R20

Code No: R 20 EF-301

MBA III Semester Regular/Supplementary Examinations

INVESTMENT ANALYSIS AND PORTFOLIO MANAGEMENT

DEPARTMENT OF BUSINESS ADMINISTRATION

Duration: 3 Hours Max. Marks: 75

Answer any one Question from Each Unit
All questions carry equal Marks
Case study compulsory
Q. Questions CO BTL Marks
No.
Unit-I
Define Investment. Name the factors to be considered in investment 1
i decision 6M
1.A i The investment process involves a series of activities starting from the 1 6M
i policy formulation
OR
What do you understand by investment? Explain various investment 1
i 6M
avenues available to investors
1.B
i 1
“Stock Exchanges are act as barometers of the health of the economy.”Explain 6M
i
Unit-II
The Market price of a Rs 1000 par value bond carrying a coupon rate of
i 14% and maturing after 5 years is Rs 1050. What is yield to maturity of the 2 6M
2.A bond (YTM)?
Define bond duration. Discuss in brief the active and passive strategies for
i 2
managing a bond portfolio
6M
i
OR
i What is unsystematic risk? Explain the different types of unsystematic risk. 2 6M
A stock costing Rs 125 pays no dividends. The possible prices that the
stock might
6M sell for at the end of the year with the respective
probabilities as follows:
Price(Rs) Probability
115 0.1
2.B i 120 0.1 2 6M
i 125 0.2
130 0.3
135 0.2
140 0.1
1. Calculate the expected return
2. Calculate the standard deviation of returns.

Unit-III
3.A i What is the fundamental analysis? What are the objectives and believes of 3 6M
fundamental analysis

1
 i What is technical analysis Explain the popular charts used by technical 3 6M
i analysis
OR
i Elucidate the concept of DOW theory. 3 6M
3.B i Compare and contrast efficient market hypothesis with fundamental and 3 6M
i technical analysis

Unit-IV
Explain the difference between Markowitz model and Sharpe single index
i 4 6M
model.
Calculate the portfolio variance and standard deviation for a portfolio
having the
6M following characteristics.

4.A Securitie Return(percent Std Proportio of

i 4
s ) deviatio n investment 6M
i n
P 30 12 0.2
Q 15 8 0.3
R 35 16 0.5
Correlation coefficients: P and Q=0.8; P and R=0.2; Q and R=0.5
OR
Explain the concept of efficient frontier in the context of portfolio
i 4 6M
selection.
4.B
i Describe the valuation of stocks using capital asset pricing model. 4 6M
i
Unit-V
What is portfolio evaluation? Explain its significance in the process of
i 5 6M
portfolio Management.
5.A Explain the need for portfolio revision. Differentiate between active
i revision strategy and passive revision strategy. 5 6M
i

OR
Explain in detail any three types of measures to evaluate the performance 5
i 6M
of mutual funds?
The following three portfolios provide the particulars given below
6M

Portfolio Average Standard Correlation coefficient

annual deviation Market
return and portfolio
5.B A 18 27 0.8
i B 14 18 0.6 5 6M
i C 15 8 0.9
Market 13 12 --
Risk free rate of interest is 9 %.
i) Rank these portfolios using
Sharp’s and Treynor’s methods.
ii) Compare both the indices.

2
 6. Case study 15M

An investor wants you to analyze the following two securities by providing the
following information

State of Probability Return on ABC Return on

Nature Stock PQR Stock
1 0.1 5% 0%
2 0.3 10% 8%
3 0.5 15% 18%
4 0.1 20% 26%

(a) What is standard deviation of return on stock ABC and PQR

(b) What is the covariance between the returns of securities ABC and PQR
(c) What is the coefficient of correlation between the returns on securities ABC and PQR

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