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BA1727 - SECURITY ANALYSIS & PORTFOLIO MANAGEMENT

Question Bank

2 Marks and 16 Marks


S.A.ENGINEERING COLLEGE, CHENNAI 600 077.
DEPARTMENT OF BUSINESS ADMINISTRATION
QUESTION BANK

SUBJECT: SECURITY ANALYSIS &


PORTFOLIO MANAGEMENT
SUBJECT CODE: BA 1727
CLASS: II YEAR MBA

UNIT-I - INVESTMENT SETTING


PART - A

1. What is investment?
2. Define Speculation?
3. Define Securities?
4. What are warrants?
5. List the investors objective
6. What do you mean by investible fund?
7. What is sweat equity?
8. Differentiate between investment and gambling
9. List the characteristics of equity stock
10. What are the various types of debenture?
11. What is a share certificate?
12. What are the gilt edged securities?
13. List out the difference between speculation and gambling
14. What do you mean by primary market?
15. List the intermediaries in the primary market
16. List the advantages of warrants

17. What is the deep discount bond?


18. What do you mean by CCPS?
19. Explain ZCBs
20. Define security analysis

PART-B
1. Investment and speculation are somewhat similar and different in certain respectExplain
2. Explain the process of investment undertaken by the investors
3. Explain the primary and secondary objectives of investment
4. Explain the rules and regulation of SERA
5. What are the sources of investment?
6. List and explain the market indicators
7. Discuss the various types and features of debenture
8. List the new innovation in bond market
9. Explain how investors protection measures taken by the authorities in primary market.
10. How cans investors protection made effective?

UNIT-II - CAPITAL MARKETS


PART - A

1.
2.
3.
4.
5.
6.
7.
8.

Define new issue market


List the parties involved in new issue market
Who is an underwriter?
What is issue of shares at premium and par?
What are the advantages of private placement?
Who are the players in the capital market?
Who is Arbitrageurs?
Explain the role of floor brokers

9. List the objectives of UTI


10. What is the composition of IFCI, ICICI?
11. What are the developmental service offered by SIDCIL
12. How badla trading Carried out
13. What is mean by Electronic Trading?
14. List the problem faced by NIM
15. What are the methods of floatation?
16. Explain debt market
17. Who are the players in bond market
18. List the advantages of preference share
19. What are the problems in primary market?
20. What are the factors to be disclosed in the Prospectus?
21. How is the liability of underwriters established?
22. What is book building?
23. Differentiate between primary and secondary market
24. What are the objectives of capital issue?
25. Is book building and private placements are the same.

PART-B

1. Bring out the reason behind the success of NSE over BSE in the Indian Capital
market
2. List the various initiatives taken by SEBI
3. List out the various institutions that define the capital structure of a firm
4. Analyze the role of NIM in financing Companies
5. Explain in detail the functions of Capital Market
6. Discuss the role of FIs in the formation of capital market
7. What are the reforms made by Capital market? Does reforms have an impact on
capital market
8. What are the implications of the Narashima Committee
9. Explain in detail the problems faced in the NIM
10. Is debt market play an active role in the capital market- Discuss
11. List the guidelines of SEBI in issue and allotment of shares
12. Vigilance on the part of investors could avoid there being caught up in the poor
public issue- How is it possible.
UNIT-III - FUNDAMETAL ANALYSIS
PART- A

1. What is mean by fundamental analysis?


2. What is GDP?
3. List the methods of economics forecasting

4. What do you understand by EIC approach?


5. State the different classes of industry
6. What is SWOT analysis?
7. What are the factors that you will consider under company analysis?
8. How is sales forecast done in fundamental analysis?
9. What is EPS?
10. What is P/E Ratio?
11. What is intrinsic value of a share
12. Discuss the industry life cycle
13. How decision tree is used in fundamental analysis?
14. What are defensive industries?
15. Why is industry analysis important?
16. Does the ratio analysis serve as a tool for financial analysis?
17. What are financial indicators under which fundamental analysis is performed?
18. List the non-financial indicators in fundamental analysis
19. List any 4 factors that are important for appraising the companies in different
industries
20. Explain what is Dividend yield ratio
21. What is GNP model
22. List the factors that effect the EPS of the company
23. How industries are classified according to growth
24. How does ratio analysis effect the financial health of the company
25. What is diffusion index?

PART-B

1. Explain the utility analysis and state the economic factor consider for this analysis
2. Industry life cycle exhibits the states of the industry and gives a clue to entry and
exit for investors-elucidate
3. What are the methods adopted to analyze the financial statements of a company
4. Following are the data for Anand product 1998
1998
Assets

1998
Revenue 6600

Short term

6000 Op.exp

5950

Liabilities

450 EBIT

650

8% debentures 1250 Interest 150

10% bond

500 EBT

Common stock 3500 Taxes


Surplus

500
200

300 Dividend 50

Find out
1.
1.
2.
3.
4.
5.

Asset turnover
Effective interest rate
Effective tax rate
Debt/Equity ratio
Dividend payout rate

1. The following table gives the statistics for 2 of the Indian two wheelers company
in 1998. on the basis of the data given suggest any one of the company for
investment.
BAJAJ TVS
Sales

3493.1 1039.8

Net profit

389.3 67.4

Equity

119.4 23.1

BK value

177.4 80.1

EPS

32.6

29.2

P/E ratio

17.1

16.8

ROMW % 18.4

36.4

Dividend % 80

50

1. A company as profit margin of 15% and asset turnover of 5 times. What is the
ROI? How will it vary if
1. The profit margin increases by 3%
2. The asset turnover decreases to 2 times
3. The profit margin decreases by 3% and the assets turnover increases to 4
times.

1. Given below is the data regarding two firms Alpha and Beta Ltd.

Alpha Beta
Asset 175

170

Debt

70(10% debenture)

Equity 175

100

Calculate the EPS of both these firms


1. 18% before tax return on assets and
2. 14% before tax return on assets
The companies fall in the tax bracket of 40% what did you observe?

1. Well being drugs ltd reported an Rs.100 sales per share for the current year. It paid
a dividend of Rs.400 on an earring of Rs.700 per share. It expects a growth rate of
7% per year in the long run. The required rate of return is 19% and the market is
Rs.75. estimate the price/sales multiple.

1. Calrick Ltd has an equity box of Rs.10 cr. Some of the ratio are
1. Current debt to total debt =0.40
2. Total debt to equity=0.10
3. F.A to equity=0.85

4. Total asset turnover= 2 times


5. Inventory turnover= 8 times
Calculate Total debt, F.A, Total capital, total sales, sales and inventories.
UNIT-IV - TECHNICAL ANALYSIS
PART-A

1.
2.
3.
4.
5.
6.
7.
8.
9.

Define technical analysis


What is a PFC chart
State the difference between technical and fundamental analysis
List the assumption of T.A
What are the factors that are consider for T.A
What is trend reversal
State the difference stages of trend reversal
What are indicators?
What do you mean by Breadth of the market?

10. How odd lot trading is carried out?


11. What is EMA?
12. How does MACD help in determining the averages?
13. How do Oscillators indicate the momentum of the market
14. What is RSI?
15. Define Stochastic?
16. Explain ROC?
17. List the various charting method available to T.A
18. What is ROC momentum?
19. List the various types of MA
20. What are the various advantages of using charting methods in T.A?

PART-B
1. Calculate the EMA for 20-day period assuming that 20 days SMA on the first day
is 410.
1 424
2 422
3 436
4 415
5 411
6 433
7 417
8 422
9 423
10 409
11 417
12 418
13 427
14 431
15 430

16 419
17 417
18 425
19 412
20 408
1. RSI is a total for T.A for measuring momentum. The following information
pertains to the price of stock and for the last 8 trading days.
Days Closing price
0

180

160

190

210

300

290

210

100

You are required to calculate the RSI and interpret the result.

1. Given below is the information for 6 trading session in march 1999.


Days Price
1

575.50

545.40

535.35

540.80

542.45

550.60

Calculate 50 day EMA assuming that SMA for the first day is Rs.532.5. compare EMA
with price and interpret.

4. Consider the following daily stock prices of a company listed on BSE.


Day High Low Close
1

330 290 300

320 270 290

310 280 300

315 290 300

325 300 315

340 290 310

345 300 330

325 285 300

305 250 280

10 290 240 260


11

285 240 280

12 295 250
Calculate % K stochastic for 6 day.

1. Data for 7 day trend of Group A scrips of BSE is given below


Day Advances Decline Unchanged
1

96

96

140

53

120

75

79

115

102

88

99

95

90

102

Calculate Short period A-D Line


Long period A-D Line.

UNIT-V -PORTFOLIO MANAGEMENT

PART-A

1. Explain the term portfolio


2. Differentiate between Traditional and modern approach of portfolio
3. How do you select a portfolio
4. Define Markewitz diversification?
5. What is simple Diversification?
6. List the assumption of CAPM
7. What is SML?
8. Distinguish between CAPM and Arbitrage pricing
9. What is meant by mutual fund?
10. Explain what is open end and close end mutual fund

11. List the different types of mutual fund


12. What is the use of formula plans?
13. What is rupee cost averaging?
14. What are Swaps?
15. Differentiate between Active and passive management
16. How is portfolio managed
17. List the benefits of rupee cost averaging
18. Explain Jensen index.

PART-B

1. With the details given below calculate Sharpe, Treynor and Jensen
Find Return SD Beta
A

20 0.98

12

18 0.97

22 1.17

24 1.22

Risk free rate of return 4%

1. The table gives the data about 3 funds

P.F

Rf

Beta Rf

14% 1.3 6%

!2% 0.9 6%

18% 1.6 6%

Market index 13% 1.0 6%


Compare the funds performance into the market index performance.

1. Stocks L&M have yielded the following returns for the past 2 years
Years Return %
L
1995 12

M
14

1996 18
12
1. What is expected return on P.F made up of 60% of L and 40% of M?
2. Find out the SD of each stock.
3. What is Co-variance in co-efficient of correlation between L&M
4. What is the P.F risk of a P.F made up of 60% of L & 40% of M
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