BBA/B.Com Portfolio Management Sep 2024

Description

Portfolio Management

September 2024 Examination

 

 

Q1. There are different financial instruments & each and every instrument have their own feature. On the basis of investor’s objective he / she select investment avenues. Briefly explain few common investment alternatives. (10 mark)

Ans 1.

Introduction

In the diverse world of investing, choosing the right financial instruments is pivotal for achieving specific financial goals. Each investment alternative comes with unique features and risk profiles, tailored to cater to varied investor objectives and risk appetites. From the stability of bonds to the growth potential of stocks, and the innovative approaches of derivatives, the range of options available allows investors to construct diversified portfolios that align closely with their long-term financial plans and immediate needs. Understanding

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Q2. Ratio Analysis helps in determining how efficiently a firm or an organization is operating. It provides significant information to users regarding the performance of the business. With the help of ratio analysis users can compare two or more firms. There are different ratios & every ratio informs us something. Explain classification of ratio. (10 mark)

Ans 2.

Introduction

Ratio analysis stands as a cornerstone of financial analysis, offering a detailed lens through which to view a company’s operational efficiency and overall financial health. By breaking down complex financial statements into simpler, comparable metrics, ratio analysis provides valuable insights into a company’s profitability, liquidity, operational efficiency, and solvency. This analytical method is not only crucial

 

 

Q3a. If probability of stock A, B & C is 0.3, 0.5 & 0.2 & return from stock A, B & C is 10%, 14% & 20% then what will be the total expected return?   (5 marks)

Ans 3a.

Introduction

The concept of expected return is fundamental in financial analysis and portfolio management. It quantifies the average return an investor might anticipate based on the probabilities of various outcomes. By calculating the expected return for stocks A, B, and C, which have specified probabilities and returns, investors can gain insights into the potential performance of a diversified portfolio comprising

 

1. If covariance = 1.90, standard deviation of X =1.8 & standard deviation of Y = 2.2 calculate correlation coefficient. (5 marks)

Ans 3b.

Introduction

The correlation coefficient is a statistical measure that calculates the degree to which two variables are related. This value provides essential insights into the strength and direction of a linear relationship between two variables. In finance, understanding the correlation between different assets can help in diversifying and managing the risk of a portfolio. This calculation uses the covariance between the variables