NMIMS Global Access

School for Continuing Education (NGA-SCE)

Course: Capital Market and Portfolio Management
Internal Assignment Applicable for December 2018 Examination

Assignment Marks: 30

Instructions:

 All Questions carry equal marks.

 All Questions are compulsory
 All answers to be explained in not more than 1000 words for question 1 and 2 and for
question 3 in not more than 500 words for each subsection. Use relevant examples,
illustrations as far as possible.
 All answers to be written individually. Discussion and group work is not advisable.
 Students are free to refer to any books/reference material/website/internet for attempting
their assignments, but are not allowed to copy the matter as it is from the source of
reference.

 Students should write the assignment in their own words. Copying of assignments from
other students is not allowed.

 Students should follow the following parameter for answering the assignment questions.

For Theoretical Answer For Numerical Answer

Assessment Parameter Weightage Assessment Parameter Weightage
Introduction 20% Understanding and usage 20%
Concepts and Application 60% of the formula
related to the question Procedure / Steps 50%
Conclusion 20% Correct Answer & 30%
Interpretation

Question1
Mr. Lalawani wants to invest in share market. Specifically, he is interested in the securities
of Power Sector. He strongly believes that performance of any entity is significantly related
to the general industry to which the entity belongs and also to the economic environment.
 NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Capital Market and Portfolio Management
Internal Assignment Applicable for December 2018 Examination
Discuss the nature and type of analysis Mr. Lalwani will pursue so as to get the desired
outcome. (10 Marks)

Question 2
Mr. Anand wants to determine in which, out of the two securities he should invest in. He
already did the task of forecasting the returns on both of these securities as mentioned
below. You, being the financial research analyst advise him on these securities.

Security B
Security A

Return probability Return probability

0.15 0.2 0.12 0.15

0.1 0.05 0.1 0.05

0.12 0.1 0.08 0.45

0.05 0.4 0.09 0.15

0.13 0.25 0.1 0.2

(10 Marks)

Question 3
Beta of Pragati Ltd is 1.55. The market rate of return is 15%. The risk free rate of return is
8%

a. Compute the expected return based on CAPM, explaining all the components of the
CAPM Model (5 Marks)
 NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Capital Market and Portfolio Management
Internal Assignment Applicable for December 2018 Examination

b. Suppose, the risk premium on the market goes up by 3.5 % points do you think that
the expected return on the stock of the above company will change? Calculate and
elaborate. (5 Marks)

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