BBA/B.Com Portfolio Management Dec 2024

Description

Portfolio Management

December 2024 Examination

 

 

Q1. In what ways do you think the liquidity of different financial assets affects an investor’s ability to access their funds? How might an investor determine which assets are suitable for their financial goals? Consider the characteristics of various assets in your response.     (10 Marks)

Ans 1.

Introduction

Liquidity plays a crucial role in financial decision-making, influencing an investor’s ability to access funds when needed. It refers to how easily an asset can be converted into cash without significantly affecting its market value. Different financial assets, such as stocks, bonds, real estate, and mutual funds, have varying levels of liquidity, directly impacting their suitability for an investor’s financial goals. An investor seeking quick access to funds, for instance, would prefer assets with higher liquidity, while

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Q2. Imagine you are a researcher exploring different types of indices in a project. Describe a scenario where different types of indices contribute to the overall understanding of trends in data analysis.    (10 Marks)

Ans 2.

Introduction

Indices play a pivotal role in data analysis, offering condensed and interpretable metrics to gauge trends, compare performance, and make informed decisions. Their application spans diverse fields, from financial markets to economic analysis, social sciences, and environmental studies. By aggregating data into a single figure or a structured set of indicators, indices simplify complex datasets and provide insights into temporal or comparative trends. In the context of portfolio management, indices such as stock market indices or sector-specific benchmarks allow investors to track performance, identify

 

Q3a. Based on the provided probabilities of 0.5, 0.2, and 0.3, how would you calculate the expected return for each individual probability with their corresponding returns of 10%, 20%, and 30%?  (5 Marks)

Ans 3a.

Introduction

The concept of expected return is fundamental in finance, providing a measure of the average return an investor can anticipate from an investment given various possible outcomes. It combines the probabilities of different scenarios with their corresponding returns to generate a weighted average. By calculating the expected return, investors can assess potential risks and rewards, aiding in better decision-making. This response explains the calculation of expected return using probabilities of 0.5, 0.2, and 0.3 with

 

1. Considering the original values of standard deviation = 0.0254 and mean = 0.25, how would you interpret a coefficient of variation calculated from these values in the context of data analysis? (5 Marks)

Ans 3b.

Introduction

The coefficient of variation (CV) is a statistical measure that evaluates the relative variability of data compared to its mean. It is particularly useful in assessing the degree of dispersion in relation to the average value, making it an effective tool for comparing datasets with different units or scales. In this scenario, the CV is