Page 261 - DCOM504_SECURITY_ANALYSIS_AND_PORTFOLIO_MANAGEMENT

Security Analysis and Portfolio Management

Notes 9.12 Review Questions

1. How do you select security of selection?
2. How do you make the selection of asset mix?
3. What process will you follow to formulate a portfolio strategy?
4. Examine the concept of risk pyramid.
5. What do you see as the difference between passive and active investment strategies?

6. Before you make any investment, you should always determine the amount of time you
have to keep your money invested. Why?
7. Examine the concept of value investing. What do you think is/are its advantage(s)?
8. Only a specialist should handle the work of building an investment portfolio. Why/why
not?
9. Examine the concept of asset allocation/asset mix.
10. Portfolio management is a combination of the securities which will give maximum return
with minimum risk. Why/ why not?
11. As a portfolio manager, what would you do if a transaction is proposed that has a return
from lending activities only that is below the hurdle rate and why?

Answers: Self Assessment

1. low 2. Growth investment

3. feedback, control 4. insurance
5. asset 6. specific
7. income, growth, stability 8. time

9. risk pyramid 10. strongest
11. Passive 12. investors
13. active 14. portfolio, broad

15. Large Numbers

9.13 Further Readings

Books Dougall, Herbert E., Capital Markets and Institutions, 2nd ed., Englewood Cliffs,
NJ, Prentice Hall, 1970.
Kaufman, George, G., Money, the Financial System and the Economy, 2nd ed., Chicago,
Rand McNally & Co., 1977.
Kroos, Herman E., and Blyn, Martin R., A History of Financial Intermediaries, New
York, Random House, 1971.

Online link www.investopedia.com

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