Capital Market and Portfolio Management June 2024

Description

Capital Market and Portfolio Management

June 2024 Examination

 

 

1. Every individual have different investment objective. Like retired person want risk free investment & youngster may have long term investment objective as well as risk taking ability. Whenever any investor takes investment decision what are the factors that affect while taking his / her investment decision? (10 Marks)

Introduction

Investment decisions are crucial for achieving financial security and realizing long-term objectives. Each investor approaches these decisions uniquely, shaped by individual goals, circumstances, and tolerance for risk. Retired individuals often seek stable, low-risk investments to preserve their capital, while younger investors might pursue higher-risk opportunities to maximize long-term growth. Understanding the factors that influence investment decisions is essential for both investors and financial advisors to tailor strategies that align with personal objectives. These factors not It is only half solved

 

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2. Heena want to invest in stock market but confused which stock to select. On the basis of below information suggest her which stock will give good return, so that she can take good investment decision.

 

Probability	Return on stock A	Return on stock B
10%	5%	3%
20%	10%	15%
30%	15%	12%

 

(10 Marks)

Introduction

Making informed investment decisions in the stock market involves analyzing potential returns and the associated risks of various stocks. Heena, like many individual investors, faces the challenge of choosing between multiple stock options with varying performance outcomes. The decision-making process can be streamlined using probabilistic models to estimate expected returns based on different scenarios. By examining the given data for Stock A and Stock B—which includes the probability

 

 

 

3. a. Aditya Ltd earned a net income= ₹4,00,000/- at the end of the year 31st March 2020. Shareholder’s equity on  31st  march  2019  =  ₹16,00,000/-  &  on  31st  march  2020  = ₹15,00,000/- Calculate ROE for the year ended 31st March 2020.    (5 Marks)

Introduction

Return on Equity (ROE) is a critical financial metric used to gauge the profitability of a company relative to shareholders’ equity. It essentially measures how effectively a company is using the money invested by its shareholders to generate profits. In this case, we will calculate the ROE for Aditya Ltd. for the fiscal year ending 31st March 2020, using its net income and shareholders’ equity figures.

Concept and application

Understanding

 

 

3b. There are few indicators of investment risk. Beta is one of them. With the help of beta indicator investor can take informative decision. Beta informs an investor about the risk involved in a stock and risk involved in the entire market, but has some disadvantages also discuss it.                                                                                                                (5 Marks)

Introduction

Beta is a widely used indicator in investment analysis that measures the volatility of a stock relative to the overall market. It provides valuable insights into the risk associated with individual stocks compared to the broader market. While beta can be informative for investors in assessing risk, it also has its