FM03 Security Analysis and Portfolio Management

Assignment No.I
Assignment Code: 2011FM03B1 Last Date of Submission: 30th Sept 2011 Maximum Marks:100

Attempt all the questions. All the questions are compulsory and carry equal marks.

Section-A Ques.1 (a) Describe the role of various participants in the securities market? (b) Enumerate the various characteristics of an industry that an analyst must consider while doing industry analysis. (a) How does SEBI regulate the new issues market? (b) Describe the features that distinguish institutional investors from individual investors? If a firm enjoys a positive difference between the rate of return on assets and the effective interest rate paid on borrowed funds, why shouldnt it push the mix of total funds acquired to the maximum limit of debt funds and minimize the financing that is done through equity sources? Write short notes on - Sharpes portfolio performance measure - Treynors portfolio performance measure - Jensens portfolio performance measure Section-B Case Study: SECTION B M/s A.B.C. Corporation Ltd has as on 31.03.2008 1. Share Capital Paid 2. Preference Share 3. No of Shares 4. Value of Share 5. Net Profit 6. Net Worth 7. Current Market price of share 8. Total Debt including Bonds 9. Reserve Total 1. Market Capitalization 2. Debt-Equity Ratio 3. R.O.N.W % 4. Book Value per Share Rs. 200 Lacs NIL 100 Lacs Rs.2 Each Rs.50 Lacs Rs. 400 Lacs Rs. 5.10 P. Rs. 400 Lacs Rs. 200 Lacs

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Calculate the following from above data.

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FM03 Security Analysis and Portfolio Management

Assignment No.II
Assignment Code: 2011FM03B2 Last Date of Submission: 15th Nov 2011 Maximum Marks:100

Attempt all the questions. All the questions are compulsory and carry equal marks.

Section-A Ques.1 (i)Briefly describe the concept and techniques of portfolio revision. (ii) The share of New Parke Limited which is not expected to pay dividend in the near future is currently selling for Rs. 150. The risk free interest rate is 8% per month. A three month future contact is selling for Rs. 152. Develop an arbitrage strategy and show what your profit will be three months hence. (i)What is strategic asset allocation? List the steps involved in the formal approach to strategic asset allocation. (ii)Discuss the key factors of active portfolio strategy. (i) What is an efficient market? Briefly discuss the three levels of market efficiency and also the common misconceptions surrounding the efficient market hypothesis. (ii)Describe the tests that are commonly employed to verify the weak-form efficient market hypothesis. Why is standard deviation commonly employed as a measure of risk? What are the criticisms of variance as a measure of risk? Section-B Case Analysis: East End Residential Complex is a Registered Society having 400 No. of Flats. All the 400 FLATS are allotted and occupied by the Individual Residents. The East End Residential Complex has collected one time maintenance charges from all Residents which is Rs. two crores Only. The society has invested the amount as under:1. Deposit with Public Sector Bank 2. Govt. Bond 3. Public Ltd Company Bond Total One Crore 50 Lacs 50 Lacs 2 Crores

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Deposit with Public sector Bank, on maturity, is now due for Payment Rs. 1 Crore The Public Sector Bank deposit rate is now 9% p.a. instead 11% p.a.

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The East End Residential Complex has now to decide how to invest Rs.1 Crore amount. The following 4 options are now available. 1 Private Sector Bank Deposit 2 ICICI Bank Bond 3 Infrastructure Bond 4 N.H.B Bond 10% P.A. 11% 11% P.A. P.A. 10.5% P.A.

Make a technical Analysis and a graph; describe the best option for investment of Rs. One Crore by the East End Residential Complex.

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