LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com. DEGREE EXAMINATION – CORPORATE SECRETARYSHIP
SUPPLEMENTARY EXAMINATION – JUNE 2009
BC 6602 - PORTFOLIO MANAGEMENT
Date & Time: 26/06/2009 / 10.00 – 1.00
Dept. No.
Max. : 100 Marks
SECTION – A
I. Answer all the questions:
10 x 2 = 20 Marks
1. Define Investment.
2. What are the reasons for investing?
3. VST Limited share is available today at a price of Rs.110. After one year, the
company is expected to declare a dividend of Rs.10 per share. You expect to sell
the share for Rs.150. Find out the holding period return from your investment.
4. Differentiate between an active and passive portfolio.
5. What is Beta?
6. What is meant by Security market line?
7. Give any four avenues of investment other than shares.
8. Define the concept of YTM.
9. What is a Debenture?
10. Give any two examples of formula plans.
SECTION – B
II. Answer any FIVE questions only:
5 x 8 = 40 Marks
11. Distinguish between investment and speculation.
12. The market price of an equity share is Rs.100. Following information is available
in respect of dividends, market price and the expected market condition after one
year:
Market
Probability
Market Price
Dividend
Condition
Good
0.25
Rs.115
Rs.9
Normal
0.50
Rs.107
Rs.5
Bad
0.25
Rs.97
Rs.3
Find out the expected return and variability of returns of the equity share.
13. Bring out the advantages of Formula plans.
14. The following results were obtained form a study for a period of six months in
2008.
Fund
Rp
σp
β
25.38
4.0
0.23
Birla Advantage
36.28
6.86
0.52
ICICI Prudential
45.56
4.31
0.63
Alliance Equity
36.74
3.69
1.00
S & P CNX 500
9.00
----Rf
Rank the funds, according to the predictive ability of the fund’s management.
15. Explain the significance of the following ratios with reference to company
analysis:
(a) Price-earning ratio (b) Earnings per share (c) Dividend per share
(d) Dividend yield
16. Describe the various factors influencing investment decisions?
17. Explain the different types of risks.
18. Following are data for Anand Products:
Particulars
Assets
Short term liabilities
8% Debentures
10% Bonds
Common stock (Rs.10)
Surplus
Revenues
Operating Expenses
EBIT
Interest
EBT
Taxes
Dividend
Rs. in
Lakhs
6,000
450
1,250
500
3,500
300
6,600
5,950
650
150
500
200
50
Find out the following ratios:
i.
Effective interest rate
ii.
Effective tax rate
iii.
Debt/equity ratio
iv.
Dividend pay-out ratio
SECTION – C
III. Answer any TWO questions only:
2 x 20 = 40 Marks
19. From the given details, evaluate the performances of the different funds using
Sharpe, Treynor and Jensen performance evaluation techniques.
Fund
A
B
C
MARKET
Return
2
12
8
9
σ
20
18
22
24
β
0.98
0.97
1.17
1.00
Risk free rate is 4.
20. Explain in detail the various phases of Fundamental analysis.
21. Explain the Capital Asset Pricing Model along with its assumptions.
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