Portfolio Management 2

8/17/2019 Portfolio Management 2

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A project report

on

A study on Portfolio Management

atAngel Stock Broking Pvt Ltd .

Submitted in partial fulfillment of the

Requirements for the award of the Degree

of

MASTER OF !S"#ESS ADM"#"STRAT"O#

Submitted $

Naresh

13BK1!!

!nder the %uidance of

"PA#$MN$ %& B'S(NSS A"M(N(S$#A$(%N

S$ P$#S N)(N#(N) *%LL)

&Affiliated to 'awaharlal #ehru Technological !ni(ersit$ )$derabad*

)$derabad

+,-. / +,-0


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1)A2TER "

"#TROD!1T"O#


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INTRODUCTION

2ORTFO3"O MA#A%EME#T"#TROD!1T"O#

Stoc4 e5change operations are peculiar in nature and most of the "n(estors

feel insecure in managing their in(estment on the stoc4 mar4et because it is difficult for an

indi(idual to identif$ companies which ha(e growth prospects for in(estment6

Fu rthe r du e to (o la ti le na tu re of the mar4ets7 it requires constant reshuffling of portfolios

to capitali8e on the growth opportunities6 E (en afte r ident if$i ng the gro wth ori en ted

companies and the ir securi t ies7 the t rading prac ti ces are a lso complica ted 7

ma4ing it a difficult tas4 for in(estors to trade in all the e5change and follow up

on post trading formalities6 "n(estors choose to hold groups of securities rather than single

securit$ that offer the greater e 5 p e c t e d r e t u r n s 6 T h e $ b e l i e ( e t h a t a

c o m b i n a t i o n o f s e c u r i t i e s h e l d t o g e t h e r w i l l g i ( e a b e n e f i c i a l r e s u l t

i f t h e $ a r e g r o u pe d i n a m a n n e r t o s e c u r e h i g h e r r e t ur n a f t e r t a 4 in g

i n t o considerat ion the r is4 element6 That is wh$ professional in(estment ad(ice

t hr ough por tf ol io management s er (i ce can hel p t he i n(es to rs t o ma4e an

in te ll igen t and informed choice be tween alternati(e in(estments opportunities without

the worr$ of post trading hassles6

MAN(N) %& P%#$&%L(% MANA)MN$

2ort fo lio management in common par lance refer s to the selec tion of

securit ies and thei r continuous shifting in the portfolio to optimi8e returns to suit the

objecti(es of an in(estor6 This how e(er requi res finan cial e5pe rtis e in select ing the

right mi5 of securi t ies in changing mar4et condit ions to get the best out of thestoc4 mar4et6 "n "ndia7 as well as in a number of western countries7 portfolio

management ser(ice has assumed the role of a speciali8ed ser(ice now a da$s and a number of

professional merchant ban4ers compete aggressi(el$ to pro(ide the best to high net worth clients7

who ha(e little time to manage their in(estments6 The idea is catching on with the boom in the

capital mar4et and an increasing number of people are inclined to ma4e profi ts

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out of their hard9earned sa(ings6 2 o r t f ol io ma n ag e me n t s er ( ic e i s o n e o f th e

me r c ha n t b a n 4i n g a c t i (i t i e s re co g n i 8e d b $ Securities and E5change oard of

"ndia &SE"*6 The ser(ice can be rendered either b$ merchant ban4ers or portfolio managers or

discretionar$ portfolio manager as define in clause &e* and &f*of Rule + of Securities and

E5change oard of "ndia&2ortfolio Managers*Rules7 -::. and their functioning are

guided b$ the SE"6 Acco rding to the defin itions as conta ined in the abo( e claus es7

a portfolio manager means a n $ p e r s o n w h o i s p u r s u a n t t o c o n t r a c t o r

a r ra ng e me nt wi th a c l i e n t 7 ad (i se s or d i re c t s or underta4es on behalf of the

client &whether as a discretionar$ portfolio manager or otherwise* them Mana ge ment or

administrat ion of a portfolio of securi t ies or the funds of the cl ient7 as the case

ma$ be6 A merchant ban4er acting as a 2ortfolio Manager shall also be bound b$

the rules and regulations as applicable to the portfolio manager6 Reali8ing the importance of

portfolio management ser(ices7 the SE" has laid down certain guidelines for the proper

and professional conduct of portfolio management ser(ices6 As per guidelines onl$

recogni8ed merchant ban4ers registered with SE" are authori8ed to offer these ser(ices6

2ortfolio management or in(estment helps in(estors in effecti(e and efficient management of

their in(estment to achie(e this goal6 The rapid growth of capital mar4ets in "ndia has opened up

new in(estment a(enues for in(estors6


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3"TERAT!RE

RE;"E


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#+(, %& L($#A$'#

P%#$&%L(%-

A portfolio is a collection of securities since it is reall$ desirable to in(est the

entire funds of an indi(idual or an institution or a single securit$7 it is essential that e(er$ securit$

be (iewed in a portfolio conte5t6 Thus it seems logical that the e5pected return of the portfolio6

2ortfolio anal$sis considers the determine of future ris4 and return in holding (arious blends of

indi(idual securities

2ortfolio e5pected return is a weighted a(erage of the e5pected return of the indi(idual

securities but portfolio (ariance7 in short contrast7 can be something reduced portfolio ris4 is

because ris4 depends greatl$ on the co9(ariance among returns of indi(idual securities6

2ortfolios7 which are combination of securities7 ma$ or ma$ not ta4e on the aggregate

characteristics of their indi(idual parts6 Since portfolios e5pected return is a weighted a(erage of

the e5pected return of its securities7 the contribution of each securit$ the portfolio=s e5pected

returns depends on its e5pected returns and its proportionate share of the initial portfolio=s

mar4et (alue6 "t follows that an in(estor who simpl$ wants the greatest possible e5pected return

should hold one securit$> the one which is considered to ha(e a greatest e5pected return6 ;er$

few in(estors do this7 and (er$ few in(estment ad(isors would counsel such and e5treme polic$

instead7 in(estors should di(ersif$7 meaning that their portfolio should include more than one

securit$6

%B*$(+S %& P%#$&%L(%MANA)MN$-

The main objecti(e of in(estment portfolio management is to ma5imi8e the

returns from the in(estment and to minimi8e the ris4 in(ol(ed in in(estment6 Moreo(er7 ris4 in

price or inflation erodes the (alue of mone$ and hence in(estment must pro(ide a protectionagainst inflation6

Secondary o/0ectives-


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The following are the other ancillary objectives:

Regular return6

Stable income6

Appreciation of capital6

More liquidit$6

Safet$ of in(estment6

Ta5 benefits6

2ortfolio management ser(ices helps in(estors to ma4e a wise choice between

alternati(e in(estments with pit an$ post trading hassle=s this ser(ice renders optimum returns to

the in(estors b$ proper selection of continuous change of one plan to another plane with in the

same scheme7 an$ portfolio management must specif$ the objecti(es li4e ma5imum return=s7 and

ris4 capital appreciation7 safet$ etc in their offer6

Return From the angle of securities can be fixed income securities such as:

&a* Debentures /partl$ con(ertibles and non9con(ertibles debentures debt with tradable


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2ortfolio managers has to decide up on the mi5 of securities on the basis

of contract with the client and objecti(es of portfolio

N" &%# P%#$&%L(% MANA)MN$-

2ortfolio management is a process encompassing man$ acti(ities of in(estment in assets and

securities6 "t is a d$namic and fle5ible concept and in(ol(es regular and s$stematic anal$sis7

judgment and action6 The objecti(e of this ser(ice is to help the un4nown and in(estors with the

e5pertise of professionals in in(estment portfolio management6 "t in(ol(es construction of a

portfolio based upon the in(estor=s objecti(es7 constraints7 preferences for ris4 and returns and

ta5 liabilit$6 The portfolio is re(iewed and adjusted from time to time in tune with the mar4et

conditions6 The e(aluation of portfolio is to be done in terms of targets set for ris4 and returns6

The changes in the portfolio are to be effected to meet the changing condition6

2ortfolio construction refers to the allocation of surplus funds in hand among a (ariet$ of

financial assets open for in(estment6 2ortfolio theor$ concerns itself with the principles

go(erning such allocation6 The modern (iew of in(estment is oriented more go towards the

assembl$ of proper combination of indi(idual securities to form in(estment portfolio6

A combination of securities held together will gi(e a beneficial result if the$ grouped in

a manner to secure higher returns after ta4ing into consideration the ris4 elements6

The modern theor$ is the (iew that b$ di(ersification ris4 can be reduced6 Di(ersification

can be made b$ the in(estor either b$ ha(ing a large number of shares of companies in different

regions7 in different industries or those producing different t$pes of product lines6 Modern theor$

belie(es in the perspecti(e of combination of securities under constraints of ris4 and returns

P%#$&%L(% MANA)MN$ P#%*SS-

"n(estment management is a comple5 acti(it$ which ma$ be bro4en down into the following

steps?

-* Secification of investment o/0ectives and constraints?


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The t$pical objecti(es sought b$ in(estors are current income7 capital appreciation7

and safet$ of principle6 The relati(e importance of these objecti(es should be specified further

the constraints arising from liquidit$7 time hori8on7 ta5 and special circumstances must be

identified6

2 choice of the asset mi4 -

The most important decision in portfolio management is the asset mi5 decision (er$ broadl$>

this is concerned with the proportions of @stoc4s= &equit$ shares and unitsshares of equit$9

oriented mutual funds* and @bonds= in the portfolio6

The appropriate @stoc49bond= mi5 depends mainl$ on the ris4 tolerance and in(estment

hori8on of the in(estor6

LMN$S %& P%#$&%L(% MANA)MN$-

Portfolio management is on-going process involving the following basic tasks?

"dentification of the in(estor=s objecti(es7 constraints and preferences6

Strategies are to be de(eloped and implemented in tune with in(estment polic$

formulated6 Re(iew and monitoring of the performance of the portfolio6

Finall$ the e(aluation of the portfolio

#isk-

Ris4 is uncertaint$ of the income capital appreciation or loss or both6 All in(estments are

ris4$6 The higher the ris4 ta4en7 the higher is the return6 ut proper management of ris4 in(ol(es

the right choice of in(estments whose ris4s are compensating6 The total ris4s of two companies

ma$ be different and e(en lower than the ris4 of a group of two companies if their companies are

offset b$ each other6


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S%'#*S %& (N+S$MN$ #(SK-

Business risk-

As a holder of corporate securities &equit$ shares or debentures*7 $ou are e5posed to

the ris4 of poor business performance6 This ma$ be caused b$ a (ariet$ of factors li4e heightened

competition7 emergence of new technologies7 de(elopment of substitute products7 shifts in

consumer preferences7 inadequate suppl$ of essential inputs7 changes in go(ernmental policies7

and so on6

(nterest rate risk-

? The changes in interest rate ha(e a bearing on the welfare on in(estors6 As the interestrate goes up7 the mar4et price of e5isting firmed income securities falls7 and (ice (ersa6 This

happens because the bu$er of a fi5ed income securit$ would not bu$ it at its par (alue of face

(alue o its fi5ed interest rate is lower than the pre(ailing interest rate on a similar securit$6 For

e5ample7 a debenture that has a face (alue of RS6 -,, and a fi5ed rate of -+B will sell a discount

if the interest rate mo(es up from7 sa$ -+B to -CB6while the chances in interest rate ha(e a

direct bearing on the prices of fi5ed income securities7 the$ affect equit$ prices too7 albeit some

what indirectl$6

The two major types of risks are-

S$stematic or mar4et related ris46

!ns$stematic or compan$ related ris4s6

ystematic risks affected from the entire mar4et are &the problems7 raw material a(ailabilit$7

ta5 polic$ or go(ernment polic$7 inflation ris47 interest ris4 and financial ris4*6 "t is managed b$

the use of eta of different compan$ shares6


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The unsystematic risks are mismanagement7 increasing in(entor$7 wrong financial polic$7

defecti(e mar4eting etc6 this is di(ersifiable or a(oidable because it is possible to eliminate or

di(ersif$ awa$ this component of ris4 to a considerable e5tent b$ in(esting in a large portfolio of

securities6 The uns$stematic ris4 stems from inefficienc$ magnitude of those factors different

form one compan$ to another6

#$'#NS %N P%#$&%L(%?

Each securit$ in a portfolio contributes return in the proportion of its in(estments in

securit$6 Thus the portfolio e5pected return is the weighted a(erage of the e5pected return7 from

each of the securities7 with weights representing the proportions share of the securit$ in the total

in(estment6


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of the returns from 8ero to infinit$6 Ris4 of the indi(idual assets or a portfolio is measured b$ the

(ariance of its return6 The e5pected return depends on the probabilit$ of the returns and their

weighted contribution to the ris4 of the portfolio6 These are two measures of ris4 in this conte5t

one is the absolute de(iation and other standard de(iation6 Most in(estors in(est in a portfolio of

assets7 because as to spread ris4 b$ not putting all eggs in one bas4et6 )ence7 what reall$ matters

to them is not the ris4 and return of stoc4s in isolation7 but the ris4 and return of the portfolio as a

whole6 Ris4 is mainl$ reduced b$ Di(ersification6

#(SK #$'#N ANAL5S(S-

All in(estment has some ris46 "n(estment in shares of companies has its own ris4 or uncertaint$>

these ris4s arise out of (ariabilit$ of $ields and uncertaint$ of appreciation or depreciation of

share prices7 losses of liquidit$ etc

The ris4 o(er time can be represented b$ the (ariance of the returns6


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#ormall$7 the higher the ris4 that the in(estor ta4es7 the higher is the return6 There

is7 how e(er7 a ris4 less return on capital of about -+B which is the ban47 rate charged b$ the

R66" or long term7 $ielded on go(ernment securities at around -.B to -CB6 This ris4 less return

refers to lac4 of (ariabilit$ of return and no uncertaint$ in the repa$ment or capital6 ut other

ris4s such as loss of liquidit$ due to parting with mone$ etc67 ma$ howe(er remain7 but are

rewarded b$ the total return on the capital6 Ris49return is subject to (ariation and the objecti(es

of the portfolio manager are to reduce that (ariabilit$ and thus reduce the ris4$ b$ choosing an

appropriate portfolio6 Traditional approach ad(ocates that one securit$ holds the better7 it

is according to the modern approach di(ersification should not be quantit$ that should be related

to the qualit$ of scripts which leads to qualit$ of portfolio6E5perience has shown that be$ond the

certain securities b$ adding more securities e5pensi(e6

Simle diversification reduces?

An asset=s total ris4 can be di(ided into s$stematic plus uns$stematic ris47 as shown below?


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Systematic risk 6undiversifia/le risk 7 unsystematic risk 6diversified risk 8$otal risk 8+ar

6r.

!ns$stematic ris4 is that portion of the ris4 that is unique to the firm &for e5ample7 ris4 due to

stri4es and management errors6* !ns$stematic ris4 can be reduced to 8ero b$ simple

di(ersification6

Simple di(ersification is the random selection of securities that are to be added to a

portfolio6 As the number of randoml$ selected securities added to a portfolio is increased7 the

le(el of uns$stematic ris4 approaches 8ero6 )owe(er mar4et related s$stematic ris4 cannot be

reduced b$ simple di(ersification6 This ris4 is common to all securities6

Persons involved in ortfolio management?

(nvestor-

Are the people who are interested in in(esting their funds

$echni9ue:s of ortfolio management-

As of now the under noted technique of portfolio management? are in (ogue in our countr$

-6 e9uity ortfolio- is influenced b$ internal and e5ternal factors the internal factors effect

the inner wor4ing of the compan$=s growth plan=s are anal$8ed with referenced to

alance sheet7 profit loss ac &account* of the compan$6

Among the e5ternal factor are changes in the go(ernment policies7 Trade c$cle=s7 2olitical

stabilit$ etc6


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+6 e9uity stock analysis? under this method the probable future (alue of a share of a

compan$ is determined it can be done b$ ratio=s of earning per share of the compan$ and

price earning ratio

PS 88 P#%&($ A&$# $A;

N%- %&


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*oncet of (nvestment- "n(estment will generall$ be used in its financial sense and as such

in(estment is the allocation of monetar$ resources to assets that are e5pected to $ield some gain or

positi(e return o(er a gi(en period of time6 "n(estment is a commitment of a person=s funds to deri(e

future income in the form of interest7 di(idends7 rent7 premiums7 pension benefits or the appreciation

of the (alue of his principal capital6

Man$ t$pes of in(estment media or channels for ma4ing in(estments are a(ailable6

Securities ranging from ris4 free instruments to highl$ speculati(e shares and debentures are

a(ailable for alternati(e in(estments6

All in(estments are ris4$7 as the in(estor parts with his mone$6 An efficient in(estor with

proper training can reduce the ris4 and ma5imi8e returns6 )e can a(oid pitfalls and protect his

interest6

There are different methods of classif$ing the in(estment a(enues6 A major classification

is ph$sical "n(estments and Financial "n(estments6 The$ are ph$sical7 if sa(ings are used to acquire

ph$sical assets7 useful for consumption or production6 Some ph$sical assets li4e ploughs7

tractors or har(esters are useful in agricultural production6 A few useful ph$sical assets li4e cars7

jeeps etc67 are useful in business6

Man$ items of ph$sical assets are not useful for further production or goods or create income

as in the case of consumer durables7 gold7 sil(er etc6 among different t$pes of in(estment7 some are

mar4etable and transferable and others are not6 E5amples of mar4etable assets are shares and

debentures of public limited companies7 particularl$ the listed companies on Stoc4 E5change7 onds

of 26S6!67 %o(ernment securities etc6 non9mar4etable securities or in(estments in ban4 deposits7


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pro(ident fund and pension funds7 insurance certificates7 post office deposits7 national sa(ings

certificate7 compan$ deposits7 pri(ate limited companies shares etc6

The investment process may be described in the following stages:

(nvestment olicy-

The first stage determines and in(ol(es personal financial affairs and objecti(es before

ma4ing in(estment6 "t ma$ also be called the preparation of in(estment polic$ stage6 The in(estor

has to see that he should be able to create an emergenc$ fund7 an element of liquidit$ and quic4

con(ertibilit$ of securities into cash6 This stage ma$7 therefore be called the proper time of

identif$ing in(estment assets and considering the (arious features of in(estments6

investment analysis-

After arranging a logical order of t$pes of in(estment preferred7 the ne5t step is to anal$8e

the securities a(ailable for in(estment6 The in(estor must ta4e a comparati(e anal$sis of t$pe of

industr$7 4ind of securities etc6 the primar$ concerns at this stage would be to form beliefs regarding

future beha(ior of prices and stoc4s7 the e5pected return and associated ris4s

6(nvestment valuation-

"n(estment (alue7 in general is ta4en to be the present worth to the owners of future benefits

from in(estments6 The in(estor has to bear in mind the (alue of these in(estments6 An appropriate

set of weights ha(e to be applied with the use of forecasted benefits to estimate the (alue of the

in(estment assets such as stoc4s7 debentures7 and bonds and other assets6 1omparison of the (alue

with the current mar4et price of the assets allows a determination of the relati(e attracti(eness of the


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asset allows a determination of the relati(e attracti(eness of the asset6 Each asset must be (alue on its

indi(idual merit6

Portfolio construction and feed>/ack-

2ortfolio construction requires 4nowledge of different aspects of securities in

relation to safet$ and growth of principal7 liquidit$ of assets etc6 "n this stage7 we stud$7

determination of di(ersification le(el7 consideration of in(estment timing selection of in(estment

assets7 allocation of in(est able wealth to different in(estments7 e(aluation of portfolio for feed9

bac46

(N+S$MN$ "*(S(%NS> )'("L(NS &%#


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#e9uirement of ortfolio-

-6 Maintain adequate di(ersification when relati(e (alues of (arious securities in the portfolio

change6

+6 "ncorporate new information rele(ant for return in(estment6

.6 E5pand or contrast the si8e of portfolio to absorb funds or with draw funds6

C6Reflect changes in in(estor ris4 disposition6

6


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The former theor$ implies that a consumer is capable of assigning to e(er$ commodit$ or

combination of commodities a number representing the amount of degree of utilit$ associated

with it6 +A#(N* *#($#(%N

Dr6 )arr$ M6Mar4owit8 is credited with de(eloping the first modern portfolio

anal$sis in order to arrange for the optimum allocation of assets with in portfolio6 To reach this

objecti(e7 Mar4owit8 generated portfolios within a reward ris4 conte5t6 "n essence7 Mar4owit8=s

model is a theoretical framewor4 for the anal$sis of ris4 return choices6 Decisions are based on

the concept of efficient portfolios6


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A portfolio is efficient when it is e5pected to $ield the highest return for the le(el of ris4

accepted or7 alternati(el$7 the smallest portfolio ris4 for a specified le(el of e5pected return6 To

build an efficient portfolio an e5pected return le(el is chosen7 and assets are substituted until the

portfolio combination with the smallest (ariance at the return le(el is found6 At this process is

repeated for e5pected returns7 set of efficient portfolio is generated6

ASS'MP$(%NS-

-6 "n(estors consider each in(estment alternati(e as being represented b$ a probabilit$

distribution of e5pected returns o(er some holding period6

+6 "n(estors ma5imi8e one period9e5pected utilit$ and posse=s utilit$ cur(e7 which

demonstrates diminishing marginal utilit$ of wealth6

.6 "ndi(iduals estimate ris4 on the ris4 on the basis of the (ariabilit$ of e5pected returns6

C6 "n(estors base decisions solel$ on e5pected return and (ariance or returns onl$6

06 For a gi(en ris4 le(el7 in(estors prefer high returns to lower return similarl$ for a gi(en

le(el of e5pected return7 "n(estors prefer ris4 to more ris46

!nder these assumptions7 a single asset or portfolio of assets is considered to

be efficientG if no other asset or portfolio of assets offers higher e5pected return with the same

ris4 or lower ris4 with the same e5pected return6

$= SP*(&(* M%"L

(n de(eloping his model7 Mor4owit8 first disposed of the in(estment beha(ior rule

that the in(estor should ma5imi8e e5pected return6 This rule implies that the non9di(ersified

single securit$ portfolio with the highest return is the most desirable portfolio6 Onl$ b$ bu$ing


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that single securit$ can e5pected return be ma5imi8ed6 The single9securit$ portfolio would

ob(iousl$ be preferable if the in(estor were perfectl$ certain that this highest e5pected return

would turn out be the actual return6 )owe(er7 under real world conditions of uncertaint$7 most

ris4 ad(erse in(estors join with Mar4owit8 in discarding the role of calling for ma5imi8ing

e5pected returns6 As an alternati(e7 Mar4owit8 offers the e5pected returns(ariance of returnsG

rule6

Mar4owit8 has shown the effect of di(ersification b$ reading the ris4 of securities6

According to him7 the securit$ with co(ariance which is either negati(e or low amongst them is

the best manner to reduce ris46 Mar4owit8 has been able to show that securities which ha(e less

than positi(e correlation will reduce ris4 without7 in an$ wa$ bringing the return down6

According to his research stud$ a low correlation le(el between securities in the portfolio will

show less ris46 According to him7 in(esting in a large number of securities is not the right method

of in(estment6 "t is the right 4ind of securit$ which brings the ma5imum result6

*%NS$#'*$(%N %& $= S$'"5

Purose of the study-

The purpose of the stud$ is to find out at what percentage of in(estment should be

in(ested between two companies7 on the basis of ris4 and return of each securit$ in comparison6

These percentages helps in allocating the funds a(ailable for in(estment based on ris4$

portfolios6

(mlementation of study?


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For implementing the stud$7H securit$=s or scripts constituting the Sense5 mar4et are

selected of one month closing share mo(ement price data from Economic Times and financial

e5press from 'an .rd to .-st 'an +,,:6

"n order to 4now how the ris4 of the stoc4 or script7 we use the formula7 which is gi(en

below?

999999999999

Standard de(iation I @ variance

n J

;ariance I &-n9-* K&R9R* L+

t I-

variance 6*%+AB 8 1nC A>#A 6#B>#B

t I1

6*%+ AB

*orrelation>*oefficient 6P AB 8 >>>>>>>>>>>>>>>>>>>>>


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6Std. A 6Std. B


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8 @ ;1D2F1D27;2D2F2D2726;16;26;12F1F

,here

N-Iproportion of in(estment in securit$ -6

N+Iproportion of in(estment in securit$ +6

-I standard de(iation of securit$ -6

+I standard de(iation of securit$ +6

N-+Icorrelation co9efficient between securit$ -+6


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#SA#*= )AP

2ortfolio management or in(estment helps in(estors in effecti(e and efficient management of

their in(estment to achie(e this goal6 The rapid growth of capital mar4ets in "ndia has opened up

new in(estment a(enues for in(estors6

The stoc4 mar4ets ha(e become attracti(e in(estment options for the common man6ut the need

is to be able to effecti(el$ and efficientl$ manage in(estments in order to 4eep ma5imum returns

with minimum ris46

)ence this stud$ on P%#$&%L(% MANA)MN$G to e5amine the role process and merits

of effecti(e in(estment management and decision6


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%B*$(+S-

To stud$ the in(estment decision process6

To anal$sis the ris4 return characteristics of sample scripts6

Ascertain portfolio weights6

To construct an effecti(e portfolio which offers the ma5imum return for minimum ris4


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=5P%$=S(S

=5P%$=S(S > 1

), ? 9 There is no impact of di(idends on the in(estments of the in(estors

)-?9 There is an impact of Di(idends on the in(estment of the in(estors

=5P%$=S(S > 2

), ? 9 There is no affect of the construction of the portfolio while in(esting in an$ securities

)-?9 There is affect of the construction of the portfolio while in(esting in an$ securities

=5P%$=S(S > 3

), ? 9 There is no impact of ris4 and return anal$sis of the securities in the portfolio

)-?9 There is an impact of ris4 and return anal$sis of the securities in the portfolio

=5P%$=S(S > G

), ? 9 Ascertaining the portfolio weight ma$ not ha(e good results in the portfolio selected

)- ? 9 Ascertaining the portfolio weight ma$ ha(e good results in the portfolio selected

=5P%$=S(S > H

), ? 9 The co(ariance of the selected scrip=s ma$ mot influence the selected portfolio

)- ? 9 The co(ariance of the selected scrip=s ma$ influence the selected portfolio


29/30

S*%P %& $= S$'"5

Onl$ nine samples ha(e been selected for constructing a portfolio6

Share prices of scripts of 0 $ears period was ta4en6

;er$ few scrips companies are selected and anal$sed from the common list of

SE sense5 #SE nift$ contributing companies6

Data collection regarding selected scripts was strictl$ confined to secondar$

source6 #o primar$ data is associated with the project6

Detailed stud$ of the topic was not possible due to limited si8e of the project6 9

P#(%" %& $= S$'"5

The duration of the project is C0 da$s onl$


30/30

M$=%"%L%)5-

Primary source

The anal$sis is totall$ on the historical data so there is no primar$ data for this stud$

Secondary source

Dail$ prices of scripts from news papers7 websites and some information from te5tboo4s

S*%P

Duration 2eriod C0da$s

Sample si8e ? 0 $ears

To ascertain ris47 return and weights6

Documents

Portfolio Management 2