Total No. of Questions: 6 Total No.

of Printed Pages:3

Enrollment No......................................

Faculty of Management Studies

End Sem Examination May-2023
MS3EF07
Investment Analysis & Portfolio Management
Programme: BBA Branch/Specialisation: Management /
Finance
Duration: 3 Hrs. Maximum Marks: 60

Note: All questions are compulsory. Internal choices, if any, are indicated. Answers of
Q.1 (MCQs) should be written in full instead of only a, b, c or d. Assume suitable data if
necessary. Notations and symbols have their usual meaning.
Q.1 i. Which of the following are role of investment banks? 1
(a) Raising capital
(b) Hiring of employees
(c) Help in day-to-day functions of management
(d) Earning profit
ii. Political stability is the major factor concerning- 1
(a) Exchange risk (b) Systematic risk
(c) Non-systematic risk (d) Country risk
iii. Investment would score high only if there is a protection to- 1
(a) Real estate (b) Preferred stock
(c) Common stock (d) Government bonds
iv. Which of the following provides better estimate of value in case of 1
valuation of firms for take overs?
(a) Free cash flows (b) Free cash flows to equity
(c) Cash flows (d) Future cash flows
v. An example for a sunrise industry is- 1
(a) IT business (b) Animation industry
(c) FMCG (d) None of these
vi. ________ combines economic industry and company analysis to 1
forecast future stock price:
(a) Technical analysis (b) Random walk theory
(c) Fundamental analysis (d) None of these
P.T.O.
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vii. The two primary tools of a technical analyst are- 1 Q.6 Attempt any two:
(a) Level of the market index & volume i. Define portfolio management. What are the roles & responsibilities 5
(b) Economic indicators & level of the market price of portfolio manager?
(c) Price and technical indicators ii. Given the following data, calculate the security market line and the 5
(d) Price and volume betas of the two securities:
viii. Which of the following is not true regarding the Dow theory? 1 Expected Correlation with Standard
(a) It is intended to forecast the start of a primary movement return market portfolio deviation
(b) It does not forecast how long a movement will last Security 1 15.5 0.9 2
(c) It has a very high success rate Security 2 9.2 0.8 9
(d) It is subject to many criticisms Market portfolio 12 1 12
ix. The credit of taking portfolio theory from abstraction to reality 1 Risk free asset 5 0 0
goes to- iii. Consider the three portfolios given in the table below: 5
(a) Harry Markowitz (b) William Sharpe Portfolio Average Annual Standard Correlation
(c) Jack Trepnor (d) Eugene Fama Return (%) Deviation (%) Coefficient of
x. The formula of Capital Asset Pricing Model (CAPM) is- 1 Market portfolio
(a) Kj = Rf + b (Rf-Rm) (b) Kj = Rf + b (Rm-Rf) A 18 27 0.8
(c) K = R + b (R-M) (d) K = R + b (R-R) B 14 18 0.6
C 15 8 0.9
Q.2 i. Define the meaning of investment. 2 Market 13 12 -
ii. Explain any three objectives of investment. 3 If the risk- free rate of Interest is 9%.
iii. What is investment process? How an investment works? 5 (a) Rank these portfolios using Sharpe’s index method.
OR iv. Describe the various types of risk. 5
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Q.3 i. Explain any two types of investment. 2
ii. What do you understand by fixed income securities? Explain the 8
various types of fixed income securities.
OR iii. What is bond valuation and its characteristics? How are convertible 8
bonds valued?

Q.4 i. What do you mean by fundamental analysis? Give example. 3

ii. Explain the different types of industry analysis. State the 7
importance of industry analysis.
OR iii. Discuss quantitative and qualitative factors of company analysis. 7

Q.5 i. Discuss about the various tools of technical analysis. 4

ii. What are the types of charts? How it is used in technical analysis? 6
OR iii. Differentiate between fundamental and technical analysis. 6
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Marking Scheme Investment Works 2.5

OR iv. Describe the various types of risk? 5
MS3EF07[T]- Investment Analysis and Portfolio 1) Type 1
Q.1 i) Which of the following are role of investment banks? 1 2) Type 1
(a) Raising capital 3) Type 1
ii) Political stability is the major factor concerning: 1 4) Type 1
(d) Country risk 5) Type 1
iii) Investment would score high only if there is a protection to: 1
(d) Government Bonds
Q.3 i. Explain any two types of Investment? 2
iv) Which of the following provides better estimate of value in case 1
1) Type 1
of valuation of firms for take overs?
2) Type 1
(b) Free cash flows to equity
ii. What do you understand by fixed income securities? Explain the 8
v) An example for a sunrise industry is: 1
various types of fixed income securities?
(b) Animation Industry
Meaning of Fixed Income Securities
vi) ------- combines economic industry and company analysis to 1
1) Type 1
forecast future stock price:
2) Type 1
(c) Fundamental analysis
3) Type 1
vii) The two primary tools of a technical analyst are: 1
4) Type 1
(d) Price and volume
5) Type 1
viii) Which of the following is not true regarding he Dow theory? 1
6) Type 1
(c) It has a very high success rate
7) Type 1
ix) The credit of taking portfolio theory from abstraction to reality 1
OR iii. What is bond valuation and its characteristics? How are 8
goes to:
convertible Bonds valued?
(b) William Sharpe
Bond Valuation 2
x) The formula of Capital Asset Pricing Model (CAPM) is: 1
1) characteristic 1
(b) Kj = Rf + b (Rm-Rf)
2) characteristic 1
3) characteristic 1
Q.2 i. Define the meaning of Investment? Convertible bond valued 3
Meaning of Investment 2

Q.4 i. What do you mean by fundamental analysis? Give example? 3

ii. Explain any three objectives of Investment? 3
Meaning of Fundamental analysis 1.5
1) Objective 1
Example of fundamental analysis 1.5
2) Objective 1
ii. Explain the different types of Industry analysis? State the 7
3) Objective 1
importance of Industry analysis? 1.5
iii. What is Investment process? How an investment works? 5
1) Type 1.5
Investment process 2.5
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2) Type 1.5 ii. Given the following data, calculate the security market line and 5
3) Type 2.5 the betas of the two securities:
Importance of Industry analysis Expected Correlation Standard
OR iii. Discuss quantitative and qualitative factors of company analysis? 7 return with deviation
Quantitative factors of company analysis 3.5 market
Qualitative factors of company analysis 3.5 portfolio
Security 1 15.5 0.9 2
Q.5 i. Discuss about the various tools of technical analysis? 4 Security 2 9.2 0.8 9
1) Tool 1 Market 12 1 12
2) Tool 1 portfolio
3) Tool 1 Risk free 5 0 0
4) Tool 1 asset
ii. What are the types of charts? How it is used in technical analysis? 6 Solution ; The security market line is 0.5
Types of charts 4 ri = rf + bi (rm – rf) 0.5
Charts used in technical analysis 2 = 5 + bi (12 -5)
OR iii. Difference between Fundamental and Technical analysis? 6 For security 1
Fundamental analysis 3 15.5 = 5 + b1 (12-5) 0.5
Technical analysis 3 15.5-5 = b1 (12-5) 0.5
10.5 = b1 (7) 0.5
Q.6 10.5/7 = b1 0.5
B1 = 1.4
i. Define portfolio Management? What are the roles & 5
responsibilities of Portfolio Manager?
For security 2 0.5
Portfolio management 2
9.2 = 5 + b2 (12-5) 0.5
Roles & responsibilities of portfolio manager 3
9.2-5 = b2 (12-5) 0.5
4.2 = b2 (7) 0.5
4.2/7 =b2
B2 = 0.6
iii. Consider the three portfolios given in the table below: 5
Portfolio Average Standard Correlation
Annual Deviation (%) Coefficient of
Return (%) Market
portfolio
A 18 27 0.8
B 14 18 0.6
C 15 8 0.9
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Market 13 12 -
If the risk- free rate of Interest is 9%.
(i) Rank these portfolios using Sharpe’s index method.
(ii) Compare both the indices.
Solution ;
3 marks
Portfolio AR S.D Correlation B Sharpe Ranking
(%) (%) Coggs of (beta) Index as per
mkt. & sharp
Portfolio
A 18 27 0.8 1.8 0.3333 2
B 14 18 0.6 0.9 0.277 3
C 15 8 0.9 0.6 0.750 1

Market return = 15%, Market S.D = 12%; Rt =9% 0.5

We know that
B = Correlation Coefficient *S. D of security/S.D of Market
Ba = 0.8*27/12 = 1.8 0.5
Bb = 0.6*8/12 = 0.9 0.5
Bc = 0.9*8/12 = 0.6 0.5

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