Capital Market and Portfolio Management 2023 Sep NMIMS

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Q1. Mr. A invested in stock market, but he is shocked because many different charges have been imposed on him. As an investment adviser provide information to Mr. A about different charges that investors have to bear. Q2. Every investor expects maximum return from his investment. Suppose Mr. B buy 100 shares & invested Rs. 1, 00,000/- in share market for 1 year. How will you calculate the return from investment if company is giving dividend of Rs. 10/- per share & after 1 year price become 2000 per share. Q3. a. Mr. A got a new job & has a good salary. Now he is planning for investment in retirement plan. As an investment adviser give detail information about different retirement plans. b. At the time of investment every investor wants less risk with good return. But individual’s investment pattern is depending on his future need and according he creates his portfolio. As an investor what will be the objectives of your portfolio?

June 2023

Q1. Suppose you have Rs. 100000/- & interested to invest in financial assets. Which factors you should keep in mind while investing in financial assets?

Q2. Suppose there are two stocks in the market, namely stock A & stock B. whichever stock will give maximum return investor will invest in that stock. For this purpose, investor needs to measure the return from the asset. What is the different measuring return?

Q3. a. Mr. A wants to buy some stocks, but he is confused because he doesn’t know how to measure the risk. He wants your suggestion for risk measurement, please suggest. (5 Marks)
Q3. b. If you are planning to invest in mutual fund so you must know the risk involved in it. Highlight three to four risk that everyone needs to know. (5 Marks)

Dec 2022

Q1. Assume that you are planning to invest in the capital market. What steps will you follow to start trading in the capital market. (10 Marks)

Q2. You are given the following information on two stocks BI and B2. The stock B1 performed well in slowdown as compared to B2. Both the shares are selling at Rs.90 per share. The estimated rupee return of the stock is given as follows:

Economy’s Behaviour
	High Growth	Low Growth	Stagnation	Recession
Probability	0.45	0.25	0.2	0.1
Return on B1	90	98	106	122
Return on B2	120	104	72	48

Calculate the expected return and risk in the following cases:

1. When you invested 5000 in B1
2. When you invested 5000 in B2

Write down your preferences (10 Marks)

Q3. There is an ongoing debate regarding the fundamental analysis and technical analysis.

One school of thought supports fundamental analysis, while the other school supports that stock market cannot work effectively without technical analysis” these statements have raised a confusion among the investors.

1. As a security analyst how do you effectively explain the difference between fundamental and technical analysis to the investors. (5 Marks)
2. Do you prefer one analysis over the other? Give reasons for your choice. (5 Marks)

Sep 2022

Q1. Efficient market hypothesis repudiates the technical analysis by arguing that no abnormal returns can be earned by using three different forms of information. In the light of this statement, discuss the three forms of EMH, and comment on their validity in the stock markets in contemporary periods. (10 Marks)

Q2. From the following information about two portfolios, explain which one offers a better investment option based on the Sharpe ratio. (10 Marks)

	Portfolio X	Portfolio Y
Annual Return (Rp)	7.6%	8.9%
Risk-free Return (Rf)	5%	5%
Standard deviation of portfolio’s return (õp)	0.12	0.23

Q3. On seeing the report of Company A, we found that the “EVA rises 224% to Rs.71 Crore” whereas Company B’s “EVA rises 50% to 548 crore”.

1. Define EVA, and discuss its significance. (5 Marks)
2. Comparatively analyze EVA in relation with measures like EPS or ROE? Is EVA suitable in Indian Context? (5 Marks)

June nmims assignment

Q1. Are investment and gambling the same? Justify your answer explaining the concept and characteristics of investment. (10 Marks)

Q2. You are given the following data:

Name of the Company	Expected Beta	Expected return in percent
A	0.95	12
B	0.80	15
C	0.65	13.50
D	0.64	10
E	0.90	12.5
F	0.60	16.5
G	1.25	18

 

Expected return of the market – 14%; Risk free rate of return – 5%

With the help of above given information find the stocks which you would recommend to buy or sell? Which technique would you employ to calculate the same? List down the other applications if any? (10 Marks

Q3. According to Lord Keynes “Given market prices, investors driven by the speculative motive, would trade on forecasts of the future market price of stocks, rather than stocks’ intrinsic values.” As a security analyst:

 

1. Comment on the given statement (5 Marks)
2. Given this statement, why do we need fundamental analysis? (5 Marks)

 

Apr 2022 NMIMS

Q1. In order to maximize the returns from any investment decision, it’s essential that such decision is taken after adequate analysis. This analysis can be further classified as fundamental analysis or technical analysis.
Discuss the basic difference between these two techniques. Also, showcase other essential points which can convey in an impactful manner that both the types of analysis i.e. fundamental analysis and technical analysis should be taken care of while taking investment decision.

Q2. Mr. Alok is interested to invest Rs 1 lacs in the securities market. He selected two securities A and B for this purpose
The risk return profile of these securities are as follows-
Security Risk Expected return
A 10% 12 %
B 18 % 20 %
Coefficient of correlation between A and B is 0.15
If he decides to invest 50 % of his fund in A and rest 50% in B. What if, he decides to invest 75 % of his fund in A and rest 25% in B, will the risk and return associated to the portfolio will change? You are required to calculate the portfolio return and risk to be calculated by Mr Alok for his investment. (10 Marks)
Q3. Suppose you are fortunate enough to receive an inheritance of $1 million from your relative but with a specific condition that you should invest the amount intelligently in Capital market securities.
a. Discuss any five Capital market security Instruments, you would prefer to invest in (5 Marks)
b. Mention your understanding in relation to the various factors affecting investment decision process in the above context (5 Marks)

NMIMS CMPM Assignment Dec 2020

Q1. Distinguish between systematic and unsystematic risk. Explain different mutual fund schemes for diversifying enlisted risks.

 

Q2. Given below are likely returns in case of shares of Sun Ltd. and Moon Ltd. In the various economic conditions. Both shares are presently quoted at Rs. 100 per share.

Economic Condition	Probability	Returns of Sun Ltd.(%)	Returns of Moon Ltd.(%)
High Growth	0.3	100	150
Low Growth	0.4	110	130
Stagnation	0.2	120	90
Recession	0.1	140	60

 

Compute – Expected Return and Standard Deviation for both stocks and provide your suggestion for suitable investment.

 

Q3. Rajesh, 35-year-old salaried individual wishes to invest Rs. 15 lakhs in different investment avenues. He plans to invest for the education of his two children aged 5 and 8 years old, retirement and contingency. Assuming the role of a Portfolio Management Consultant design a suitable portfolio for Rajesh if –

• He is willing to take moderate risk for his investments.
• He is a risk neutral investor.

June 2020 NMIMS Assignment

Q1. Calculate the standard deviation and return of portfolio consisting of 60% of Security A and 40% of Security B.

TABLE BELOW

Year	Security A return(%)	Security B return(%)
2015	10	18
2016	12	15
2017	9	11
2018	10	9
2019	5	7

 

Q2. Calculate the return as per CAPM for each of the company’s stock, identify whether they are underpriced, overpriced or correctly priced and advise accordingly. Returns of T- Bill is 9%.

 

Stock	Expected Return	Beta
Titan	24%	1.8
Nestle	30%	1.5
Eicher Motors	12%	1.2
HDFC	25.9%	1.3
Sensex	22%

 

Q3. An investor was tracking SBI and HDFC mutual funds whose return and beta are as given below:

	Observed Return	Beta
Portfolio SBI	18%	0.75
Portfolio HDFC	25%	1.25

 

Return on the market portfolio is 11%, while the risk-free return is 8%. Assume standard Deviation of the market to be 7%.

1. Compute the Jensen index for each of the funds and comment which one is better.
2. Compute the Treynor index for each of the funds and comment which one is better.

 

Previous Semester

APR 2020 NMIMS SOLUTION

Q1. The following data shows the return of Alpha Ltd and the Market:

TABLE GIVEN BELOW

Year	Return Alpha(%)	Return Market (%)
1	12	18
2	16	17
3	17	19
4	14	18
5	10	15

Calculate the Beta of Alpha Ltd and interpret. Explain the implications of different values of Beta.

Q2. Calculate the standard deviation and return of portfolio consisting of 60% of Security A and 40% of Security B. Assume correlation coefficient between stock A and stock B is 0.55. Interpret the benefit of portfolio over individual stock investment (in case of security A and B).

Q3. Observed Return and Beta of SBI Bluechip Fund and Franklin India Equity Fund for the year 2019 are as follows

Assume standard deviation of the market to be 8%, Return on Sensex 15% and the riskfree return to be 7%.

a. Compute the Jensen index for each of the funds and interpret the results.         (5 Marks)

b. Compute the Treynor index for each of the funds and interpret the results.         (5 Marks)