Portfolio Management

MBA Program Ahsanullah University of Science and Technology Suggestions for Final Examination (Spring 2011) Questions (Theory): 06, 07,09,10,12 (S.Kevin) Math: All Examples Exercise no: 01,02,03,04 (S.Kevin) Questions (Theory): 09, 13 (S.Kevin) Math: All Examples Exercise no: 01, 02, 03, 04, 05, 06, 07, 08 (S.Kevin) Questions (Theory): 01,02,05,07 Math: Exercise no: 2-21 (page 89), Chapter 2 case (page 92) (Lowrence J. Gitman, 10th Ed.) Questions (Theory): 01. Definition of Stock. 02. Types of Stock 03. Features of Common Stock and Preferred Stock From S.Kevin: 09, 10, 12 Math: Class lecture and sheet of Security analysis Questions (Theory): 1. Features of Bond 2. Types of Bond 3. Yield to Maturity 4. Trustee 5. Bond indenture Math: Class lecture and sheet of Security analysis Questions (Theory): 04, 06, 09 Math: Example no: 01, 02, 03, 04 Questions (Theory): 01, 02, 04 Questions (Theory): 04, 07

Chapter 01: Risk and Return

Chapter 02: Portfolio Analysis

Chapter 03: Financial Statement Analysis

Chapter 04: Stock Valuation

Chapter 05: Bond Valuation

Chapter 06: Portfolio Evaluation Chapter 07: Portfolio Revision Chapter 08: Portfolio Selection

Stock Valuation Question 01. Home Palace Hotel Corporation is entering into a 3 years remodeling and expansion project. The construction will have a limiting effects one earning during that time, but when it is complete it should allow the company to enjoy much improved growth in earnings and dividend. Last year, the company paid a dividend of $3.40. It expects zero growth next year. In years 2&3, 5% growth is expected and in year 4, 15% growth, year 5 and thereafter growth should be constant 10% per year. What is the maximum price per share that an investor who requires a return of 14% should pay for Home Palace Hotels. Bond Valuation Question 01. Smith Corporation has $40 million bond outstanding in the market carrying 14% coupon rate. The bond has the remaining life of 15 years. Company is thinking to repurchase the old bond and resize a new 10% bond amounting 40 million for 15 years. If the old bond was repurchased the company has to pay 7% call premium and it has to incur $3, 50,000 as flotation cost for the new issue. If the cost of bond 12%, determine whether the company should the original bond issue? 02. Compact is offering a 9%, 20 years maturity bond with a face value of BDT 1000. If the cost of the bond is 10% and bond is currently selling at BDT 880, determining whether should you buy the bond. 03. ABC is offering 11%, 25 years maturity bond. The floatation cist associated with bond issue is 3% and the bond is selling at 2% discount. Determine YTM of the bond. 04. XYZ is offering 12%, 30 years maturity bond. The floatation cist associated with bond issue is 2% and the bond is selling at 4% premium. Determine YTM of the bond.