ENROLLMENT NUMBER

Amity University Haryana

BBA / BBA- 3 Continent / BBA (B&F)
Fifth Semester End Term Examinations – Nov - Dec, 2018
Course Title – Principles of Investment Management

Course Code: MGT2507/MGC2507/MBF2505

Exam Dept. Ref.: feI154
Time: 3 Hours Maximum Marks: 70
Note: This question paper has three sections : Section A, Section B and Section C.
Attempt (i) Any FIVE from Sec.-A.
(ii) Any TWO from Sec.-B.
(iii) Section-C is compulsory.

Section –A (any Five) 30 Marks

(Each question carries 6 marks)

1. “No investment is risk free”. Elaborate the statement.

2. Ratios are the symptoms like blood pressure, pulse or temperature of an individual,
explain.
3. How do operations of the stock market affect the economic life of a nation? Is it necessary
to control the stock exchange?
4. What is Porter Model of Industry analysis? Give suitable examples.
5. Write a short note on the significance of sharpe ratio in measuring the performance of a
portfolio.

6. Explain price earning and price to book value ratio with examples.

Section – B (any two) 20 Marks

(Each question carries 10 marks)

7. Why most technicians follow several technical rules and attempt to derive a consensus?
Discuss the statement while using different prominent patterns of technical analysis.
8. Can all risk be eliminated if a sufficiently large portfolio is held? Explain with an
example.
9. Comment on:
a) World’s major stock market indexes and how they are connected?
b) Role of SEBI in capital market.

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 Section – C (Compulsory) 20 Marks

10. Case Study:

Risk comes from not knowing what you are doing. Investment guru Warren Buffett’s warning
rings true for all investments, but more so for equities. Historical data proves that fundamental
analysis of companies is key to sustainable wealth creation over the long term. It looks at key
parameters to assess the long-term prospects of a company and its competitive advantage.
Prospect of industry To know the prospects of a company, the investor must understand the
external environment in which it operates. He must be able to assess the parameters such as the
size of the industry—both domestic and global— as well as the import-export scenario which
indicates the potential for the company. Similarly, one must understand the industry growth stage
along with the changing trends and intensity of competition. Its future plans, including expansion,
diversification and acquisitions can also be sensed from this. Company's positioning Assessment
of a company’s positioning tells us how well it is placed within the industry and its strategy to
achieve long-term goals. While evaluating a company’s positioning, an investor must understand
its target segments in terms of geographies and demographics and whether it caters to business or
directly to consumers. This gives an idea of the competitive advantages (or disadvantages) of the
company and provides insights about the appropriateness of strategy in achieving its stated long-
term vision. It also reveals the challenges the company is likely to face while pursuing its growth
strategy. These could be risks related to the industry performance, competition, cost pressure and
adequacy of funds to name a few. Quality of management and corporate governance While the
first three parameters can be quantified to a certain extent, the last two are qualitative but
important. After all, a company is run by people and it is important to understand how they
qualify on integrity. An assessment of the management’s capabilities, including the second rung
leadership, is essential because it defines the strategy and decisions taken by the company. Also
important are corporate governance practices such as disclosure norms, transparency in reporting,
board practices and quality of discussions, profile of board members and independence of the
board. Financial performance An investor must be able to analyse its financial performance,
which includes analysis of profits, cash flow generation and return on capital. These indicate how
well a company is doing and highlight its growth potential. A company which is well positioned
in the industry and has competitive advantage would naturally be a good performer—financially
and operationally. Many documents, such as financial statements, auditor’s report, director’s
report on the company’s operations and corporate presentations are now publicly available on
company websites and financial portals.

Questions:
A. What do you understand by above article? Explain in 500 words.
B. What do you understand by above underlined statements? Justify in 1000 words. Use
examples.

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