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Master of Business Administration- smude MBA Semester 3 spring 2015

MF0010: SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT
Q1. Describe the investment process.
Answer: The Investment Process: It is rare to find investors investing their entire savings in a
single security. Instead, they tend to invest in a group of securities. Such a group of securities is called
a
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Q2. Write about the secondary markets? Explain the role of financial intermediaries.
Answer: Secondary market is a market where already existing (pre-issued) securities are traded
amongst investors.
Although corporations do not directly benefit from secondary market transactions,
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Q3. Explain the meaning of risk. Describe the factors that affect risk.
Answer: Meaning of Risk
Risk refers to the likelihood we will receive a return on an investment that is different from the return
we expected to make. Risk is the likelihood that your investment will either earn money or lose
money. It is the degree of uncertainty about your expected return
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Q4. Briefly explain the variables that are analyzed in economy analysis.
Answer: Economy Analysis
In addition to the economy analysis, fundamental analysis helps investors determine whether the
economic climate offers a positive and encouraging investing environment. Economic analysis is done
for two reasons: first, a companys growth prospects
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Q5. Explain about technical indicators and How are they used?
Answer: Technical Indicators
A technical indicator is a series of data points that are derived by applying a formula to the price
and/or volume data of a security. Price data can be any combination of the open, high, low or closing
price over a period of time. Some indicators may use only the closing
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Q6. Explain the assumptions of Capital Asset Pricing Model (CAPM). Give a short note on
Separation Theorem, Capital Market Line(CML) and Security Market Line (SML).
Answer: Assumptions of CAPM
All investors are assumed to follow the mean-variance approach i.e. the risk-averse investor will
ascribe to the methodology of reducing portfolio risk by combining assets with
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