LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
M.Com. DEGREE EXAMINATION – COMMERCE
THIRD SEMESTER – NOVEMBER 2010
CO 3802 – SECURITY ANALYSIS & PORTFOLIO MANAGEMENT
Date : 29-10-10 Dept. No. Max. : 100 Marks
Time : 9:00 – 12:00
SECTION – A Answer ALL questions ( 10 x 2 = 20 )
- What do you mean by ‘return’?
- What are the two basic investment avenues?
- What are the precautions to be taken while investing in real estate?
- What is diversification of portfolio?
- What are the limitations of CAPM?
- Highlight the important points of Markowitz model.
- What is stock split? How the stock price is affected by it?
- What are tools used for judging undervaluation or overvaluation of investment?
- Security A and B have standard deviations of 5% and 8%
Mr.X is planning to invest 30% of his funds in security A and the balance in Security B.
Ascertain portfolio risk, if correlation is 1.
- A company’s return was 20% and that of the stock market as a whole was 15%. The standard deviation of the portfolio was 10%, while that of the market is 5%. The risk free rate is 6%. What is the Sharpe measure of the company’s portfolio? Comment on its performance.
SECTION – B Answer any five questions ( 5 x 8 = 40 )
- Who is an investor? Bring out his characteristics.
- Highlight the features of Firm specific analysis under Fundamental factors.
- What are the obstacles faced by an investment analyst?
- On what basis efficient market theory is criticized?
- What are the points to be considered in Portfolio evaluation?
- Explain the constraints of the investors in formulating their investment objectives.
- KK invested Rs.10,000 each in shares of X Ltd. and Y Ltd. which carry a risk of 10% and 12% respectively. He had computed the risk of his portfolio as 11% being the weighted average risk. Subsequently on learning about correlation he desires to re-compute the risk of his portfolio. He finds that the correlation co-efficient between X Ltd. and Y Ltd. is 0.25. what is the risk of his portfolio?
- From the following information, calculate the expected rate of return of a portfolio:
Risk free rate of interest 12%; Expected return of market portfolio 18%; standard deviation of an asset 2.8%; market standard deviation 2.3%; correlation co-efficient of portfolio with market 0.8%.
SECTION – C Answer any TWO questions ( 2 x 20 = 40 )
- How the risk is classified? Explain in brief.
- Bring out the unique features of Technical analysis highlighting its various forms.
- What do you mean by portfolio construction and revision? Identify and discuss the factors contributing to portfolio management.
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