MANAGEMENT PROGRAMME
Term-End Examination

June, 2005

MS-44 : SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT

Time : 3 hours
Maximum Marks : 100
(Weightage 70%)

Note : Attempt any five questions. All questions carry equal marks. Present value table are to be provided if asked for.1. “No Investment Decisions are made wiihout calculating risk.” Do you agree ? As an Investment Manager of a firm, discuss the various steps involved in the investment decision making process.

2. (a) What are the various methods of floating the new issue ? Discuss the roles played by the Underwriter and the Bankers to the issue.

(b) 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 (prerent value) of the bond. Should Vamsi buy the bond ?
(ii) Calculate the yield to maturig of the bond.

3. Explain fully the role played by the SEBI in the securities market as a regulator and as a developer of the capital market.

4. What are the major criticisms of the technical analysis ? Do the technical analysis and the fundamental analysis give complementary information about securities for making informal decisions ? Explain.

5. (a) Discuss the Markowitz Theory of Portfolio Selection. How does Markowitz Theory help in planning an investor’s portfolio ?

(b) An aggressive Mutul Fund promises an expected rate of retum of 18% with a standard deviation of 22%. On the other hand, a conservative mutual fund promises an expected rate of return of 16% and fluctuations of 13%.

(i) In which of the funds would you like to invest ?
(ii) Would you like io invest in both the funds ?
(iii) If you can borrow money from you provident fund at an opportunity cost of 15%, in which fund would you invest your money ?

6. Explain the concept of ‘Mutual Fund’. What factors should be considered before selecting a Mutual Fund ? Discuss the present state of the Muiual Funds in India and outline the risks involved in investing in Mutual Funds.

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

(a) Dow theory
(b) Odd lot trading
(c) Point and Figure charts
(d) Serial bond
(e) Superfluous Diversification
(f) Market Risk

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