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Gnanamani College of Technology: Ba5012 Security Analysis and Portfolio Management
Gnanamani College of Technology: Ba5012 Security Analysis and Portfolio Management
Gnanamani College of Technology: Ba5012 Security Analysis and Portfolio Management
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GNANAMANI COLLEGE OF TECHNOLOGY
DEPARTMENT OF MANAGEMENT STUDIES
MODEL EXAM - II
BA5012 SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT
PART –B (5 X 13 = 65)
ANSWER ALL THE QUESTIONS
11. (a) Define financial and economic meaning of investment. Explain the characters and objectives of an
investment.
(OR)
(b) Distinguish between invest, speculation and gambling. What is the usefulness of a sound invest plan?
Explain.
12. (a) (i) Who are all the parties involved in the issue of shares in the stock market? Explain. (6)
(ii) Discuss the mechanics of floating share in the new issue market. (7)
(OR)
(b) Write a short note on
(i) NSE
(ii) BSE
(iii) OTCEI
(iv) ISE
13. (a) What is the meaning of company analysis? What financial statements in your opinion are helpful in
undertaking the company’s prospects?
(OR)
(b) (i) Do you think that knowing the current status of economy is useful in analyzing stock market
movements? (7)
(ii) How would you classify shares into growth, cyclical and defensive? (6)
14. (a) How does technical analysis differ from fundamental analysis? Explain in detail the Dow Theory and
how is it used to determine the directions of the stock market.
(OR)
(b) “The Elliot wave theory is based on the principle that action is followed by reaction” Elucidate and
explain this statement.
15. (a) (i) Discuss about Jensen’s, Treynor’s and Sharpe’s performance index model. (7)
(ii) Enumerate the primary factors which necessitate the portfolio revision. (6)
(OR)
(b) (i) A mutual fund has earned an average annual return of 24 percent over a five year period while the
average market return over the same period was only 18 percent. The risk free rate prevailing at the time
was 7.5 percent. The mutual fund has a beta of 1.45. The standard deviation of returns of the mutual
fund and the market index were 40 percent and 30 percent respectively. Calculate Fama’s net selectivity. (7)
(ii) Information regarding two mutual funds and a market index are given below:
STD.DEVIATION
FUND RETURN PERCENT BETA
PERCENT
SILVER 14.5 20 1.1
COPPER 11.25 17.5 0.8
GOLD 19.75 26.3 1.8
Assuming the Risk – Free Return as 6 percent, Market Return 12 percent. Calculate Sharpe and Treynor
ratio. (6)
PART –C (1 X 15 = 15)
ANSWER ALL THE QUESTIONS
16. CASE STUDY - A successful business owner ready to retire
Brill and Laura owned a successful small business for over 25 years. During that time they had
grown accustomed to the affluent life style that their business afforded them. Upon reaching their 60’s
they worried about not being able to enjoy their rewards of their many years of hard work. They were
ready to sell the business, but they were afraid of their loss of income and the security that would come
from the sale.
(i) Where did Bill and Laura go wrong in their investment decisions?
(ii) Analyze the above case and suggest the suitable remedies to overcome the problem.