Section-A

problem1)a) ‘No investment is risk free’.  In view of this statement, discuss the meaning and types of investment-risk. Can this be eliminated or minimized, how?

b) Differentiate between financial and economic meaning of investment. describe the different stages of investment.

problem2) Discuss the features of investment avenues available in India. Categorize them into tax saving and non-tax saving avenues and bring out the major features of each avenues.

problem3)a) Discuss   the   trading   system   in stock exchanges in India.  State some of the recent reforms in the trading system.

b) Describe the institutional structure in Indian capital market.

problem4)a) Describe the benefit of  investment in mutual funds. What are various types of mutual funds schemes?  What are loads and NAV in mutual funds?

b) Use closing price data of June 2013 (from June 1 till June 30) of Sensex and Infosys Ltd. find out beta of Infosys Ltd. Visit www.bseindia.com for closing price data.

Section-B

Case Study

The following data is offered on two stocks – A and B:

Stock        Expected return     Standard deviation
A                    0.15                       0.30
B                    0.10                       0.20

The correlation between the two stocks is 0.85

Find out the expected return and risk on the following combination of these two    stocks:

Combinations        % of Stock A        % of Stock B
I                                 70                       30
II                                50                       50
III                               40                      60
IV                              10                       90

Case problem:

What would be your conclusion if correlation between two stocks is negative 0.67 and they are held in the proportion of 60% and 40% respectively?