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OM SAKTHI
ADHIPARASAKTHI COLLEGE OF ENGINEERING
[Link], KALAVAI – 632 506
DEPARTMENT OF MANAGEMENT STUDIES

UNIT – I
INVESTMENT SETTING

BA 4001 Branch MBA

Subject Code
Security Analysis & Portfolio
Subject Name Year/Sem. II /III
Management
PART A

1. What are the three components of an investor‟s required rate of return on an investment?
2. What is Gambling? Differentiate an investor from speculator
3. Distinguish between real and financial assets
4. How is expected return calculated?
5. Define systematic risk and unsystematic risk.
6. What do you mean by “hybrid security‟?
7. Distinguish between investing and speculation.
8. A stock was purchased in the beginning of the year for Rs.1110, the expected dividend for the
year was [Link] stock was sold for Rs.1108 at the end of the year. Compute the holding period
return.
9. What do you mean by pre-emptive rights?
10. Define investment. How it is different from gambling?
11. What are the objectives of investment?
12. What is risk free rate of return?
13. Define “security” as per Security Contract regulation act.
14. Explain the features of equity shares.
15. Differentiate bonds and debentures.
16. Explain features of preference shares.
[Link] any four market indices in Indian stock market.
[Link] the current settlement system in NSE.
[Link] do you mean by underwriting? What is preferential allotment?
[Link] the rolling settlement in trading of securities.
[Link] is oversubscription?
[Link] is the importance of IPO grading? What decisions are taken before going in for IPO?
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[Link] is depository participant?

[Link] are the possible disadvantages of limits orders?
[Link] stop order what is meant by Capital Market
[Link] trading on margin a good idea?
[Link] book building.
[Link] is OCTEI and how it is different from other stock exchanges?
[Link] primary market from secondary market.
[Link] functions of primary market.
[Link] is insider trading? What is an odd lot?
[Link] are the parties involved in issue of shares in stock market?
[Link] is demat account? Name the depositories available in India.

PART B

1. Explain the steps in portfolio / investment management.

2. Explain “ Systematic Risk” and “Unsystematic Risk” in detail
[Link] are the different types of investment alternatives available for a common investor
[Link] the Characteristics of Investment. Elucidate if there will be a trade-off between Risk and
Return in Investments.
[Link] an investment advisor what features would you suggest to be included in the investment bunch
of a client explain the features briefly.
[Link] analysis requires as first step the sources of information on the basis of which analysis is
made. What are different types of information used for security analysis?
[Link] the different kinds of long term investment opportunities available for corporate
investors with their pros and cons.
8. What factor should an Investor consider while making investment
decisions?
9. The returns on securities A and B are given below
Probability security A Security B
0.5 4 0
0.4 2 3
0.1 0 3

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Give the security of your preference. The Security has to be selected on the basis of return and
risk.
[Link] are the main Advantages and disadvantages to a company by raising finance through
issuing the ordinary shares?
[Link] the portfolio return and portfolio risks.
[Link] between Investing and Speculating. Is it Possible to incorporate Investment and
Speculation within the same security? Explain with Examples.
[Link] the trading system in stock exchanges. Mention some of the recent reforms
in the trading system.
[Link] the SEBI’s Guidelines to the share trading.
[Link] the structure of Indian Financial Market. Discuss the major reforms in the India
Capital Market.
[Link] are the key players involved in the new issues market.
[Link] the various ways in which an initial public offer can be made.
[Link] are the objectives and functions of SEBI?
[Link] are the salient features of NSE & BSE?
[Link] a note on book building process used to float new issues.
[Link] the major indices and how it helps investors?
[Link] the role of SEBI in regulating stock exchanges in India.
[Link] are the SEBI guidelines on pricing of the security? Explain
[Link] the different methods of floating new issues in the market.
[Link] the Efficiency of Automated Vis-à-vis floor trading system in the secondary Capital
Market.
[Link] is the role and development of OCTEI in the Indian capital market?
[Link] the mechanics of stock trading
27. Elaborate the different stock valuation models.
20. What are the steps taken by SEBI to protect the investors in the secondary market?
PART –C
[Link] Various Types of investment alternatives

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UNIT-2
FUNDAMENTAL ANALYSIS

PART A

1. What is fundamental analysis?

2. What are Graham and Dodd’s investor ratios?
3. Define multiplier. What is Market Equilibrium?
4. How is weighted value index computed?
5. What is industry life cycle? What are the industry life cycle stages.
6. What is the importance of P/E ratio?
7. What is Value vs. Growth investing?
8. What is opportunistic building model? What is Economic Forecasting?
9. Distinguish between historical return and expected return.
10. List the significance of ROI in company analysis.
11. State the ratios listed by Graham and Dodd for value investing.
12. What is the quality of growth stocks? Give an example for growth stock.
13. What do you mean by leading and lagging indicators of the economy? Give 2 Examples
14. What are the mechanisms adopted by RBI to check liquidity?
15. What is fiscal policy? Define GNP
16. What is competitive advantage?
17. What is the use of ratio analysis? How will you calculate intrinsic value of a share?
18. What is balance of payment?
19. Classify industry according to business cycle.

PART B
1. What is fundamental analysis? Explain in detail
2. What is Economic Analysis? Explain in detail
3. What is industry Analysis? Explain in detail
4. What is Company Analysis? Explain in detail
[Link] are the macro economic factors would you consider before making investment decision
6. Explain the concept of Industry Life Cycle. Describe the different stages in the Industry
Life Cycle and gives the clue to entry and exit for investors. Elucidate.

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[Link] does ratio analysis reflect the financial health of a company.

[Link] economic factors would you be most interested in forecasting if you were an analyst
investigating major consumer durable - goods sales for next year.
[Link] Graham and Dodd’s applied valuation techniques.
[Link] would you expect a relationship between economic activity and stock price movements?
(ii)Describe two commonly used ways of decomposing ROE into its underlying determinant.
[Link] between technical and fundamental analysis.
[Link] a detailed account on the Markowitz’s risk diversification.
[Link] an industry of your choice and make an industry analysis explaining various steps
involved.
14. Discuss the key tools in company analysis.
PART –C
[Link] fundamental analysis in detail before investing

UNIT-3
TECHNICAL ANALYSIS

PART A
1. What is technical analysis?
2. Differentiate fundamental analysis from technical analysis.
3. Explain the importance of Oscillators in technical analysis.
4. Explain the three types of trends in stock prices
5. What do you infer from the moving average theory of technical analysis?
6. How is PE ratio used to interpret growth opportunities?
7. Define Moving Averages. What are Line Charts?
8. How is moving average computed?
9. Define RSI and its usage.
10. What are the two major market indicators considered as a barometer of Indian capital market?
11. How do the leverage policies affect the company performances?
12. What do you mean by security market line? Define “Efficient frontier”?
13. Explain Random Walk Hypothesis. What are the various levels of market Efficiency?
14. What patterns helps us identify the trend reversal?
15. What do you mean by support level?

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16. What do you mean by resistance level?

17. What oscillators indicate?
18. What is odd lot trading?
19. What is short sale? What is trend reversal?
[Link] is Beta? Is it a better measure of risk than the standard deviation?

PART B
1. What is Technical analysis? What are the important points that you will be taking into
account while doing Technical analysis?
2. Discuss about the technical analysis as a tool for security selection.
3. What are the premises of technical analysis? What are the difference between technical and
fundamental analysis?
4. Explain efficient market theory.
5. Describe the Dow Theory and its 3 components. Which component is most important?
6. How would you use ROC to predict the stock price movement. Kindly elucidate with example.
7. Chart patterns are helpful in predicting the stock price movement comment.
8. Critically examine the Elliot wave Principle of stock market prediction.
9. (i) What does the EMH imply for the use of technical and fundamental analysis?
(ii)Explain the Weak form of the efficient market hypothesis. Describe the empirical test used
for testing the weak form efficiency
10.“Moving averages not only smoothens the data, but also predict the market”. Discuss
PART-C
[Link] various tools of technical analysis in detail

UNIT- IV
PORTFOLIO CONSTRUCTION AND SELECTION

PART-A

[Link] do you mean by Portfolio Construction?

[Link] is Portfolio Risk?
[Link] is expected rated of Return?
[Link] is Co Variance?

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[Link] is Markowitz Model?

[Link] the single Index Model
7. What is Multiple –index Model for Portfolio analysis

PART-B
[Link] in details about Portfolio Analysis
[Link] the reduction of Portfolio risk through diversification
3. Discuss the selection of Portfolio and estimation of Fisher involved in it.
[Link] feasible and efficient set of Portfolios
5. Describe the Construction of Optimum Portfolio using Utility Concept
6. Explain Efficient Frontier in detail
7. Explain the advantages of Portfolio Selection
PART-C
[Link] Selection of Portfolio under Markowitz Model

UNIT- V
PORTFOLIO EVALUATION

PART A
1. Explain CAPM.
2. How are the portfolios evaluated?
3. What is an index fund?
4. What is the difference between SML AND CML.?
5. How is Beta computed using CAPM?
6. What do you mean by term AMC?
7. What do you mean by diversification?
8. Explain the constraints in the formation of objectives.
9. What is superfluous diversification?
10. State Jensen measure.
11. List out the ways in which Beta can be calculated.
12. Define NAV. What are formula plans?
13. What do you mean by risk aversion?
14. What is a open ended fund and closed ended fund?

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15. What is entry and exit load in mutual fund?

16. What is gilt edged fund?
17. State Treynor‟s index.
18. What are the criteria for evaluation of portfolio?
19. Explain portfolio revision. What is portfolio selection?
20. What is CML? Define its role.

PART B

1. (i)From the given data, evaluate the portfolios using Sharpe, Treynor and Jensen‟s model.
Portfolio
Portfolio A Portfolio B C
Return 20% 25% 18%
Beta 1.5 1.6 1.4
Std.
Deviation 5% 6% 4%
Market
return 12%
Risk free
rate 7%

(ii)The following three portfolios provide the particulars given below .

Portfolio average annual return, standard deviation ,correlation co-
efficient
A 18 27 0.8
B 14 18 0.6
C 15 8 0.9
MARKET13 12 -
RISK free rate of interest 9%
i. rank these portfolios using sharpe’s and treynor’s methods
ii. Compare both the indices
[Link] people advocate mutual funds for small investors. They suggest the best strategy for
small investors invest in suitable mutual funds scheme and hold them. What do you think of
this advice?
3. What are the basic assumptions of CAPM. What are the advantages of adopting CAPM
model in the portfolio management. How can securities be evaluated with the help of the
CAPM theory?
4. (i)Discuss the process of portfolio construction.
(ii)Explain the different stages involved in portfolio management.
5.(i)Enumerate the various measures used for portfolio evaluation and explain how it is
interpreted.
(ii)What are the prominent mutual fund schemes available in India? Explain its features

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6. (i)Should you care about how well a mutual fund is diversified? Why or Why not?
(ii)Discuss the growth of the mutual funds in India.
7. (i)Distinguish between CAPM and Arbitrage pricing theory.
(ii)Explain about portfolio revision.
8. Explain the steps in portfolio constructions as per traditional approaches.
9. Mr.X has been owning units of three different mutual funds namely R,S and T. The
following particular are available to him. He wants to dispose any one of the mutual fund for
his personal expenditure. Which fund should he dispose?

Fund Excess Average

s Return Beta
R 7.7 1.02
S 11.3 0.99
T 11.6 1.07
Market 7.8 1.00

10. Discuss briefly the steps involved in the portfolio management process. Following are the
price
and other details of 3
stocks.
Beginning Price Dividend Ending
Stock paid Price
X 30 3.40 34
Y 72 4.70 69
Z 140 4.80 146
Construct a portfolio with these securities having the proportion as 0.3,0.5 and 0.2 assume
the standard deviation(in terms of percentage) to be 6,9 and 10 for stock A,B and C
respectively. What is the portfolio return.
PART-C
[Link] CAPM in detail

Prepared by [Link] [Link]

Adhiparasakthi College of Engineering
[Link]

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