MB FM– 201 - Security analysis and portfolio management - JNU solved assignments

 

Dear students get fully solved assignments

Send your semester & Specialization name to our mail id :

help.mbaassignments@gmail.com

or

Call us at : 08263069601

 

Master of Business Administration

 

Paper Code: MB FM– 201

 

Paper Title:  Security analysis and portfolio management

 

 

 

Q. 1.    Short answer type questions:  Limit 100 – 150

 

(i)  What are securities? Write any two features of securities.

Answer: Securities commonly refers to any form of negotiable financial instrument that holds some type of monetary value.Its legal definition varies by jurisdiction where in some cases the term excludes financial instruments other than equities and fixed income instruments and in some areas it includes some instruments that

 

 

(ii) Who are brokers? Write its important role in security market.

Answer: The role of a stock broker is to facilitate the buying and selling of stocks at the stock markets, on behalf of investors. There are many prominent stock brokerage firms in India through which you can trade in stock exchanges.

 

 

 

 

(iii)  What do you understand by efficient portfolio & efficient frontier?

Answer: Optimal Portfolio

An optimal portfolio is one that occupies the ‘efficient’ parts of the risk-return premium spectrum. It satisfies the requirement that no other collection exists with a higher expected return at the same standard deviation of the return (risk measure).

The optimal portfolio does not focus on

 

 

 

(iv)  What do you understand by systematic and non-systematic risk?

Answer: Systematic Risk

It is the risk that highlights the possibility of a collapse of the entire financial system or the stock market causing a

 

 

 

(v)  What do you understand by over the counter exchange (OTCEI)?

Answer: Over The Counter Exchange of India (OTCEI) can be defined as a stock exchange without a proper trading floor. All stock exchange have a specific place for trading their securities through counters. But the OTCEI is connected through a computer network and the transactions are taking place through computer operations.

 

 

 

 

 

(vi) Broker is an agent who executes the order of his client, yet he can act many roles.

Explain any two different roles of a broker?

Answer: 1)Suggest best deals

 

Mostly a broker deals in all different types of securities. Brokers suggest the best deal to buy or sell stocks and may also advise traders when to buy or sell stocks. But they are not licensed investment advisers.

 

 

 

(vii)     Explain the concept of undervalued and overvalued portfolio

Answer: Undervalued Stocks?

Buying undervalued stocks and securities is one of the key investment strategies for value strategies. Investors actively pick out stocks that are undervalued in the market.

 

However, this strategy of

 

 

 

 

 

(viii)    Investor are risk averse what do you understand by this assumption?

 

Answer: Every investor wants to maximize the investment returns for a given level of risk. Risk refers to the uncertainty of future outcomes. Risk aversion relates to the notion that investors as a rule would rather avoid risk. Given a choice of two investments with equal returns, risk-averse investors will select the investment with

 

 

(ix)      Difference between shares and debentures?

Answer:

1.       The holder of shares is known as a shareholder while the holder of debentures is known as debenture holder.

2.       Share is the capital of the company, but Debenture is the debt of the company.

3.       The shares represent ownership of the shareholders in the company. On the other hand, debentures represent indebtedness of the company.

4.      The income earned on shares is the dividend, but the income earned on debentures is interest.

 

 

(x) Write short notes on

 

(a) Relative strength index

Answer: The relative strength index (RSI) is a momentum indicator used in technical analysis that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a stock or other asset. The RSI is displayed as an oscillator (a line graph that moves between two extremes) and can have a

 

 

(b) Rate of change?

Answer: The rate of change (ROC) is the speed at which a variable changes over a specific period of time. ROC is often used when speaking about momentum, and it can generally be expressed as a ratio between a change in one variable relative to a corresponding change in another; graphically, the rate of change is represented by the slope of a line. The ROC is often illustrated by the Greek letter delta.

A rate of change is a rate that describes

 

 

 

 (Word limits 500)

 

Q. 2.    Risk free return is at 6% and expected return of market portfolio is 18% wit standard deviation 2.5%.draw CML

Let us take hypothetical value of standard deviation portfolio as 0, 1, 1.5, 2, 2.5, 3, 3.5 and 4.

Answer: First, we calculate the expected return under the various hypothetical values;

 

at 0; 6 + (18-6)0 = 6%

 

 

 

Q. 3.    What do you mean by listing of shares? Discuss in brief the SEBI requirement for listing of shares.

Answer: Listing means the admission of securities of a company to trading on a stock exchange. Listing is not compulsory under the Companies Act. It becomes necessary when a public limited company desires to issue shares or debentures to the public. When securities are listed in a stock exchange, the company has to comply with the requirements of the exchange.

 

The company has to follow specified conditions before Shares listing in stock exchange:

 

 

 

 

Q. 4.    „Investors‟ are utility maximizers”, do you agree? Explain with the help of suitable example

Answer: Investors are risk averse utility maximizers because they will always look for opportunities and make the most out of them and at the same time are reluctant to venture into projects that are associated with risk of financial loss or projects that have little economic viability. Investors acquire factors of production such as labor, capital, and land and ensure that they are maximally used. For example, if an real estate investor

 

 

Q. 5. Risk free return is at 5% and expected return of market portfolio is 16%. Find out the expected returns of the securities with a beta of (a) 1.25 (b) .8 and (c) 1?

Answer: (a) The expected returns of the securities with a beta of 1.25:
E(R) = 5% + 1.25(16%-5%) = 5% + 1.25 * 11% = 5% + 13.75% = 18.75%
The expected returns of the securities with a beta of 1.25 is 18.75 %

 

 

Q. 6. Current dividend per share is Rs 5, growth expected during the next three years is 15 % p.a., thereafter, for three years, the dividend are expected to grow at the rate of 10% per annum and then the dividends are likely to grow at a constant rate of 7 % p.a., If an investor expects a return of 20% p.a., find out what is the value of these shares for this investor.

Answer: Stage one dividends grew by 15% or 0.15

Year......Workings ............................. Expected

 

 

 

Dear students get fully solved assignments

Send your semester & Specialization name to our mail id :

help.mbaassignments@gmail.com

or

Call us at : 08263069601

 

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.