Anna University MBA Important Question Bank (Most Important Questions)
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DEPARTMENT OF MANAGEMENT STUDIES
QUESTION BANK
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III SEMESTER
BA5012 - SECURITY ANALYSIS & PORTFOLIO MANAGEMENT
Regulation – 2017
Academic Year 2019 - 2020
Prepared by
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Mrs. L.Sujatha – Asst. Professor
Mr. M. Ganesan@Kaaj – Asst. Professor
DEPARTMENT OF MANAGEMENT STUDIES
QUESTION BANK
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SUBJECT: BA5012 – SECURITY ANALYSIS &PORTFOLIO MANAGEMENT
SEM/YEAR: III Semester / II Year
UNIT – I – INVESTMENT SETTING
SYLLABUS: Financial and economic meaning of Investment – Characteristics and objectives of Investment – Types of Investment – Investment alternatives – Choice and Evaluation – Risk and return concepts.
PART- A
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| S.NO | QUESTIONS | BT LEVEL | COMPETENCE |
|---|---|---|---|
| 1 | Define Investment and hybrid security? | Level 1 | Remembering |
| 2 | Differentiate investor from speculator. | Level 2 | Understanding |
| 3 | Identify the two types of information necessary for security analysis. | Level 3 | Applying |
| 4 | Classify the different kinds of bonds. | Level 4 | Analysing |
| 5 | Give five characteristics of common stock. | Level 5 | Evaluating |
| 6 | Can you assess the importance of warrants? | Level 6 | Creating |
| 7 | What are the features of preference shares? | Level 1 | Remembering |
| 8 | Distinguish investment from gambling. | Level 2 | Understanding |
| 9 | Identify the features of warrants. | Level 3 | Applying |
| 10 | State your view point about Financial Investment. | Level 4 | Analysing |
| 11 | Give five qualities required for successful investing. | Level 5 | Evaluating |
| 12 | Interpret the objectives of Investment. | Level 6 | Creating |
| 13 | Define security as per security contract regulation act. | Level 1 | Remembering |
| 14 | Summarize the concept of Risk and Return. | Level 2 | Understanding |
| 15 | How do you show your understanding on speculation? | Level 3 | Applying |
| 16 | Classify the types of risk. | Level 4 | Analysing |
| 17 | What is risk free rate of return? | Level 1 | Remembering |
| 18 | Discuss financial risk and risk. | Level 2 | Understanding |
| 19 | Define systematic risk and unsystematic risk. | Level 1 | Remembering |
| 20 | Why do investors invest in Gold, Silver and Real estate? | Level 1 | Remembering |
PART- B
| S.NO | QUESTIONS | BT LEVEL | COMPETENCE | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 | What are the investor's objectives in investing his funds in the stock market? | Level 1 | Remembering | ||||||||||||||||
| 2 | Explain the various choices of Investment alternatives available for an Investor with moderate risk taking capabilities. | Level 2 | Understanding | ||||||||||||||||
| 3 | Identify the different investment alternatives in India. | Level 3 | Applying | ||||||||||||||||
| 4 | (i)Without adequate information the investor cannot carry out his investment programme. Analyse.(8 marks) (ii)Elucidate if there will be a trade- off between risk and return in Investments? (5 marks) | Level 4 | Analysing | ||||||||||||||||
| 5 | (i)Discuss the various features of mutual funds. (5 marks) (ii)Discuss the various mutual fund schemes available for investors. (8 marks) | Level 5 | Evaluating | ||||||||||||||||
| 6 | (i) There are so many types of bonds - Interpret. (7marks) --- Content provided by FirstRanker.com --- (ii) Interpret the various types of preference shares. (6marks) | Level 6 | Creating | ||||||||||||||||
| 7 | A bond of Rs.1000 face value bearing a Coupon rate of 12% will mature after 7 years. (i)What is the value of the bond if the discount rates is 14%?(7marks) (ii)What is the value of the bond if the discount rates is12%?(6 marks) | Level 1 | Remembering | ||||||||||||||||
| 8 | Anand owns Rs.1000 face value bond with five years to maturity. The bond has an annual coupon of Rs.75. The bond is currently priced at Rs.970. Given an appropriate discount rate of 10%, Explain whether Anand should hold or sell the Bond? | Level 2 | Understanding | ||||||||||||||||
| 9 | i) Identify the price of Rs.1000 Zero Coupon bond with yield to maturity of 18% and 10 years to maturity.(5 marks) ii) What is YTM of this bond if its price is Rs.220? (8 marks) | Level 3 | Applying | ||||||||||||||||
| 10 | Prem is considering the purchase of a bond Currently selling at Rs.878.50. The bond has four years of maturity, face value of Rs.1000 and 8% coupon rate. The next annual Interest payment is due after one year from today. The required rate of return is 10%. --- Content provided by FirstRanker.com --- i) Calculate the intrinsic value (present value) of the bond. Should Prem buy the bond? (5 marks)ii) Calculate the yield to maturity of the bond. (8 marks) | Level 4 | Analysing | ||||||||||||||||
| 11 | The returns on securities A and B are given below :
i) What is the expected return for security A and B.? The security has to be selected on the basis of return and risk.(4 marks ) ii) If the investor invests an equal proportion on both the scrips, what would be the return? ( 4 marks ) iii) If the proportion is changed to 25 % and 75 % what would be the return?( 5 marks) | Level 1 | Remembering | ||||||||||||||||
| 12 | How would you summarize the statement “The investment process involves a series of activities starting from the policy formulation”? --- Content provided by FirstRanker.com --- Returns for a stock has the following probability distribution :
| Level 2 | Understanding | ||||||||||||||||
| 13 | (i)Calculate the variance (9 marks ) (ii)Also calculate the standard deviation( 4 marks ) | Level 4 | Analysing | ||||||||||||||||
| 14 | i) Mention the Characteristics Of Investment in Real Estate. (5marks) ii) What are the characteristics of investments in Mutual funds? (8 marks) | Level 1 | Remembering |
ART - C
| S.NO | QUESTIONS |
|---|---|
| 1 | Assume that you know for certain that market is heading towards the boom period. Should you buy a common stock based upon this information? |
| 2 | R.S Verma is considering investing in a bond currently selling for Rs.8785.07. The bond has four years to maturity, a Rs.10, 000 face value and a 8% Coupon rate. The next annual interest payment is due one year from today. The approximate discount factor for investments of similar risk is 10%. --- Content provided by FirstRanker.com --- i)Calculate the intrinsic value of the bond. Based on this calculation, should Verma purchase the bond.(8 marks)ii)Calculate the YTM of the bond .Based on this calculation, should Verma purchase the bond.(7 marks) |
| 3 | A mutual fund has earned an average annual return of 24 per cent over a five year period while the average market return over the same period was only 18 per cent. The risk free rate prevailing at the time was 7.5 per cent. The mutual fund had a beta of 1.45. The standard deviation of return of the mutual fund and the market index were 40 percent and 30 per cent |
| 4 | respectively. Calculate Fama's net selectivity for the fund, showing the decomposition of performance. Consider two situations: a young man X in early twenties and another young man Y in the late thirties. X and Y earns same amount of money. Mr. Y has a family, a car and all the encumbrances related with the marital status. Both of them like to invest in securities, what would be their constraints and objectives. |
UNIT-II – SECURITIES MARKETS
SYLLABUS: Financial Market - Segments – Types - - Participants in financial Market – Regulatory Environment, Primary Market – Methods of floating new issues, Book building – Role of primary market - Regulation of primary market, Stock exchanges in India – BSE, OTCEI, NSE, ISE, and Regulations of stock exchanges – Trading system in stock exchanges –SEBI.
PART- A
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| S.NO | QUESTIONS | BT LEVEL | COMPETENCE |
|---|---|---|---|
| 1 | What is Book building and IPO? | Level 1 | Remembering |
| 2 | Explain reverse book building | Level 2 | Understanding |
| 3 | Identify the different types of security markets. | Level 3 | Applying |
| 4 | Analyse the meaning of underwriting. | Level 4 | Analysing |
| 5 | What is your opinion about primary market? | Level 5 | Evaluating |
| 6 | Interpret the role of Capital Market. | Level 6 | Creating |
| 7 | Identify the importance of IPO grading. What decisions are taken before going in for IPO? | Level 1 | Remembering |
| 8 | Explain the meaning of oversubscription. | Level 2 | Understanding |
| 9 | What facts would you select to show that OCTEI is different from other stock? | Level 3 | Applying |
| 10 | Analyse the parties involved in issue of shares in stock market. | Level 4 | Analysing |
| 11 | What is the rolling settlement in trading of securities? | Level 5 | Evaluating |
| 12 | Interpret whether trading on margin a good idea. | Level 6 | Creating |
| 13 | Who are the participants in financial market? | Level 1 | Remembering |
| 14 | Distinguish between capital market and money market. | Level 2 | Understanding |
| 15 | Identify objectives of OTCEI. | Level 3 | Applying |
| 16 | Compare BSE and NSE. | Level 4 | Analysing |
| 17 | What is insider trading? | Level 1 | Remembering |
| 18 | Explain an odd lot. | Level 2 | Understanding |
| 19 | Name any four market indices. | Level 1 | Remembering |
|---|---|---|---|
| 20 | List the functions of SEBI. | Level 1 | Remembering |
PART- B
| S.NO | QUESTIONS | BT LEVEL | COMPETENCE |
|---|---|---|---|
| 1 | How would you explain the Role of SEBI in primary and secondary market? | Level 1 | Remembering |
| 2 | Explain the characteristics of Book Building and its process. | Level 2 | Understanding |
| 3 | i) Describe functions of NSDL(6 marks) ii) Identify the various ways in which an initial public offer can be made? (7 marks) | Level 3 | Applying |
| 4 | i) The strength of the economy depends upon the capital market- Discuss (7 marks) ii) Compare Primary and Secondary market.(6 marks) | Level 4 | Analysing |
| 5 | Evaluate the different segments of financial market? | Level 5 | Evaluating |
| 6 | "Stock exchange provides the linkage between the savings in the household sector and the investments in the corporate sector". Explain. | Level 6 | Creating |
| 7 | i) What are NSE, BSE and ISE? (5 marks) --- Content provided by FirstRanker.com --- ii) Discuss their features and advantages. (8 marks) | Level 1 | Remembering |
| 8 | What can you say about the investors' protection measures taken by the regulatory authorities in the primary market? | Level 2 | Understanding |
| 9 | i)How do you show your understanding of IPO ?(5 marks ) ii) Identify the steps taken by SEBI to protect the investors in the secondary market.(8 marks) | Level 3 | Applying |
| 10 | i) Analyse how stock indices are formed.(5 marks) ii) Compare the major indices and how it helps investors. (8 marks) | Level 4 | Analysing |
| 11 | What are the functions of Stock Exchange? | Level 1 | Remembering |
| 12 | i) Describe functions of primary market.(6 marks ) ii) Explain the changes in the trading system of stock exchanges brought forth by SEBI in the recent years. (7 marks) | Level 2 | Understanding |
| 13 | Analyse the factors to be taken into account when an investor decides to invest in the primary market. | Level 4 | Analysing |
| 14 | i)What are the Objectives of OTCEI? (5 marks) ii) What are the features and benefits of OTCEI? (8 marks) | Level 1 | Remembering |
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| S.NO | QUESTIONS |
|---|---|
| 1 | Discuss the recent policy initiatives and developments in the capital market in India. |
| 2 | What are the Objectives, functions and powers of SEBI? |
| 3 | Comment on the role played by the key players involved in the new issue market. |
| 4 | What are the main objectives of NSE? Explain the trends in NSE. |
UNIT - III – · FUNDAMENTAL ANALYSIS
SYLLABUS: Economic Analysis – Economic forecasting and stock Investment Decisions Forecasting techniques. Industry Analysis : Industry classification, Industry life cycle – Company Analysis Measuring Earnings – Forecasting Earnings – Applied Valuation Techniques – Graham and Dodds investor ratios.
PART- A
| S.NO | QUESTIONS | BT LEVEL | COMPETENCE |
|---|---|---|---|
| 1 | What is industry life cycle analysis? | Level 1 | Remembering |
| 2 | Explain the meaning of leading indicators of the economy? Give 2 Examples | Level 2 | Understanding |
| 3 | What do you understand by EIC framework to security analysis? | Level 3 | Applying |
| 4 | Analyse how Economic Forecasting is done. | Level 4 | Analysing |
| 5 | Discuss the meaning economic analysis | Level 5 | Evaluating |
| 6 | Interpret the industry life cycle stages. | Level 6 | Creating |
| 7 | What is the importance of P/E ratio? | Level 1 | Remembering |
| 8 | What is Value vs. Growth investing? | Level 2 | Understanding |
| 9 | Identify the meaning of opportunistic building model. | Level 3 | Applying |
| 10 | Analyse the ratios listed by Graham and Dodd for value investing. | Level 4 | Analysing |
| 11 | Discuss the significance of ROI in company analysis. | Level 5 | Evaluating |
| 12 | Interpret the concept of company analysis | Level 6 | Creating |
| 13 | What do you mean by lagging indicators of the economy? Give 2 Examples | Level 1 | Remembering |
| 14 | Explain Graham and Dodd's investor ratios? | Level 2 | Understanding |
| 15 | Identify the meaning of coincidental and lagging indicators of the economy? Give 2 Examples. | Level 3 | Applying |
| 16 | Classify industry according to cycle. | Level 4 | Analysing |
| 17 | What is SWOT analysis? | Level I | Remembering |
|---|---|---|---|
| 18 | Explain the use of ratio analysis? | Level 2 | Understanding |
| 19 | What is meant by fundamental analysis? | Level 1 | Remembering |
| 20 | What is intrinsic value of a share? | Level 1 | Remembering |
PART-B
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| S.NO | QUESTIONS | BT LEVEL | COMPETENCE |
|---|---|---|---|
| 1 | i) Define ROI .(3 marks) ii) What are the methods of computation of ROI in company analysis.(10 marks) | Level 1 | Remembering |
| 2 | Explain two commonly used ways of decomposing ROE into its underlying determinant. | Level 2 | Understanding |
| 3 | i) Identify the need for company analysis.(3 marks) ii) Discuss the key tools used in Company analysis.(10 marks) | Level 3 | Applying |
| 4 | Why do you think industry analysis is important? Why should it include the economic analysis? | Level 4 | Analysing |
| 5 | Discus the ratios calculated by the investor before making the investments. | Level 5 | Evaluating |
| 6 | Can you elaborate Graham and Dodd's investor ratios with respect to Fundamental analysis? | Level 6 | Creating |
| 7 | What are the factors affecting Industry analysis? | Level 1 | Remembering |
| 8 | “Fundamental analysis provides an analytical frame work for rational investment decision - making”. Explain. | Level 2 | Understanding |
| 9 | How would you show your understanding of EIC framework? | Level 3 | Applying |
| 10 | Analyze the factors considered to be most important in appraising companies in different industries. | Level 4 | Analysing |
| 11 | i)Do you think that knowing the current status of economy is useful in analyzing stock market movements.( 4 marks) ii) What are the factors affecting economic analysis?(9 marks) | Level 1 | Remembering |
| 12 | Summarize on the concept of stock investment decision. | Level 2 | Understanding |
| 13 | Compare the different stages in Industry life cycle. | Level 4 | Analysing |
| 14 | How would you explain that various indicators predict the prospect for investment in stocks? | Level 1 | Remembering |
| S.NO | QUESTIONS |
|---|---|
| 1 | i) As an analyst, discuss the concept of an industry lifecycle by describing each of its four phases .In which phase of the lifecycle, investments in an industry are most attractive? (12marks) --- Content provided by FirstRanker.com --- ii) Why is industry life cycle important to investors? (3marks) |
| 2 | Foreign investors look for certain key factors before investing in Indian Economy. - Elaborate. |
| 3 | Enumerate the significance of economic forecasting in fundamental analysis. |
| 4 | “The level, trend and stability of earnings of a company depend upon a number of factors concerning the operation of the company. Discuss. |
UNIT – IV – TECHNICAL ANALYSIS
SYLLABUS: Fundamental Analysis Vs Technical Analysis – Charting methods – Market Indicators. Trend – Trend reversals – Patterns - Moving Average – Exponential moving Average – Oscillators Market Indicators – Efficient Market theory.
PART- A
| S.NO | QUESTIONS | BT LEVEL | COMPETENCE |
|---|---|---|---|
| 1 | Explain the three types of trends in stock prices | Level 1 | Remembering |
| 2 | Explain the importance of Oscillators in technical analysis. | Level 2 | Understanding |
| 3 | Differentiate fundamental analysis from technical analysis. | Level 3 | Applying |
| 4 | Analyse the moving average theory of technical analysis. | Level 4 | Analysing |
| 5 | What is the theme of Technical analysis? | Level 5 | Evaluating |
| 6 | Draw and Interpret a Line Chart. | Level 6 | Creating |
| 7 | Define RSI and its usage. | Level 1 | Remembering |
| 8 | Explain MACD | Level 2 | Understanding |
| 9 | Compare ROC I and ROC II. | Level 3 | Applying |
| 10 | Analyse the two major market indicators considered as a barometer of Indian capital market. | Level 4 | Analysing |
| 11 | How do the leverage policies affect the company performances? | Level 5 | Evaluating |
| 12 | What do you mean by security market line? Define "Efficient frontier". | Level 6 | Creating |
| 13 | What is Random Walk Hypothesis? What are the various levels of market Efficiency? | Level 1 | Remembering |
| 14 | Explain trend reversal. | Level 2 | Understanding |
| 15 | How will you identify support? | Level 3 | Applying |
|---|---|---|---|
| 16 | Analyse any two oscillators. | Level 4 | Analysing |
| 17 | What are Oscillators? | Level 1 | Remembering |
| 18 | What is resistance level of a stock? | Level 2 | Understanding |
| 19 | What are price charts and short sale? | Level 1 | Remembering |
| 20 | What is Beta? Is it a better measure of risk than the standard deviation? | Level 1 | Remembering |
PART- B
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| S.NO | QUESTIONS | BT LEVEL | COMPETENCE |
|---|---|---|---|
| 1 | i) What are the premises of technical analysis? (5marks) This download link is referred from the post: Anna University MBA Important Question Bank (Most Important Questions) |