Mr. Anand wants to determine in which, out of the two securities he should invest in. He already did the task of forecasting the returns on both of these securities as mentioned below

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Capital Market and Portfolio Management
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Capital Market and Portfolio Management
Question1 –
Mr. Lalawani wants to invest in share market. Specifically, he is interested in the
securities of Power Sector. He strongly believes that performance of any entity is
significantly related to the general industry to which the entity belongs and also to the
economic environment. Discuss the nature and type of analysis Mr. Lalwani will pursue
so as to get the desired outcome. (10 Marks)
Question 2 –
Mr. Anand wants to determine in which, out of the two securities he should invest in. He
already did the task of forecasting the returns on both of these securities as mentioned
below. You, being the financial research analyst advise him on these securities.
Question 3
Beta of Pragati Ltd is 1.55. The market rate of return is 15%. The risk free rate of return
is 8 % .
a. Compute the expected return based on CAPM, explaining all the components of the
CAPM Model (5 Marks)
b. Suppose, the risk premium on the market goes up by 3.5 % points do you think that the
expected return on the stock of the above company will change? Calculate and
elaborate. (5 Marks)
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