MF0010-Security Analysis and Portfolio Management

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Master of Business Administration - MBA Semester 3

MF0010-Security Analysis and Portfolio Management-4 Credits

(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. What are Technical Indicators? How are they used?

Answer. The purpose technical analysis indicators, is to offer a different perspective from which to analyze price action. They filter price action using mathematical formulas.

Technical analysis indicators can be used to:

Confirm other technical signals, such as a

Q2. Calculate Risk of Portfolio

Security Expected Return Proportion % Invested Standard Deviation

A 10 25 0.2

B 15 15 0.3

C 20 60 0.5

Calculate Risk of the Portfolio 10 10

Answer. Portfolio Expected Return: The Expected Return on a Portfolio is computed as the weighted average of the expected returns on the stocks which comprise the portfolio. The weights reflect the proportion of the portfolio invested in the stocks. This can be expressed as follows:

Q3. Write Short notes on

1. Financial Statement Analysis

Answer: Financial statement analysis (or financial analysis) is the process of reviewing and analyzing a company's financial statements to make better economic decisions. These statements include the income statement, balance sheet, statement of cash flows, and a statement of changes in equity. Financial statement analysis is a method or process involving specific techniques for evaluating risks, performance, financial health, and future prospects of an organization.

2. Industry life Cycle

Answer. Life cycle models are not just a phenomenon of the life sciences. Industries experience a similar cycle of life. Just as a person is born, grows, matures, and eventually experiences decline and ultimately death, so too do industries and product lines. The stages are the same for all industries, yet every industry will experience these stages differently, they will last longer for some and pass quickly for others. Even within the

Q4. 1. Explain the meaning of Risk Diversification.

Answer. Risk diversification consists of spreading risk out into numerous areas to ensure that the potential negative effects of exposure to any one variable are limited.

Diversifying risk is done in order to protect a company’s financial position. If a company does not protect itself through diversification, and instead leaves itself exposed to one variable, it could lead to potentially costly consequences.

For example: a clothing chain

2. How do we measure Portfolio Risk?

Answer. One of the concepts used in risk and return calculations is standard deviation, which measures the dispersion of actual returns around the expected return of an investment. Since standard deviation is the square root of the variance, variance is another crucial concept to know. The variance is calculated by weighting each possible dispersion by its relative probability (take the difference between the actual return and the

Q5. Explain the Meaning and Benefits of Mutual Fund.

Answer. Let's imagine you just overheard the following conversation among three friends:

'I had a great year last year. My mutual fund was up 10%.'

'Oh, yeah? Mine was up 12%.'

'Oh, my. Mine was down 1%.'

Q6. Probability Return %

P M

0.40 30 -10

0.25 20 30

0.35 0 20

This distribution of returns for share P and the market portfolio M is given above.

Calculate the Expected Return of Security P and the market portfolio, the covariance between the market portfolio and security P and beta for the security.

Calculate:

1. Expected Return of Security P and the market portfolio,

2. Covariance between the market portfolio and security P

3. Beta for the security.

Answer. Many elements of mathematics and statistics are used in evaluating stocks. Covariance calculations can give an investor insight into how two stocks might move together in the future. Looking at historical prices, we can determine if the prices tend to move with each other or opposite each other. This allows you to predict the

FALL-2017

Get solved assignments at nominal price of Rs.125 each.

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Any issues mail us at: subjects4u@gmail.com or contact at

08894344452, 8219081362