CONSTRUCTION OF PORTFOLIO

ROLL NO
1] As a Portfolio Management Consultant you are approached by
an investor with investible funds of Rs 35 lakh. He wants to know
from you:
a. What are investment avenues available to him which will give a
stable return with minimum risk?
b. what are various types of risk; which will be confronted by
him?
ROLL NO
2] You are a Portfolio Management Consultant. A middle class
investor Mr. Joseph with investible funds of Rs 100 lakh
approaches you. He wants to know:
a. What are investment avenues available to him assuming that he
is willing to take risk to the extent of 30% of his funds?
b. Explain him about ELSS.
_____________________________________________________
ROLL NO
3. Ms. Rashi a leading doctor of Mumbai approaches you as a
portfolio management consultant, with an investible funds of 130
lakh. You are required to advise her on:
a. What are investment avenues available to him assuming that he
is willing to take risk to the extent of 30% of his funds?
b. Which is the investment which will minimize her income tax
outflows.
_____________________________________________________
ROLL NO
 CONSTRUCTION OF PORTFOLIO
4] You are a portfolio management services consultant. A middle-
aged investor approaches you to seek your advice for investing his
₹20,00,000.
Present to him any five investment schemes mentioning various
merits and demerits of each scheme.
You may assume that he is willing to take risk of 30% of his funds
_____________________________________________________
ROLL NO
5] A young aspiring investor approaches a management consultancy to
guide him for investing his ₹98,00,000 where his is ready to take any
amount of risk to get the maximum highest return.
___________________________________________________________

Solution :
1. Characteristics of an Investor:
a. Risk AVERSE
b. Investible fund = 35,00,000
c. Assume class of an investor = Middle Age, Retired
individual
2. Objectives of an Investors:
a. Minimum Risk
b. Stable returns
c. Liquidity
 CONSTRUCTION OF PORTFOLIO
d. Provision for an old age.
e. Protection to his/her family

3. INVESTMENT AVENUES:
a. Planning:
i) Debenture/Debt/Bonds
ii) Equity share
iii) Tax benefit investment
iv) Mutual fund
b. Construction of Portfolio :
Sr Investment Amount % in total Expected
No Alternatives investment Return%
.
1 Pidilite 2,00,000 5.71 24
Industries
Equity Shares
2 12% IDBI 5,00,000 14.29 12
Bonds
3 10.5% 1,00,000 2.86 10.5
Government
Bonds
4 SBI ELSS 5,00,000 14.29 18
5 11.5% 2,00,000 5.71 11.5
Debentures in
Mafco Ltd
6 PPF 2,00,000 5.71 8
7 LIC 3,00,000 8.57 5
8 Franklin 10,00,000 28.57 19
Mutual Fund
9 Senior citizen 5,00,000 14.29 11
scheme of Uco
bank
TOTAL 35,00,000 100
 CONSTRUCTION OF PORTFOLIO
4. A} Pidilite Industries Equity Shares
a. Highest return  200,000 * 24% = 48000/-
b. Capital Appreciation Equity shares FV =100; Market
Price= 2500 & Expected price = 3000
c. Liquidity  whenever he/she wants money can easily get
from BSE: NSE in secondary market in a day or two
B} 12% IDBI Bonds
a.

5. Risk associated with suggested portfolio

a. Default risk
b. Call risk
c. Interest Risk