MF0010 & SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT

Dear students get fully solved assignments

Send your semester & Specialization name to our mail id :

help.mbaassignments@gmail.com

or

call us at : 08263069601

SEM-3 FINANCE Summer 2016 MF0010 & SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT

 

                                               

Q1. Financial markets bring the providers and users in direct contact without any intermediary. Financial markets permits the businesses and governments to raise the funds needed by sale of securities. Describe the money market/capital market – features and its composition.

(Money market- features and composition-5 marks, Capital market-features and composition-5 marks) 10 marks

Answer:

Money Market

The money market consists of financial institutions and dealers in money or credit who wish to either borrow or lend. Participants borrow and lend for short periods, typically up to thirteen months. Money

Q2. Risk is the likelihood that your investment will either earn money or lose money. Explain the factors that affect risk. Mr. Rahul invests in equity shares of Wipro. Its anticipated returns and associated probabilities are given below:

Return	-15	-10	5	10	15	20	30
Probability	0.05	0.10	0.15	0.25	0.30	0.10	0.05

You are required to calculate the expected ROR and risk in terms of standard deviation.

(Explanation of all the 4 factors that affect risk-4 marks, Calculation of expected ROR and risk in terms of standard deviation-6 marks) 10 marks

Answer:

Factors that affect risk

Some common risk factors are:

Business risk: This is the possibility that the company holding your money will not pay the interest or dividend due, or the principal amount,

When your bond matures. This may be caused by a variety of factors like heightened competition, emergence of new

Q3. Explain the business cycle and leading coincidental & lagging indicators. Analyze the issues in fundamental analysis

(Explanation of business cycle-leading coincidental and lagging indicators-6 marks, Analysis and explanation of the issues in fundamental analysis all the four points-4 marks) 10 marks

Answer:

Business cycle and leading coincidental and lagging indicators

All economies experience recurrent periods of expansion and contraction. This recurring pattern of recession and recovery is called the business cycle. The business cycle consists of expansionary and recessionary periods. When business activity reaches a high point, it peaks; a low point on the cycle is a trough.

Q4. Discuss the implications of EMH for security analysis and portfolio management.

(Implications for active and passive investment-5 marks, Implications for investors and companies-5 marks) 10 marks

Answer:

Implications for active and passive investment

Proponents of the efficient market hypothesis often advocate passive as opposed to active investment strategies. Active management is the art of stock-picking and market-timing. The policy of passive investors is to buy and hold a broad-based market index. Passive investors spend neither on market research nor on

Q5. Explain about the interest rate risk and the two components in it.

An investor is considering the purchase of a share of XYZ Ltd. If his required rate of return is 10%, the year-end expected dividend is Rs. 5 and year-end price is expected to be Rs. 24, Compute the value of the share.

(Introduction of interest rate risk-2 marks, Explanation of two components of interest rate risk-4 marks, Calculation of value of the share-4 marks) 10 marks

Answer:

Interest Rate Risk: With the passage of time, interest rate changes in the market. The cash flows from a bond (coupon payments and principal repayment) however, remain fixed. As a result, the value of a bond fluctuates. Thus interest rate risk arises because the changes in the market interest rates affect the value of the bond. The return on a bond comes from coupons payments, the interest earned from re-

                                   

Q6. Elucidate the risk and returns of foreign investing. Analyze international listing.

(Explanation of all the points in risks and returns from foreign investing-7 marks, Introduction of international listing-3 marks)10 marks

Answer:

Risks and Returns from Foreign Investing

International investing provides superior returns adjusted for risk. Allocating some portion of one's portfolio to foreign assets provides better risk adjusted reruns than a portfolio of domestic assets alone. International equities also offer access to a broader spectrum of economies and opportunities that can provide for further diversification benefits. Some of the best performing companies in the world like

Dear students get fully solved assignments

Send your semester & Specialization name to our mail id :

help.mbaassignments@gmail.com

or

call us at : 08263069601