FACULTY OF MANAGEMENT
M.B.A. III-Semester Examination, May June 2016
Subject: Investment Management
Course No 3.4.1 (Finance)
Time 3 Hours Max. Marks: 80
Note: Answer ALL the questions.
Part A (10x2=20 Marks)
(Short Answer Type)
1 Write short notes on the following.
Real Vs. Financial Assets
Chartist Approach
Doji candle stick
Deep discount bonds
P/E multiplier Approach
Dividend discounted models
The law of one price
Optimal portfolio
AMC
Exchange Traded Funds
Part B (5x12=60 Marks)
(Essay Answer Type)
2 Do you think that the Indian investor should consider Tax incentives in planning his
investment guided by risk, return, and Tax consideration.
OR
Define risk and distinguish between systematic and unsystematic risk.
3 The face value of a bond is Rs.1000/- with a coupon of 14% payable semi-annually.
It have a life of 8 years after which it would be redeemed at a premium of over
F.V. Find the YTM of the bond, if is market price is Rs.896/-.
OR
Mr. Sagar is considering the purchase of a bond currently selling at Rs.878.50. The
bond has four years to maturity with a face value of Rs.1000/- and coupon rate.
The next annual interest payment is due after one year from today. The required rate
of return is 10%.
Calculate the intrinsic value of the bond. Should Sagar buy the bond?
Calculate the YTM of the bond.
4 Explain the Whitebeck Kisor Model in stock valuation.
OR
The returns of Fashions Ltd. at present is 21%. This assumed to be continued for the
next 5 years and after that it is assumed to have a growth rate of 10% indefinitely.
The dividend paid for the current year is Rs.3.2/-. The required rate of return is 20%
and the present price is Rs.57/-. What is the estimated price according to two- stage
model. Should you purchase the bond?
..2
OU 2260 OU 2260
Code No. 1048
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5 Define Markowritz diversification. Explain the statistical method used by Markowritz
to obtain the risk reducing benefit.
OR
Stocks X Y have yielded the following returns for the past 6 years.
Returns
Years X Y
1st year 12 14
2nd year 18 12
Years Return
X
Return
Y
123456
12%
18%
14%
22%
15%
20%
22%
18%
14%
10%
12$
18%
What is the expected return and risk of a portfolio made up of 60% of X and 40% of Y.
6 Explain about the regulatory authority which protects the investors interest in India.
OR
The following three portfolio provide the particulars given below:
Portfolio
Average
Annual return
S.D.

Correlation
coefficient
PQR
18
14
15
13
27
18

0.8
0.6
0.9

Market 13 12
Risk free rate of interest is 9.
Rank these portfolio using Sharpe's and Treynor's model.
Compare both the indices.