[Dec-14]

[MPRBA-FM-501A]
MBA Degree Examination
V TRIMESTER
SECURITY ANALYSIS & PORTFOLIO MANAGEMENT
(Effective from the admitted batch 2013–14)
Time: 3 Hours Max.Marks: 60
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Instructions: All parts of a section must be answered in one place only.
Answer all units choosing one question from each unit.
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SECTION-A
1. Answer any FIVE of the following:
Each answer should not exceed one page. (5x4=20)
a) Speculation
b) Purchase Power risk
c) Sharpe’s optimal portfolio
d) Technical analysis vs Fundamental analysis
e) CAPM Theory
f) The company ABC’s next year dividend per share is expected to be
` 3.50 the dividend in the subsequent years is expected to grow at a
rate of 10% per annum. If the required rate of return is 15% per
annum, what should be its price? The prevailing market price is
` 75.
g) Mr. Anand is having units in a mutual fund for the past three years.
He wants to evaluate its performance by comparing it to the market.
Fund Market
Return 70.60 41.40
Standard Deviation 41.31 19.44
Risk free rate 2% 2
 1.12 -
Find out Sharpe and Treynor indices comment
 h) A mutual fund that had a net asset value of ` 10 at the beginning of
month 1 made income and capital gain distribution of Re. 0.05 and
Re. 0.04 per share respectively during the month and then ended the
month with a net asset value of ` 10.03. Calculate monthly return.
SECTION-B
Answer the following: (5x8=40)
UNIT-I
2. a) The Grace & Co. has common shares outstanding in the market
with price earnings ratio of 15. The annual expected growth in
earnings, dividends and price is 7 per cent. The earnings per share
is ` 2.5, the dividend payout is 60% and the investor wants to hold
the stock for 4 years. The required rate of return is 15 percent.
What would be the present value?
OR
b) A stock costing ` 50, pays no dividend. The possible prices of the
stock at the end of year and their probabilities are given below:
End of year price Probability
60 0.1
65 0.2
70 0.4
75 0.2
80 0.1
i) Estimate the expected return
ii) Compute the standard deviation of the returns
UNIT-II
3. a) Why is industry analysis important? Why should it follows the
economic analysis?
OR
b) What are the methods adopted to analyse the financial statements
of a company
UNIT-III
4. a) The stock market has a fire of its own and the study of it rewards
the investor - Comment
OR
b) What do you mean by efficient market theory? What are
the different forms of market efficiency theory?
 UNIT-IV
5. a) An investor wants to build a portfolio with the following four
stocks with the given details, find out his portfolio return and
portfolio variance: The investment is spread equally over the
stocks.
Company   Residual variance
Sneha 0.17 0.93 45.15
Neha 2.48 1.37 132.25
Asha 1.47 1.73 196.28
Priya 2.52 1.17 51.98
Market return (Rm) = 11, market return variance = 26
OR
b) The following table provides the  and  values for the stocks for
the period Jan 1998 - Nov. 1998
Stock  
TISCO -2.06 50.71
Tata Tea -1.5 0.92
Bajaj Auto 1.15 0.58
ITC Hotels 1.45 1.15
If the market return in 2013 is assumed to be 15%, what will be the
portfolio return for an investor who invests equal amount of money
in the above mentioned stocks?
UNIT-V
6. a) Explain the growth and structure of mutual fund industry
OR
b) The unit price of RSS Scheme of a mutual fund is ` 10. The public
offer price (POP) of the unit is ` 10.204 and the redemption price is
` 9.80. Calculate: (i) Front-end load, and (ii) Back-end load

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