Call us at : 09816280608
SUBJECT : INVESTMENTS
MANAGEMENT
COURSE : ADBFM Total
Marks : 80
AN ISO 9001 : 2000
CERTIFIED INTERNATIONAL B-SCHOOL
Advanced Diploma in Banking, Finance and Insurance Management (ADBFM)
Q . 1) How securities are being traded in share market? (10 Marks)
Answer : Financial markets are
complex organizations with their own economic and institutional structures that
play a critical role in determining how prices are established—or “discovered,”
as traders say. These structures also shape the orderliness and indeed the
stability of the marketplace. As holders of subprime collateralized debt
obligations and other distressed debt securities found out in the months
following the August 2007 onset of the financial turmoil that led to the global
economic crisis, some types of market arrangements can very quickly become
disorderly, dysfunctional, or otherwise unstable.
Q2) What is the difference between mutual fund and other investment
companies? (10 Marks)
Answer : Mutual funds in general provide investment
programs for investors. In general they buy multiple stocks to reduce risk
providing diversification and hopefully high returns or income to their
investors.
Investment banks in general are
Wall Street Banks which create underwriting of stocks, Mergers and
Acquisitions, bonds, money markets, mutual funds, pensions, muni's, and loans.
The investment banks provide more services especially to government, companies,
utilities to set up the business infrastructure or markets. For instance, it
might
3) What is adjustable and non-adjustable capital? (10 Marks)
Answer : Adjustable
Base Capital (MABC)
Adjustable Rate Mortgages
Worried that you missed out on
low mortgage rates? Take advantage of a
Network Capital Adjustable Rate Mortgage (ARM) with a low start rate that is
fixed for 3, 5, 7, or 10 years. After
the fixed period the rate becomes a one year adjustable for the remainder of
the term.
What happens to your rate when it
becomes adjustable? Our ARM rates are
based on a current published major index plus a margin. If the index is low your rate may actually go
down when your loan becomes adjustable.
However, if the index increases your rate may also increase.
Q4) How finance statement analysis is being done from investor’s point
of view?
What is the importance of security analysis? (20 Marks)
Answer : Financial statements
shed light on the beast. That is, they help shareholders and investors stop
groping with a shape in the dark, and gain an understanding of what the
creature as a whole looks like. Is it a cash cow? Or is it a dog?
And while everybody understands
why creditors and investors need these statements, there is considerably less
information about how
Q5) What are call options? Give in brief information about put option .
(10 Marks)
Answer : What's
a call option all about?
A call option gives you the right
to buy a defined amount of the underlying asset at a certain price before a
certain amount of time expires. (Think of it as a bet that the underlying asset
is going to rise in value.) If you don’t buy the asset by the time the option
expires, you lose only the money that you spent on the call option.
You can always sell your option
prior to expiration to avoid exercising it, to avoid further loss, or to profit
if it has risen in value. Call options usually rise in price when the
underlying asset rises in price.
When you buy a call option, you
put up the option premium for the right to exercise an option to buy the
underlying asset before the call option expires
Q6) What is the theory of active portfolio management ? How it is
monitored ? (10 Marks)
Answer : Theory of Active Portfolio Management
– Market
timing
– portfolio
construction
• Portfolio
Evaluation
– Conventional
Theory of evaluation
– Performance
measurement with changing return characteristics
Q7) What are the different types of risks with regard to debt securities
? (10 Marks)
Answer : The following are
the risks associated with debt securities:
1.Default Risk: This can be defined as the risk that an issuer of a
bond may be unable to make timely payment of interest or principal on a debt
security or to otherwise comply with the provisions of a bond indenture and is
also referred to as credit risk.
2.Interest Rate Risk: can be defined as the risk emerging from an
adverse change in the interest rate prevalent in the market so as to affect the
yield on the existing instruments. A good case would be an upswing in the
prevailing interest rate scenario leading to a situation where the investors'
money is locked at lower rates whereas if he had waited and invested in the
changed interest rate scenario,
No comments:
Post a Comment