Q1) (A) Choose the right answer with reasons 10 Marks

A portfolio manager by evaluating his own performance can identify sources of _______________

Risk or return

Strength or Weakness

Beta or Standard Deviation

Buying or selling shares

Portfolio performance is evaluated over a __________

Period

Year

Timeinterval

A month

Sharp measure of Portfolio evaluation uses the __________ of returns as the measures of risk.

Standard Deviation

Variance

Range

Beta

The intrinsic value of a share is based on _________ that the investor expects to receive in future.

Dividend

Capital Gain

Cash Flow

interest

The stock valuation model should generate changes in __________ for stocks.

Expected Return

Revised Return

Regular Return

Average Return
Q1) (B) What is the present value of the following cash stream if the discount rate is 12%? (5)
Year 
0 
1 
2 
3 
4 
Cash Flow 
5000 
6000 
8000 
10000 
12000 
Q2) (A) An investment of Rs 40,000 made on 1/04/02 provides inflows as follows: (8)
Date 
Alternative I 
Alternative II 
01/04/03 
20,000 
10,000 
01/04/04 
10,000 
20,000 
01/04/05 
10,000 
10,000 
01/04/06 
10,000 
10,000 
Which alternative would you prefer if the investor’s expected return is 10%? Give reason(s) for your preference.
Q2) (B) ‘C’ Ltd. paid dividend Rs 1.80 per share. The forecast is that dividend will grow by 5% per year into the infinite future. If the required rate of return is 11% and the current market price of the Company’s share is Rs 40, find out its intrinsic value. (7 )
Or
Q2) (A) Key determinants of share value ? (8)
Q2) (B) Portfolio Theory? (7)
Q3) (A) Calculate Sharp, Treynor, Jensen’s Ratio : (8)
Portfolio 
Avg. Return(%) 
Std.Devation(%) 
Beta 
A 
15 
20 
1.25 
B 
12 
35 
.75 
C 
10 
15 
1.20 
D 
12 
25 
.85 
Market Return :12% and Risk free return is 6%
Q3) (B) Calculate Beta (7)
Years 
A Ltd. 
Market 
1 
12 
18 
2 
9 
14 
3 
15 
21 
4 
20 
24 
5 
15 
16 
Or
Q3) (A) (i) Systematic Risk 8 Marks
(ii) Unsystematic Risk
Q3) (B) Portfolio Evaluation 7 Marks
Q4) (A) ABC Company Ltd. pays an annual dividend of Rs. 4 per share. The company does not intend to change its dividend

If the investors require 8% return on company’s share what should be its market price?

What would be the current market price of the company’s share if the required rate changes to 12%. (8)
Q4) B )PQR ltd.paid its first cash dividend RS 2.50 and growth rate is 20% for next 3 years and there after it will grow at 10%. Return is 15% find out value of share. (7)
Or
Q4) (A) What is Portfolio Performance Evaluation ? How to measures the portfolio performance? (8)
Q4) (B) Write short notes: (7)

Selection of Asset Mix

Need for Portfolio Revision
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