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Master of Business Administration - MBA Semester 3
MF0010-Security Analysis and Portfolio Management
(Book ID: B1754)
Assignment (60 Marks)
Note: Answer all questions must be written within 300 to 400 words each. Each Question carries 10
marks 6 X 10=60
Q1. Describe the investment process.
Each step carries 2 marks for all the 5 steps – 10
Answer. The Investment process describes the decisions with regard to what securities to invest in while
constructing a port folio, how extensive the investment should be, and when the investment should be
made. This is a procedure involving the following five steps:
 Set investment Policy
 Perform Security analysis
 Construct a portfolio
 Evaluate the performance of Portfolio
 Revise the Portfolio.
Q2. Define primary markets? Define and explain the role of financial intermediaries.
Definition of primary markets - 3
Definition of financial intermediaries - 3
Role of financial intermediaries - 4
Answer. Definition of primary markets:
In primary market, a borrower offers new securities in exchange for cash from the investor (buyer). Sales
of bonds, treasury bills or stocks take place in primary markets. The issuers of these securities –
corporates, the government – receive cash from people who buy these securities. These buyers receive

2. financial claims that previously did not exist. Corporate or the government directly receives the proceeds
from the business transaction only in primary market.
Q3. Define technical indicators and its types and Discuss on Candlestick charts?
Definition of technical indicators - 2
Types of technical indicators - 3
Candlestick charts - 5
Answer. Definition of technical indicators:
Technical analysts also use technical indicators besides charts to assess prospects for market
declines/advances. A technical indicator is a series of data points that are derived by applying a formula to
the price data of a security. Price data includes any combination of the open, high, low or close prices over
a period of time.
Q4. Briefly explain Assumptions of Markowitz Model. Explain Efficient Frontier or Efficient set.
Explain Assumptions of Markowitz Model - 2
Explanation on Efficient Frontier - 8
Answer. Assumptions of Markowitz Model:
Markowitz’s model identifies the trade-off facing the investor as one between expected return (mean) and
risk (variance). It makes the following assumptions concerning the investment market and investors’
behaviour in those markets.
• All investors have the same expected single period investment horizon. At the beginning of the period,
the investor allocates his wealth among various assets, assigning a non-negative weight to each asset.
Q5. Explain the assumptions of Capital Asset Pricing Model (CAPM). Give a short note on Separation
Theorem, Capital Market Line (CML) and Security Market Line (SML).
Assumptions of CAPM - 4
Separation Theorem - 3
CML and SML - 3
Answer. Assumptions of CAPM:
Some of these assumptions of CAPM are clearly unrealistic. But relaxing many of these assumptions would
have only minor influence on the model and would not change its main implications or conclusions. The
primary way to judge a theory is to see how well it explains and helps predict behaviour. While CAPM does

3. not completely explain the variation in stock returns, it remains the most widely used method for
calculating the cost of capital.
Q6. Explain the Structure of Mutual Fund Operations. Explain Types of Mutual Fund.
Structure of Mutual Fund - 6
Types of Mutual Fund -- 4
Answer. Structure of Mutual Fund:
In India, mutual funds are operated by entities like sponsors, mutual funds, trustees, asset management
companies, custodians, registrars and transfer agents. Sponsor The sponsor of a mutual fund is similar to
the promoter of a company. The sponsor could be a bank, a financial institution or a financial services
company. For example, the sponsor of Reliance Mutual Fund is the Anil Dhirubhai Ambani Group (ADAG).
The sponsor has to obtain a license from SEBI for which it has to fulfill conditions relating to capital, profits,
Spring-2016
Get solved assignments at nominal price of Rs.125 each.
Mail us at: subjects4u@gmail.com or contact at
09882243490