72
Platinum
16
35
1.33
Market index
10
24
1.0
Assuming the risk-free return as 5 %, calculate the differential return for the
two funds.
SECTION C
“Investment is well grounded and carefully planned speculation.” Discuss.
7.
Distinguish between investment and speculation.
The following portfolios are available to an investor:
8.
Portfolio
Expected Return
Risk
A
14.0%
2%
B
18.0%
5%
C
30.5%
9%
Find out whether these portfolios are efficient or not, given that the risk free
interest rate is 8%. Return of market portfolio is 18% and the risk of the market
portfolio is 4%.
“Fundamental analysis provides an analytical framework for rational
9.
investment decision making.” Explain
Define Diversification. Explain in detail effect of diversification and types of
10.
diversification.
“Portfolio evaluation essentially comprises two functions, performance
11.
measurement and performance evaluation.” Discuss.
PTO