December, 2009

MS-44 : Security Analysis And Portfolio Management

1. What are the objectives of security analysis ? How do you measure the risk of a security ?

2. (a) "Systematic risk cannot be controlled, but unsystematic risk can be reduced". Discuss.

(b) Mr. Ranga owns Rs. 1,000 face value bond with five years to maturity. The bond has an annual coupon of Rs. 75. The bond is currently priced at Rs. 970. Given an appropriate discount rate of 10%, should Ranga hold or sell the bond.

3. Explain and illustrate the economy—industry-company (EIC) framework of analysis for equity investment.

4. What is Efficient Market Hypothesis ? How is the Markowitz model useful in portfolio selection ?

5. (a) Discuss the various Formula Plans that are available to an investor for portfolio revision.

(b) A security pays a dividend of Rs. 3.85 and sells currently at Rs. 83. The security is expected to sell at Rs. 90 at the end of the year. The security has a beta of 1.15. The risk free rate is 5 per cent and the expected return on market index is 12 per cent. Assess whether the security is correctly priced.

6. What is portfolio performance evaluation ? Explain the various methods of portfolio

performance evaluation.

7. Write short notes on any four of the following :

(a) Risk and Uncertainty

(b) Zero Coupon Bonds

(c) Efficient Frontier

(d) Filter Test

(F) Sharpe's Index Model

(f) Odd Lot Theory

8. Explain the various steps involved in the public issue of securities. Give salient features of the guidelines issued by SEBI regarding IPOs.