The University of Burdwan

Department of Business Administration

Internal Evaluation for MBA Semester-II (CBCS) 2021
Subject: Security Analysis and Portfolio Management (SAPM)
Paper: MBAE-2510 (New Syllabus)
Time: 2 Hours Full Marks: 50
The figures in the margin indicate full marks.
Candidates are required to give their answers in their own words as far as practical.

Answer any five questions: 10 × 5 = 50

1. Discuss the different stages of the industry life cycle under the EIC framework of security
analysis?
2. ‘There are three approaches of determining the intrinsic value of securities’. State these three
approaches. Explain the relationship between them.
3. (a) Using the given details, construct a portfolio using Securities A and B for an investor
who wants an expected return of 13%:
Expected return from Security A = 15%; Expected return from Security B = 9%;
SD of Security A (σA) = 5.3%; SD of Security B (σB) = 2%; Correlation coefficient
between returns of Security A and Security B is  0.94.
Also ascertain the portfolio risk (as measured by variance of returns).
(b) ‘Diversification provides risk averaging when the security returns are perfectly positively
correlated’. Offer your comments on the given statement and prove it with the help of
mathematical derivations.
4. The estimates of standard deviations and correlation coefficients for three stocks are given
below:
Standard Correlation with stock (ri, j)
Asset
Deviation (σ) A B C
A 30 1.00 - 0.75 0.40
B 24 - 0.75 1.00 0.60
C 19 0.40 0.60 1.00

If a portfolio is constructed with 20% of Asset A, 50% of Asset B and balance of Asset C,
calculate the standard deviation of the portfolio.
5. Explain the different forms of market efficiency as propounded by Eugene Fama.
6. Describe the different types of price charts that are used by the chartists while performing
technical analysis.
7. Write short notes on: (a) Dow Theory (b) Unsystematic risk.

Note:
 Save the answer book file with the following name: RollNo-2021Sem2-IE-MBAE2510.

 Send the answer scripts in PDF format to the following E-mail ID:
bumbae2611@gmail.com within 30 minutes from the end of the examination.