Loyola College B.Com Corporate & Secretaryship April 2008 Portfolio Management Question Paper PDF Download

LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

     B.Com. DEGREE EXAMINATION – CORPORATE SECRETARYSHIP

GF 18

 

SIXTH SEMESTER – APRIL 2008

BC 6602 / CR 6602 – PORTFOLIO MANAGEMENT

 

 

 

Date : 23/04/2008                Dept. No.                                        Max. : 100 Marks

Time : 9:00 – 12:00

PART – A

(10 x 2 = 20)

ANSWER ALL QUESTIONS

 

  1. Define investment.
  2. Who is a gambler?
  3. What does Net Asset Value mean?
  4. Write a note on Bonus Shares.
  5. What is Security Market Line?
  6. Define the term Beta.
  7. A bond of Rs.5000 with a 10% coupon rate matures in 7 years and currently

sells at 97.5%. Calculate the YTM.

  1. Output 100000 units. Selling Price Rs.4 per unit, Variable Cost Rs.2 per unit,

Fixed Cost Rs.40000. Its capital structure consists of 9% Bank Loan Rs.1 lakh

and Equity share Capital @ Rs.10, Rs.5 lakhs. Tax rate 40%. Calculate EPS.

  1. Risk free rate is 7%. The market risk premium is 10.5% and the Beta of the

security is 1.5. Calculate the expected return of the security under CAPM.

10.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 Condition Probability Market Price (Rs.) Dividend (Rs.)
Good 0.25 115 9
Normal 0.5 107 5
Bad 0.25 97 3

 

 

 

 

Find out the expected return.

PART – B

(5 x 8 = 40)

ANSWER ANY FIVE QUESTIONS

 

  1. Briefly explain the secondary objectives of investment.
  2. What are the economy-wide factors that affect the fundamental analysis?
  3. Define Capital Asset Pricing Model. Bring out its basic assumptions.
  4. Differentiate constant rupee plan from constant ratio plan.
  5. “Investment in Mutual funds are better than equity shares” – Comment.
  6. Two securities, X and Y have variance of 13 and 12 and the expected returns

of 15% and 12% respectively. The covariance between the returns is 3. Find

out the return and risk of the following portfolios:

  Security X Security Y
(I) 0.2 0.8
(ii) 0.7 0.3
(iii) 0.5 0.5

 

 

 

  1. Six Portfolios experienced the following results during a 7-year period:
Portfolio Average Return Standard Deviation Correlation with market
I 18.6 27 0.81
II 14.8 18 0.65
III 15.1 8 0.98
IV 22 21.2 0.75
V 9 4 0.45
VI 26.5 19.3 0.63

 

 

 

 

 

 

 

 

The risk free rate of interest is 9% and the market risk is 12%. Rank these

portfolios using (a) Sharpe’s and (b) Treynor’s Ratio

 

  1. Growth Fund, Trade bills and BSE Sensex had the following returns over the

past 5 years.

Year Growth Fund Returns % Trade Bills Returns % BSE Sensex Returns %
2003 9 6 6
2004 6 10 5
2005 14 8 11
2006 12 7 10
2007 16 9 13

 

 

                What is the predictive ability of the fund?

PART – C

(2 x 20 = 40)

ANSWER ANY TWO QUESTIONS

 

  1. Explain the systematic and unsystematic risk with relevant examples.

 

20.What are the various forms of investment alternatives? Give a detailed

account of any eight.

 

  1. The following information is available in respect of investment in A & B
Conditions Probability Returns from A (%) Returns from B (%)
DULL 0.2 10 6
STABLE 0.5 14 15
GROWTH 0.3 20 11

(i) Calculate:

  • Expected return and standard deviation of the investments A & B
  • Covariance
  • Correlation

(ii) What will be return if total investment is divided one half in each?

 

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