Thursday 22 August 2013

MF0010 – Security Analysis and Portfolio Management


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Summer-2013
Master of Business Administration- MBA Semester 4
MF0010–Security Analysis and Portfolio Management-4 Credits
(Book ID: 1759)
Assignment (60 Marks)
Note: Answer all questions (with 300 to 400 words each) must be written within 6-8 pages. Each Question carries 10 marks 6 X 10=60
Q1. Explain the characteristics of investment. Differentiate between investment and speculation.
Answer. Characteristics:-
1. Return: – All investments are characterized by the expectation of a return. In fact, investments are made with the primary objective of deriving a return. The return may be received in the form of yield plus capital appreciation. The difference between the sale price & the purchase price is capital appreciation. The dividend or interest received from the investment is the yield. Different types of investments promise different rates of return. The return from an investment depends upon the nature of investment, the maturity period & a host of other factors.

Q2. What do you understand by risk and measurement of risk? Explain the factors that affect risk.
Answer. Risk is the potential of loss (an undesirable outcome, however not necessarily so) resulting from a given action, activity and/or inaction. The notion implies that a choice having an influence on the outcome sometimes exists (or existed). Potential losses themselves may also be called "risks". Any human endeavor carries some risk, but some are much riskier than others.


Q3.Compare and contrast the fundamental and technical analysis.
Answer. Fundamental analysis of a business involves analyzing its financial statements and health, its management and competitive advantages, and its competitors and markets. When applied to futures and forex, it focuses on the overall state of the economy, interest rates, production, earnings, and management. When analyzing a stock, futures contract, or currency using fundamental analysis there are two basic approaches one can use; bottom up analysis and top down analysis.

Q4. Write the assumptions of CAPM. Explain the limitations of CAPM.
Answer. Assumptions:-
1. Aim to maximize economic utilities.
2. Are rational and risk-averse.
3. Are broadly diversified across a range of investments.
4. Are price takers, i.e., they cannot influence prices.
5. Can lend and borrow unlimited amounts under the risk free rate of interest.

Q5. Write about emerging markets. Explain the risks involved in international investing.
Answer. Emerging markets are nations with social or business activity in the process of rapid growth and industrialization. The economies of China and India are considered to be the largest. According to the Economist many people find the term outdated, but no new term has yet to gain much traction.
The defining features of emerging markets include at least the following factors. The markets are actively growing under governmental policies that favor a capitalist-style

Q6.What is economy analysis? Explain the factors to be considered in economy analysis.
Answer. A systematic approach to determining the optimum use of scarce resources, involving comparison of two or more alternatives in achieving a specific objective under the given assumptions and constraints.

Economic analysis takes into account the opportunity costs of resources employed and attempts to measure in monetary terms the private and social costs and benefits of a project to the community or economy.
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