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Ms-44 question bank

Ms-44 question bank (6)

Ms-44 question bank

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.

June, 2010

Ms-44 : Security Analysis and Portfolio Management

1. What do you understand by 'Investment' ? Explain the steps involved in the investment process.

2. (a) Define risk. What are the statistical tools that are used to measure risk of securities return ?

(b) Mr. Vamsi is considering the purchase of a bond currently selling at Rs. 878.50. The bond has four years to maturity, face value of Rs. 1,000 and 8% coupon rate. The next annual interest payment is due after one year from today. The required rate of return is 10%.

(i) Calculate the intrinsic value (present value) of the bond. Should Vamsi buy the bond ?

(ii) Calculate the yield to maturity of the bond.

3. Discuss the various measures that have been adopted in India to protect investors' interest in securities market.

4. What is market efficiency ? Explain the various anomalies in efficient market hypothesis.

5. (a) In the context of Risk Adjusted returns, briefly explain :

(i) Treynor's Ratio

(ii) Sharpe's Ratio

(b) Puja and Devika are the two mutual funds Puja has a mean success of 0.15 and Devika has 0.22. The Devika has double the beta of Puja fund's 1.5. The standard deviations of Puja and Devika funds are 15% and 21.43%. The mean return of market index is 12% and its standard deviation is 7. The risk free rate is 8%.

(i) Compute the Jensen Index for each fund.

(ii) Compute the Treynor and Sharp indices for the funds. Interpret the results.

6. What is portfolio revision ? Why does it arise ? Discuss the various constraints in portfolio revision.

7. Distinguish between any four of the following :

(a) Growth Fund and Balanced Fund

(b) Ex-dividend and Cum-dividend

(c) Commercial Paper and Commercial Bill of Exchange

(d) Self-regulation and Legislative regulation

(e) Buy-back of Shares and Surrender of Shares

(f) Money Market and Capital Market

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

(a) Investment Vs. Speculation

(b) Bullish market

(c) Capital market line

(d) Technical analysis

(e) Efficient portfolio

(f) Price-earnings approach

June, 2011

MS-44 : Security Analysis and Portfolio Management

1.  What do you understand by 'investment ' ? Explain the various factors, which form the basis of the investment process.

2.  (a) Discuss the main provisions of the Securities Contracts (Regulation) Act, 1956 governing the Stock Exchange in India.

(b) The company GVK’s next year dividend per share is expected to be Rs. 3.50. The dividend is expected to grow at a  rate of 10 percent per year in subsequent years. If the required rate of return is 15 percent per year, what should be the price of its shares ? The prevailing market price is Rs. 75 per share.

3.  What is Fundamental Analysis ? Bringout its relevance to the security analyst.

4.  What is Efficient Market Hypothesis (EMH) Explain the techniques for testing the various forms of E.M.H.

5.  (a) What do you mean by Formula plans ? Critically examine the formula plans and discuss their limitations.

(b) Compute the risk of the portfolio from the following information.


Proportion of Portfolio

Standard Deviation

Coefficient of Correlation




RAB  0.5




RBC 0.3




TAC 0.1

6.  Compare and contrast Capital Asset Pricing Model Arbitrage Pricing Theory: (CAPM) and (APT) which of the two is a better model for pricing risky assets and why?

7.  Write short notes on any four of the following

(a)  Systematic and unsystematic risk

(b)  Dow Theory

(c)  Efficient Frontier

(d)  Sharpe's Single Index Model

(e)  NSDL

(f)  Treyner's index

8.  (a) "Mutual funds provide stability to share prices, safety to investors and resources to prospective entrepreneurs". Comment.

(b) Briefly discuss the different types of Mutual Fund Schemes introduced in India.

December, 2011

Ms-44 : Security Analysis and Portfolio Management

1. 'The investment environment has undergone several changes in India since 1991'. Discuss this statement and explain the three elements of investment environment.

2. (a)  What are the objectives and functions of Securities Exchange Board of India ?

(b) A bond has a par value of Rs. 1,000. It has a coupon rate of 9%. It matures after 8 years. Its current market price is Rs. 800. What is the yield to maturity of the bond ?

3. Differentiate between fundamental analysis and technical analysis. Discuss the usefulness of odd of theory and Elliot wave theory on stock market prediction.

4. Explain the concept of 'efficient market'. Discuss the implications of 'efficient market hypothesis' for security analysis.

5. (a)  What are the basic assumptions behind the Markowitz Portfolio theory ?

(b)  Rotari Holdings Ltd., an investment company has invested in equity shares of a blue chip company. Its

Risk free return (Rd = 9%

Expected total return (R m) =16%

Market sensitivity index  (Bi)  = 0.8

Calculate the expected rate of return on the investment made in the security.

6. What are formula plans ? How is a constant rupee value plan different to a constant ratio plan ? Discuss.

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

(a) Warrant

(b) Industry analysis

(c) Filter rule

(d) Capital market line

(e) Arbitrage pricing theory

(f) Beta

8.  (a)  "Depository Service is another major development in the Indian Stock Market". In the light of this statement explain the function and significance of depository service in India.

(b) Distinguish between (i) Private Placement and Rights Issue and (ii) Listing of Securities and Rating of Securities. 

December, 2012

Ms-44 : Security Analysis And Portfolio Management

1.  Explain the concept of investment. Discuss in detail the steps involved in the investment process.

2.  (a)  Critically evaluate the role of SEBI as stock market developer and regulator.

(b)  The common stock of GVK Ltd. is currently selling for Rs. 70 per share. Dividend per share has grown from Rs. 2 to the current level of Rs. 6 over the past ten years and this dividend growth is expected to continue in future also. What is the required rate of return of the GVK Ltd. ?

3.  "Economic forecasting is the heart of economic analysis." Explain this statement and describe the various techniques of economic forecasting.

4.  Explain the Dow Theory. Is it useful in predicting the price behaviour of stocks ? Is the Dow Theory applicable to the Indian stock market ?

5.  (a)  What are benchmark portfolios ? How are they used to evaluate the performance of a portfolio manager ? Discuss with suitable examples.

(b)  Consider the following data for a particular sample period :

Portfolio P Market M

Average return






Standard deviation



Non-systematic risk


Calculate the following performance measures for portfolio P and the market : Sharpe, Jensen, and Treynor. The T - bill rate during the period was 6%. By which measures did portfolio P outperform the market ?

6.  Discuss the CAPM and its application in portfolio selection. Explain the relationship between SML, CML and Characteristic Line.

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

(a)  Risk -  return trade off

(b)  Duration and Immunization

(c)  Efficient Frontier

(d)  Elliot Wave Theory

(e)  Arbitrage Pricing Theory

(f)  Random Walk Hypothesis

8.  (a)  'Mutual funds provide stability to share prices, safety to investors and resources to the prospective entrepreneurs'. Critically evaluate this statement.

(b)  Distinguish between :

(i)  Sector Fund and Index Fund

(ii)  Systematic Investment Plan and Re-investment Plan. 

June, 2013

Ms-44 : Security Analysis And Portfolio Management

1. Define investment. Describe the steps involved in the investment process.

2. (a) How is the present value of a bond determined ? What effect does the use of semi annual discounting have on the value of a bond as compared to annual discounting ? How can an investor eliminate the re-investment rate risk inherent in bonds ?

(b) A bond of Rs. 1000 face value bearing a coupon rate of 12% will mature after 7 years. What is the value of the bond if the discount rates are 14% and 12% (PVIFA 14%, 7 years 2.88, PVIFA 12%, 7 years 4.564, PVIF 14%, 7 years .400, PVIF 12%, 7 years .452)

3. What do you understand by Earning Per Share ? Explain the various traditional and modern methods of forecasting EPS.

4. Define the various forms of the market efficiency. State the anomalies in the Efficient Market Hypothesis.

5. How is the expected return for one security and a portfolio determined ? What is the relationship between correlation coefficient and the covariance, both Qualitatively and Quantitatively.

6. Explain the Sharpe Index model. How does it differ from the Markowitz model ?

7. Describe the basic Arbitrage Pricing Theory Model of two factors. What are the advantages of APT over CAPM ?

8. Discuss briefly the concept of 'Mutual Fund'. Describe the role of Registrar, Custodians and the Fund managers in a mutual fund. 

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