LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034          M.Com DEGREE EXAMINATION – COMMERCE

AT 24

THIRD SEMESTER – NOV 2006

       CO 3802 – SECURITY ANALYSIS & PORTFOLIO MANAGEMENT

 

 

Date & Time : 25-10-2006/9.00-12.00   Dept. No.                                                       Max. : 100 Marks

 

 

SECTION – A

Answer ALL questions:                                                                        ( 10 x 2 = 20 )

 

1. What is stock split?

 

2. What is Formula plan?

 

3. Distinguish between systematic and unsystematic risk?

 

4. What are the problems encountered in portfolio revision?

 

5. What do you mean by portfolio diversification?

 

6. Bring out the unique feature of strong form of Efficient Market theory?

 

7. What is derivative?

 

8. What do you mean by Listing of shares.
9. 
   Give any two differences between investment and speculation.

 

10. In what way investment in financial asset is superior to investment in physical asset?

 

SECTION – B

Answer any five questions:                                                                    ( 5 x 8 = 40 )

 

11. Discuss the key macroeconomic variables and their impact on stock market.

 

12. Give a brief account of various participants involved in securities market?

 

13. What are the various policies of Portfolio management?

 

14. What are the assumptions of Markowitz theory?

 

15. There are two securities X and Y, which provide you the following returns and their
    probabilities.

Security X		Security Y
Return	Probability	Return	Probability
30%	0.10	-20%	0.05
20%	0.20	10%	0.25
10%	0.40	20%	0.30
5%	0.20	30%	0.30
-10%	0.10	40%	0.10

Calculate the expected rate of security X and security Y.

 

 

 

16. The cost of capital and rate of return of a company is 10% and 15%. The company has one
    million equity shares of 10 each and its EPS is Rs.5 per share.  Calculate the value under
    Walter when (a) retention is 100% (b) retention is 50% and (c) no retention.

 

17. An investor is seeking the price to pay for a security whose SD is 3%. The correlation
    coefficient of the security in the market is 0.8.  The market SD is 2.2%.  The return from
    Government securities is 5.2%.  The return from market portfolio is 9.8%.  Find the required
    rate of return using capital asset pricing model.

 

18. Ram & Co. has at present outstanding 50000shares selling at Rs.100 each. The company is
    contemplating to declare a dividend of Rs.5 per share at the end of the current year.  The
    captialisation rate of company is 10%. The management expects to earn a net income of
    Rs.5,00,000 and decides to invest Rs.10,00,000 in a project.  Show the price of the share at
    the end of the year if (a) a dividend is declared and (b) a dividend is not declared.

 

SECTION – C

Answer any TWO questions:                                                                 ( 2 x 20 = 40 )

 

19. Give an elaborate account of various factors involved in a company analysis?

 

20. Describe the factors and the principles considered in the portfolio management.

 

21. (a) What are criteria to be observed for the proper selection of portfolio?

• Give a brief account of the factors responsible for causing internal risk in investment?

 

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