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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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