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ASSIGNMENT
Course Code : Ms - 44
Course Title : Security Analysis And Portfolio
Management
Assignment Code : MS-44/TMA/SEM-II/2016
Coverage : All Blocks
Note: Attempt all questions and submit the
assignment on or before 31st October, 2016 to the coordinator of
your study centre.
Question.1.
Define Investment. Discuss the effect of changes in investment environment on
investment decisions. Explain the various types of risks involved in
investment.
Answer:To invest is to allocate money (or sometimes another resource, such as
time) in the expectation of some benefit in the future.
In finance, the expected future benefit from
investment is called a return (to investment). The return may consist of
capital gain and/or investment income, including dividends, interest, rental
income etc. The economic return to an investment is the appropriately
discounted value of the future returns to the investment.
Investment generally results in acquiring an
asset, also called an investment. If the asset is available at a price worth
investing, it is normally expected
Question.2.
(a) What is 'Primary Market’? Discus the important developments that have taken
placerecently in Indian primary market. .
Answer:The primary market is the part of the capital market that deals with
issuing of new securities. Companies, governments or public sector institutions
can obtain funds through the sale of a new stock or bond issues through primary
market. This is typically done through an investment bank or finance syndicate
of securities dealers.
(b)
What do you understand by Initial Public Offer (I.P.O.)? Who are allowed to
makean I.P.O.?Discuss the salient features of the SEBI guidelines on I.P.O.
Answer:An IPO is when a company which is presently not listed at any stock
exchange makes either a fresh issue of shares or makes an offer for sale of its
existing shares or both for the first time to the public. Through a public
offering, the issuer makes an offer for new investors to enter its shareholding
family.
The shares are made available to the
investors at
Question.3.
(a) Critically evaluate the fundamental analysis. How is it useful to a
prospectiveinvestor?
Answer:Fundamental analysis, in accounting and finance, is the analysis of a
business's financial statements (usually to analyze the business's assets,
liabilities, and earnings); health; and its competitors and markets. When
applied to futures and forex, it focuses on the overall state of the economy,
and considers factors
(b)
What are the various techniques of technical analysis? Explain the various
challengesto technical analysis.
Answer:In finance, technical analysis is a security analysis methodology for
forecasting the direction of prices through the study of past market data,
primarily price and volume. Behavioral economics and quantitative analysis use
many of the same tools of technical analysis, which, being an aspect of active
management, stands in contradiction to much of modern portfolio theory. The
efficacy of both technical and fundamental analysis is disputed by the
efficient-market hypothesis which states that stock market prices are
essentially unpredictable.
Dow theory is based on the collected writings
of Dow Jones co-founder and editor Charles Dow, and inspired the use and
development of modern technical
Question.4.
(a) What is Markowitz Portfolio Theory? Explain the basic assumptions of
MarkowitzTheory.
Answer:MPT - Modern Portfolio Theory - represents the mathematical formulation
of risk diversification in investing, that aims at selecting a group of
investment assets which have collectively lower risk than any single asset on
its own.
(b)
Explain the logic of the Arbitrage-Pricing Theory (APT). Compare andcontrast
with the Capital Asset Pricing Model (CAPM) ?
Answer:A simplistic answer that the theoreticians are going to hate, but has
worked for me in the real world for 40 years: CAPM is a way of explaining why a
price might vary due to external forces – an energy company’s share price will
vary due
Question.5.Critically evaluate the three formula plans
and suggest modification, if any, to make them useful for investors in Indian
Stock Market.
Answer:The portfolio which is once selected has to be continuously reviewed over
a period of time and then revised depending on the objectives of the investor.
The important factors to take into consideration are the timing for revision.
The timing for revision is found out by the
use of formula plans. These plans are predetermined with distinctive objectives
and rigidity of rules. Each
Dear
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