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Master of Business Administration - MBA Semester 3

FIN301 – Security Analysis and Portfolio Management

Set – 1

Q1. Explain the business cycle and leading coincidental & lagging indicators. Analyze the issues in
fundamental analysis.

● Explanation of business cycle-leading coincidental and lagging indicator 6

● Analysis and explanation of the issues in fundamental analysis all the four points 4
Answer. Explanation of the business cycle and leading coincidental & lagging indicators:

Q2. Explain the Meaning and Benefits of Mutual Fund.

● Explain the Meaning of Mutual Fund 5

● Elucidate the various Benefits of Mutual Funds 5
Answer. A mutual fund is a type of financial intermediary that pools funds of investors with similar
investment objectives and invests

Q3. 1. Briefly explain Financial Derivatives.

2. Differentiate between Stocks and Bonds

 Meaning and composition 5

 Differences between Stocks and Bonds 5

Answer.

Financial Derivatives
Derivatives are securities which are linked to other securities, such as stocks or bonds. Their value is based
off of the primary security they are linked to, and they are therefore not worth anything in and of
themselves. There

Set – 2

Q1.

Returns (%)
Probability P M
0.45 30 40
0.20 10 -10
0.35 20 30

This distribution of returns for share P and the market portfolio M is given above. Calculate the Expected
Return of Security P and the market portfolio, the covariance between the market portfolio and security
P and beta for the security.

1. Expected Return of Security P and the market portfolio, 5

2. Covariance between the market portfolio and security P 3

3. Beta for the security. 2

Answer.

Q2. Explain the four crucial criteria of Financial Ratio while judging financial performance.

• Four Crucial Criteria of Financial Ratio 10

Answer. Financial ratios are commonly used to analyze a company’s financial performance. Analysts
examine ratios at two levels:

(1) a company’s ratios for a period compared to previous periods (time series analysis or trend analysis)
and

Q3. 1. Distinguish between Business Risk and Financial Risk

2. Discuss the Factors affecting Industry analysis

• Describe Business Risk and Financial Risk Separately 5

• Factors affecting Industry Analysis 5

Answer. Business and financial risk

Investors look for a return that is relative to the perceived risk associated with the company. The risk can
be

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