Page 271 - DCOM504_SECURITY_ANALYSIS_AND_PORTFOLIO_MANAGEMENT

Security Analysis and Portfolio Management

Notes 10.8 Review Questions

1. Elucidate on inputs to portfolio analysis.
2. Examine various return and risk characteristics of individual assets.

3. Analyse the concept of expected return and risk of a portfolio.
4. What do you mean by portfolio selection problem? What is its significance?
5. How would you help your client determine optimal portfolio?
6. Examine portfolio selection process that entails four basic steps.

7. Do you think that the traditional portfolio analysis holds any ground today? Why/why
not?

8. Which risk is generally rewarded – is it the total risk that the asset brings or something
else?

9. What will happen to portfolio risk if we go on adding more and more stocks to a portfolio?
10. Can we eliminate risk completely? If yes, explain how. If not answer why not.
11. Does an investor need to evaluate all the portfolios of 'feasible set' to determine his or her
'best' or 'optimal' portfolio? Support your answer with reasons.
12. What is the opportunity set of investments or portfolios from which an investor must take
a choice? How do you determine it?

Answers: Self Assessment

1. 'Portfolio' 2. risk return
3. seldom 4. weighted average
5. positive 6. buy, sell

7. Covariance 8. four
9. lower 10. diversifiable
11. scrips 12. forward
13. 'trade-offs' 14. Single-Index

15. zero, negative

10.9 Further Readings

Books Samuels J. M, F.M. Wilkesard R.E. Brayshaw, Management of Company Finance,
Chapman and Hall, London
Smith, Edger Lawrence, Common Stocks as Long-term Investment, New York,
MacMillan.
Sprinkel, Beryl, W., Money and Stock Prices, Homewood III, Richard S. Irwin, Inc.
Sudhindhra Bhatt, Security Analysis and Portfolio Management, Excel Books.

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