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Unit-I
Investments
Concept; Real vs. Financial assets; Investment decision processes; Sources of investment Information; Investment vs. Speculation; Factors to be considered in investment decision – Liquidity, Return, Risk, Maturity, Safety, Tax and inflation. The concept and measurement of return – Realized and expected return. Ex-ante and ex-post returns. The concept of risk. Sources and types of risk. Measurement of risk – Range, Standard Deviation and co-efficient of variation. Risk-return trade-Off. Risk Premium and risk aversion. Approaches to investment analysis – Fundamental analysis; Technical analysis; Efficient market hypothesis, Behavioural finance and heuristic driven biases.
Unit-II
Fixed Income Securities – Analysis, Valuation and Management
Features and types of debt instruments, Bond indenture, Factors affecting bond yield. Bond yield measurement – Current yield, Holding period return, YTM, AYTM and YTC. Bond valuation: Capitalization of income method, Bond – Price theorems, Valuation of compulsorily/optionally convertible bonds, Valuation of deep discount bonds. Bond duration, Macaulay’s duration and modified Macaulay’s duration. Bond convexity, Considerations in managing a bond portfolio, Term structure of interest rates, Risk structure of interest rates. Managing Bond portfolio: Bond immunization, Active and passive bond portfolio management strategies.
Unit-III
Common Stocks – Analysis and Valuation
Basic features of common stock, Approaches to valuation – Balance sheet model, Dividend capitalization models; Earnings capitalization models; Price-earnings multiplier approach and capital asset pricing model, Free cash flow model, relative valuation using comparables – P/E,P/BV,P/S; Security market indexes, Their uses; Computational procedure of sensex and Nifty.
Unit-IV
Portfolio Theory
Concept of portfolio. Portfolio return and risk. Harry Markowitz’s portfolio theory, Construction of minimum risk portfolio, The single - Index model. Capital market theory: Introduction of risk - free asset, Capital market line, Separation theorem. Capital asset pricing model (CAPM): Security market line. Identifying over - priced and under - priced securities. Arbitrage pricing theory (APT): The law of one price, Two factor arbitrage pricing, Equilibrium risk - return relations. A synthesis of CAPM and APT.
Unit-V
Portfolio Evaluation
Performance measures – Sharpe’s reward to variability index, Treynor’s reward to volatility index, Jensen’s differential index, Fama’s decomposition of returns. Mutual funds: Genesis, Features, Types and schemes. NAVs, Costs, Loads and return of mutual funds, Problems and prospects in India, Regulation of mutual funds and investor’s protection in India.
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CategoriesManagement
Format PDF
TypeeBook