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8. What factor should an Investor consider while making investment decisions? 8. The returns
on securities A and B are given below.
security
Probability
security A
0.5
0.4
0.1
Give the security of your preference. The Security has to be selected on the basis
of return and risk.
9. Without adequate information the investor cannot carry out his investment programme.
Elucidate
10.What are the main Advantages and disadvantages to a company by raising finance
through issuing the ordinary shares?
11.Explain the portfolio return and portfolio risks.
13.Primary and Secondary markets are complementary, but their organization structures are
different Explain.
14.Explain the concept of CML and SML with suitable examples.
15.You are given the following information and asked to choose the best portfolio for your client
Portfolio
Beta
1.3
1.0
-0.7
-0.8
1.1
0.7
Likely Return
Probability
J.J Steel
Market
Boom
20%
24%
0.4
Fair
13%
15%
0.5
Depression
5%
-7%
0.1
The Risk free rate is 7%. It advisable to buy J.J. Steel Companys Stock ?
19.With a 9 per cent risk free rate of return, the NSE- Nifty portfolio is having an expected return
of 21 per cent and a standard deviation of 8. In the X portfolio, the mean is 15 per cent and
standard deviation is 8. In the Y portfolio, the mean is 20 per cent and the standard deviation is
20. For portfolio Z, the return is 21 per cent and standard deviation is 16. Choose the best
portfolio.
21. Explain in briefly the various forms investment avenues? Give a detailed account of any five.
22. Explain the role of SEBI in the Primary Market to Protect the Investors Interest.
23.What are the different types of charts used by technical analysis?
24.Explain the functions of Stock Exchanges in India and how they are managed through the
Regulation?
25.The risk free rate of return is 9 per cent, the expected return on NSE-Nifty is 20 per cent and
the variance of the index is 25 per cent. Portfolio return is 15 percent. Estimate the risk of it. If
the investor borrows 25 per cent funds at the risk free rate of return, what will be the return and
risk of the portfolio?
26.An investor wants to choose either X or Y companys stock. Both the companies are not
paying dividends. X company stock is currently selling for Rs 150 and Y for Rs 200. At the end
of the year ahead there is a probability for X to be sold either for Rs 171 or Rs 167 and Y either
for Rs 227 or Rs 223. Which companys scrip should the investor buy? Justify your answer.
27.With a 9 per cent risk free rate of return, the NSE- Nifty portfolio is having an expected return
of 21 per cent and a standard deviation of 8. In the X portfolio, the mean is 15 per cent and
standard deviation is 8. In the Y portfolio, the mean is 20 per cent and the standard deviation is
12. For portfolio Z, the return is 21 per cent and standard deviation is 16. Choose the best
portfolio.
28.Explain the functions of Stock Exchanges in India and how they are managed through the
Regulation?
29.No Investment is risk-free, In view of this statement, write an essay on the meaning and
types of investment risk. Can this risk be eliminated or minimized?
30.In what are the circumstances the Applied Valuation techniques are used in the Fundamental
analysis - Discuss
31.How does RSI indicate the technical strength and weakness of the stock price movement?
32.A stock costing Rs 50, pays no dividend. The possible prices of the stock at the end
of year and their probabilities are given below.
End year Price
Probability
60
0.1
65
0.2
70
0.4
75
0.2
80
0.1
Mean Return
Variances
Anil Electricals
20%
Soruba Ltd
25%
18
K Ltd.,
35%
22
Arul Ltd.,
32 %
21
35.Stocks X and Y display the following return over the past three years.
Year
Return
X
Y
1994
14
12
1995
16
18
1996
20
15
(a) What is the expected return on portfolio made up of 40 per cent of X and 60 per cent of Y?
(b) What is the standard deviation of each stock?
(c) Determine the correlation co-efficient of stock X and Y.
(d) What is the portfolio risk of a portfolio made up of 40 per cent X and 60 per cent Y?
36.With the given details, evaluate the performances of the different funds using sharp, treynor
and Jenson performance evaluation techniques.
Funds
Return
Standard Deviation
Beta
A
12
20
0.98
B
12
18
0.97
C
8
22
1.17
D
9
24
1.22
Risk free rate of return is 4%, Market return is 10%
37. Stocks L and M have yielded the following returns for the past two years.
Years
1995
1996
L
12
18
Return (%)
M
14
12
39. Stocks L and M have yielded the following returns for the past two years.
Years
1995
1996
a.
b.
c.
d.
L
12
18
Return (%)
M
14
12