Security Analysis and Portfolio Management

Topics: Capital asset pricing model, Financial markets, Management Pages: 5 (1175 words) Published: December 17, 2013
IIBM Institute of Business Management
Examination Paper MM.100
Security Analysis and Portfolio Management
Section A: Objective Type (30 marks)
 This section consists of Multiple choice questions & Short Answer type questions.  Answer all the questions.
 Part One questions carry 1 mark each & Part Two questions carry 5 marks each. Part One:
Multiple choices:
1. Beta is useful for comparing the relative _____________ of different stocks. a. Business risk
b. Systematic risk
c. Liquidity risk
d. Country risk
2. The price prevailing in market is called
a. Market security
b. Market value
c. Market price
d. None of the above
3. Line charts, Bar charts, Candles tic charts are the parts of a. Fundamental analysis
b. Technical analysis
c. Company analysis
d. None of the above
4. A market portfolio is a portfolio consisting of a weighted __________ in the market. a. Sum of every equity
b. Sum of every liabilities
c. Sum of every assets
d. None of the above
5. The date on the option contract is called the ___________ a. Expiration date
b. Date of maturity
c. Both a) & b)
d. None of the above
Examination Paper of Finance Management
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IIBM Institute of Business Management
6. A forward contract is an agreement made today between a ___________ to exchange the commodity
a. Buyer & buyer
b. Buyer & seller
c. Seller & seller
d. None of the above
7. Portfolio means a collection or combination of financial assets such as a. Shares
b. Debentures
c. Government securities
d. All of the above
8. CAPM is the abbreviation of
a. Capital Asset Pricing Measure
b. Capital Average Pricing Model
c. Capital Asset Pricing Model
d. None of the above
9. In India the secondary market for shares is regulated by
a. RBI
b. SEBI
c. Company law board
d. There is no regulatory authority
10. The risk of the whole market as measured by „Beta‟ is a. 1
b. 0
c. -1
d. None of the above
Part Two:
1. What does „β‟ (Beta) mean in risk management?
2. Write a note on „options‟ & „future‟ derivatives. 3. Define Capital market theory.
4. Write a short note on CAPM.
END OF SECTION A
Section B: Case lets (40 marks)
 This section consists of Case lets.
 Answer all the questions.
 Each Case let carries 20 marks.
 Detailed information should form the part of your answer (Word limit 150 to 200 words). Examination Paper of Finance Management
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IIBM Institute of Business Management
Case let 1
TOUAX is a French company and is currently Europe‟s no. 1 in shipping containers and river barges, and no. 2 in modular building and freight railcars. The group provides operating leases to customers around the world, both on its own account and for third-party investors. On June 24, 2009, TOUAX announced that its capital increased by waiving preferential subscription rights but with priority for existing shareholders, launched on 18 June 2009 for a total of E17, 851,519.76 (gross) through the issue of 936,596 new shares which were subscribed in the entirely. Following partial application of the extension clause, 952,747 shares were placed or 101.72% of the issue; total proceeds were E18, 159,357.82.

This rights issue has enabled the Group to strengthen its financial structure, to position itself with advantage for possible acquisitions of tangible stock, and to grasp opportunities thrown up by the crisis (purchase of shipping containers, modular buildings, river barges and railcars, for hiring out on mainly long-term leases). 370,062 new shares allotted under absolute entitlement were subscribed or 39.51% of the total number of new shares issue. Another 555,685 shares were applied for subject to cutting back in the event of over subscription, and orders for these were all filled. Another 27,000 shares had been applied for by the general public, and following partial application of the extension clause it proved possible to fill orders for all of these.

All the result of the right issue, TOUAX is well placed to respond to...
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