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Capital Market and
Portfolio Management
April 2022 Examination
Q1. In order to
maximize the returns from any investment decision, it’s essential that such
decision is taken after adequate analysis. This analysis can be further
classified as fundamental analysis or technical analysis.
Discuss the basic
difference between these two techniques. Also, showcase other essential points
which can convey in an impactful manner that both the types of analysis i.e.
fundamental analysis and technical analysis should be taken care of while
taking investment decision. (10 Marks)
SOLUTION:
Introduction:
A
capital market is a market for buying and selling securities such as stocks,
bonds, etc., between a client and a seller. The individuals in a capital market
are each people and institution. The capital market comprises number one markets
and secondary markets. While the primary markets are the markets for new
troubles or the preliminary public offers (IPOs) of shares and securities,
secondary markets previously traded securities. Capital markets may also be
classified into the bond and inventory
Q2.
Mr. Alok is interested to invest Rs 1 lacs in the securities market. He
selected two securities A and B for this purpose
The
risk return profile of these securities are as follows-
|
Security
|
Risk
|
Expected
return |
|
A
|
10%
|
12
% |
|
B
|
18
% |
20
% |
Coefficient
of correlation between A and B is 0.15
If
he decides to invest 50 % of his fund in A and rest 50% in B. What if, he
decides to invest 75 % of his fund in A and rest 25% in B, will the risk and
return associated to the portfolio will change? You are required to calculate
the portfolio return and risk to be calculated by Mr Alok for his investment.
(10 Marks)
SOLUTION:
Introduction:
A
Portfolio return implies the benefit or loss realized through a funding
portfolio containing several varieties of investments. Return of portfolio or
portfolio return is defined as the benefit or loss that would stand up by
investing in a funding portfolio, a mixture of a couple of or unique forms of
investments. Widespread deviation measures the variation in the return of an
investment from the portfolio's anticipated return. It accordingly suggests the
riskiness of the security. A preferred deviation is a statistical tool used to
degree the dispersion of a provided dataset to the
Q3.
Suppose you are fortunate enough to receive an inheritance of $1 million from
your relative but with a specific condition that you should invest the amount
intelligently in Capital market securities.
a.
Discuss any five Capital market security Instruments, you would prefer to
invest in (5 Marks)
SOLUTION:
Introduction:
Capital
market is a market for numerous financial instruments. These instruments are in
contracts that give rise to a financial asset for an entity and a financial
liability for some other entity.
Qb. Mention
your understanding in relation to the various factors affecting investment
decision process in the above context (5 Marks)
Introduction:
Indian
stock market is the oldest inventory marketplace in Asia. Bombay stock trade
(BSE) became set up in 1875. Then the Indian inventory market has grown extraordinarily.
The stock market's growth depends on its individuals, and the traders ought to
be financially literate approximately the stock marketplace and factors that
affect its boom. Before investing in the
.
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professionals.
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