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Master of Business Administration - MBA Semester 3
MF0010-Security Analysis and Portfolio Management
(Book ID: B1754)
Assignment (60 Marks)
Note: Answer all questions must be written within 300 to 400 words each.
Each Question carries 10 marks 6 X 10=60
Q1. Describe the investment process.
Each step carries 2 marks for all the 5 steps 10
Answer. The Investment process describes the decisions with regard to what
securities to invest in while constructing a port folio, how extensive the investment
should be, and when the investment should be made. This is a procedure involving
the following five steps:

Set investment Policy

Perform Security analysis
Construct a portfolio
Evaluate the performance of Portfolio
Revise the Portfolio.

Q2. Define primary markets? Define and explain the role of financial
intermediaries.
Definition of primary markets - 3
Definition of financial intermediaries - 3
Role of financial intermediaries - 4
Answer. Definition of primary markets:
In primary market, a borrower offers new securities in exchange for cash from the
investor (buyer). Sales of bonds, treasury bills or stocks take place in primary

markets. The issuers of these securities corporates, the government receive cash
from people who buy these securities. These buyers receive financial claims that
previously did not exist. Corporate or the government directly receives the proceeds
from the business transaction only in primary market.

Q3. Define technical indicators and its types and Discuss on Candlestick
charts?
Definition of technical indicators - 2
Types of technical indicators - 3
Candlestick charts - 5
Answer. Definition of technical indicators:
Technical analysts also use technical indicators besides charts to assess prospects for
market declines/advances. A technical indicator is a series of data points that are
derived by applying a formula to the price data of a security. Price data includes any
combination of the open, high, low or close prices over a period of time.

Q4. Briefly explain Assumptions of Markowitz Model. Explain Efficient

Frontier or Efficient set.
Explain Assumptions of Markowitz Model - 2
Explanation on Efficient Frontier - 8
Answer. Assumptions of Markowitz Model:
Markowitzs model identifies the trade-off facing the investor as one between
expected return (mean) and risk (variance). It makes the following assumptions
concerning the investment market and investors behaviour in those markets.
All investors have the same expected single period investment horizon. At the
beginning of the period, the investor allocates his wealth among various assets,
assigning a non-negative weight to each asset.

Q5. Explain the assumptions of Capital Asset Pricing Model (CAPM). Give a
short note on Separation Theorem, Capital Market Line (CML) and Security
Market Line (SML).
Assumptions of CAPM - 4
Separation Theorem - 3
CML and SML - 3

Answer. Assumptions of CAPM:

Some of these assumptions of CAPM are clearly unrealistic. But relaxing many of
these assumptions would have only minor influence on the model and would not
change its main implications or conclusions. The primary way to judge a theory is to
see how well it explains and helps predict behaviour. While CAPM does not completely
explain the variation in stock returns, it remains the most widely used method for
calculating the cost of capital.

Q6. Explain the Structure of Mutual Fund Operations. Explain Types of

Mutual Fund.
Structure of Mutual Fund - 6
Types of Mutual Fund -- 4
Answer. Structure of Mutual Fund:
In India, mutual funds are operated by entities like sponsors, mutual funds, trustees,
asset management companies, custodians, registrars and transfer agents. Sponsor
The sponsor of a mutual fund is similar to the promoter of a company. The sponsor
could be a bank, a financial institution or a financial services company. For example,
the sponsor of Reliance Mutual Fund is the Anil Dhirubhai Ambani Group (ADAG). The
sponsor has to obtain a license from SEBI for which it has to fulfill conditions relating
to capital, profits,

Spring-2016
Get solved assignments at nominal price of Rs.125
each.
Mail us at: subjects4u@gmail.com or contact at
09882243490