Paper: Management of Financial Services

General Instructions:
The Student should submit this assignment in the handwritten form (not in the typed format) The Student should submit this assignment within the time specified by the exam dept The student should only use the Rule sheet papers for answering the questions. The student should attach this assignment paper with the answered papers.

Code: PFS1C

Failure to comply with the above Four instructions would lead to rejection of assignment. Specific Instructions:
There are four Questions in this assignment. The student should answer all the four questions. Marks allotted 100. Each Question carries equal marks (25 marks) unless specified explicitly

Question No 1. i) ii) iii) iv) Question No 2

(i) Suppose the seven portfolios of mutual fund has experienced the following results during a ten year period.

Moving averages not only smoothen the data, but also predict the market. Comment. How do volume and breadth of the market indicate the trend of the market. Oscillators are valuable tools in assessing overbought and oversold position of the market. Discuss. Chart patterns are helpful in predicting the stock price movement. Comment.

Portfolio A B C D E F G Market portfolio

Average return % 15.6 11.8 8.3 19.0 (-)6.0 23.5 12.1 13.0

annual

Standard deviation 27.0 18.0 15.2 21.2 4.0 19.3 8.0 12.0

Correlation the market 0.81 0.55 0.38 0.75 0.45 0.63 0.98

with

Riskless rates

6.0

a. b. c. (ii)

Rank these portfolios using (i) sharpes method of performance evaluation, and (ii) Treynors method. Compare the rankings obtained in (a) differences noted. above and explain reasons behind any

Did any portfolio outperform the market. Why or why not. what is the difference between Growth option and Dividend option. Explain with example.

Question No 3
You have been given the order book of RIL. Answer the following Questions . Buy Qty 4378 5385 3000 400 5400 Buy Price 2290 2289 2287 2285 2284 Total Buy Qty Sell Price 2292 2293 2294 2295 2295.5 Total Sell Qty Sell Qty 5528 3000 4000 5000 7000 5528

Value at Risk (VaR)

Security VAR 7.72 Adhoc Margin _

Index VAR _

VAR Margin 7.72

Extreme Loss Rate 5.00

Applicable Margin Rate

12.72
a. Suppose you have submitted an order to sell at market. At what price will your trade be executed.

b. Suppose an investor has submitted a limit order to sell at Rs. 2298/-. What will happen. c. Suppose another investor has submitted a limit order to buy at Rs. 2280. What will happen. d. If an investor is willing to buy 6000 shares of RIL what is the price he will be paying. e. Calculate the impact cost. f. If a trader quarter a price of 3000/- and the qty is 8000 what is the price he will be asked to pay if he is buying RIL. g. Explain the concept of VAR (Value at Risk)

Question No 4
a) An investor is holding a share at Rs 6000/- per share & the company announced a Bonus issue of 3 for 1.What will be the impact on the current market price on ex Bonus date .How many new share a shareholder will receive after bonus issue . b) What do you understand by Impact cost .Explain with the help of example.