Q1) What is Mean, Covariance, Variance and correlation coefficient?

Mean
The mean is the average of the numbers: a calculated "central" value of a set of
numbers.
To calculate: Just add up all the numbers, then divide by how many numbers there
are.

Example: what is the mean of 2, 7 and 9?

Add the numbers: 2 + 7 + 9 = 18
divide by how many numbers (i.e. we added 3 numbers): 18 3 = 6
So the Mean is 6

Covariance
In probability theory and statistics, covariance is a measure of how much
two random variables change together. If the greater values of one variable mainly
correspond with the greater values of the other variable, and the same holds for the
lesser values, i.e., the variables tend to show similar behavior, the covariance is
positive. For example, as a balloon is blown up it gets larger in all dimensions. In
the opposite case, when the greater values of one variable mainly correspond to the
lesser values of the other, i.e., the variables tend to show opposite behavior, the
covariance is negative.

Variance
In probability theory and statistics, variance measures how far a set of numbers are
spread out. A variance of zero indicates that all the values are identical. Variance is
always non-negative: a small variance indicates that the data points tend to be very
close to the mean (expected value) and hence to each other, while a high variance
indicates that the data points are very spread out around the mean and from each
other.

Correlation coefficient
The correlation coefficient is a measure that determines the degree to which two
variables' movements are associated. The range of values for the correlation
coefficient is -1.0 to 1.0. If a calculated correlation is greater than 1.0 or less than
-1.0, a mistake has been made. A correlation of -1.0 indicates a perfect negative
correlation, while a correlation of 1.0 indicates a perfect positive correlation.

Q2) what are sweat equity shares?

Sweat equity is contribution to a project or enterprise in the form of effort and toil.
Sweat equity is the ownership interest, or increase in value, that is created as a
direct result of hard work by the owner(s). It is the preferred mode of building
equity for cash-strapped entrepreneurs in their start-up ventures, since they may
be unable to contribute much financial capital to their enterprise. In the context
of real estate, sweat equity refers to value-enhancing improvements made by
homeowners themselves to their properties. The term is probably derived from the
fact that such equity is considered to be generated from the "sweat of one's brow."
For example, consider an entrepreneur who has invested $100,000 in her startup. After a year of developing the business and getting it off the ground, she sells a
25% stake to an angel investor for $500,000. This gives the business a valuation of
$2 million (i.e. $500,000/0.25), of which the entrepreneur's share is $1.5 million.
Subtracting her initial investment of $100,000, the sweat equity she has built up is
$1.4 million.
Likewise, the work an auto enthusiast puts into rebuilding the engine on his 1968
Mustang to increase its value would be considered sweat equity, as would the work
done by a homeowner to install a new deck.
Valuation of sweat equity can become a contentious issue when there are multiple
owners in an enterprise, especially when they are performing different functions. To
avoid disputes and complications at a later stage, it may be advisable to arrive at
an understanding of how sweat equity will be valued at the outset or initial stage
itself.

Q3) What is the 'Efficient Market Hypothesis - EMH'

The efficient market hypothesis (EMH) is an investment theory that states it is
impossible to "beat the market" because stock market efficiency causes existing
share prices to always incorporate and reflect all relevant information. According to
the EMH, stocks always trade at their fair value on stock exchanges, making it
impossible for investors to either purchase undervalued stocks or sell stocks for
inflated prices. As such, it should be impossible to outperform the overall market
through expert stock selection or market timing, and that the only way an investor
can possibly obtain higher returns is by purchasing riskier investments.

BREAKING DOWN 'Efficient Market Hypothesis - EMH'

Although it is a cornerstone of modern financial theory, the EMH is highly
controversial and often disputed. Believers argue it is pointless to search for
undervalued stocks or to try to predict trends in the market through either
fundamental or technical analysis.
Meanwhile, while academics point to a large body of evidence in support of EMH, an
equal amount of dissension also exists. For example, investors, such as Warren
Buffett have consistently beaten the market over long periods of time, which by
definition is impossible according to the EMH. Detractors of the EMH also point to
events, such as the 1987stock market crash when the Dow Jones Industrial
Average (DJIA) fell by over 20% in a single day, as evidence that stock prices can
seriously deviate from their fair values.

Q4) Difference between security analysis and portfolio management.

Security
Assets with some financial value are called securities.

Characteristics of Securities

Securities are tradable and represent a financial value.

Securities are fungible.

Classification of Securities

Debt Securities: Tradable assets which have clearly defined terms and conditions are called
debt securities. Financial instruments sold and purchased between parties with clearly mentioned
interest rate, principal amount, maturity date as well as rate of returns are called debt securities.

Equity Securities: Financial instruments signifying the ownership of an individual in an

organization are called equity securities. An individual buying equities has an ownership in the
companys profits and assets.

Derivatives: Derivatives are financial instruments with specific conditions under which payments
need to be made between two parties.

What is Security Analysis ?

The analysis of various tradable financial instruments is called security analysis. Security analysis helps a
financial expert or a security analyst to determine the value of assets in a portfolio.

Why Security Analysis?

Security analysis is a method which helps to calculate the value of various assets and also find out the
effect of various market fluctuations on the value of tradable financial instruments (also called securities).

Classification of Security Analysis

Security Analysis is broadly classified into three categories:
1. Fundamental Analysis
2. Technical Analysis
3. Quantitative Analysis

What is Portfolio Management?

The stream which deals with managing various securities and creating an investment objective for
individuals is called portfolio management. Portfolio management refers to the art of selecting the best
investment plans for an individual concerned which guarantees maximum returns with minimum risks
involved.
Portfolio management is generally done with the help of portfolio managers who after understanding the
clients requirements and his ability to undertake risks design a portfolio with a mix of financial instruments
with maximum returns for a secure future.

Portfolio Theory

Portfolio theory was proposed by Harry M. Markowitz of University of Chicago. According to Markowitzs
portfolio theory, portfolio managers should carefully select and combine financial products on behalf of
their clients for guaranteed maximum returns with minimum risks.
Portfolio theory helps portfolio managers to calculate the amount of return as well as risk for any
investment portfolio.