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Final Spring IBA 2010

This document contains questions for a final exam on portfolio management and investment analysis. It includes the following types of questions: 1. Short answer questions asking students to distinguish between value and growth managers' styles of active equity management and discuss examples of firms known for being low-cost producers or differentiating themselves. 2. Questions asking students to discuss the competitive or complementary nature of two valuation approaches and why the price-earnings ratio has become a popular measure of relative value. 3. A question asking students to discuss whether a company would be considered a growth company based on information provided. 4. Questions asking students to break down the price of a stock between its existing assets and present value of growth opportunities

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Rakib Hossain
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43 views6 pages

Final Spring IBA 2010

This document contains questions for a final exam on portfolio management and investment analysis. It includes the following types of questions: 1. Short answer questions asking students to distinguish between value and growth managers' styles of active equity management and discuss examples of firms known for being low-cost producers or differentiating themselves. 2. Questions asking students to discuss the competitive or complementary nature of two valuation approaches and why the price-earnings ratio has become a popular measure of relative value. 3. A question asking students to discuss whether a company would be considered a growth company based on information provided. 4. Questions asking students to break down the price of a stock between its existing assets and present value of growth opportunities

Uploaded by

Rakib Hossain
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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IBA, University of Dhaka

EMBA
F- 608; Portfolio Manageent an! Investent Analysis
Final E"aination # $%ring &0'0
GROUP B
Id#.......................................
Marks : 30 Time: 110 Minutes
(Group A & B)
3 x 4 = 12
1. a) Distinguis !et"een #a$ue% an& gro"t managers' st($e o) a*ti#e e+uit( management,
!) Dis*uss a *ompan( kno"n as a $o"%*ost pro&u*er in its in&ustr( an& *onsi&er "at
makes it possi!$e )or te )irm to !e a *ost $ea&er, Do te same )or a )irm kno"n )or
&i))erentiating,
2, a) Dis*uss "( te t"o #a$uation approa*es (present #a$ue o) *as )$o"s an& re$ati#e
#a$uation ratios) are *ompetiti#e or *omp$ementar(,
!) -( as te pri*e.*as )$o" (/.0) ratio !e*ome a popu$ar measure o) re$ati#e #a$ue
&uring te re*ent past1
1
Ans"er te )o$$o"ing +uestions (an( )our)
3, a) 2ou are to$& tat a *ompan( retains 34 per*ent o) its earnings5 an& its earnings are
gro"ing at a rate o) a!out 6 per*ent a (ear #ersus an a#erage gro"t rate o) 7 per*ent
)or a$$ )irms, Dis*uss "eter (ou "ou$& *onsi&er tis a gro"t *ompan(,
!) Distinguis !et"een gro"t sto*k an& #a$ue& sto*k,
4, 8o" te !reak&o"n o) sto*k pri*e !et"een a )irm9s assets tat are a$rea&( in p$a*e an&
its present #a$ue o) gro"t opportunities5 assuming: next (ear9s expe*te& earnings e+ua$
Tk4,005 13: re+uire& rate o) return5 13: return on e+uit(5 44: p$o"!a*k ratio,
2
4, Brie)$( &is*uss 0ama's &e*omposition o) se*urit(.port)o$io per)orman*e, /an it exp$ain te
e))e*t o) &i#ersi)i*ation1 ;xp$ain,
7, -at are te &i))erent aspe*ts tat a port)o$io manager or an in#estor nee&s to *onsi&er at
time o) ana$(<ing a parti*u$ar port)o$io's per)orman*e1
3
(ro)% # *
Marks : 18
1, De#e$op a *urrent sto*k #a$ue )or a )irm tat is expe*te& to a#e extraor&inar( gro"t o)
24: )or )our (ears5 a)ter "i* it "i$$ )a*e more *ompetition an& s$ip into a *onstant
gro"t rate o) 4:, =ts re+uire& return is 14: an& next (ear9s &i#i&en& is expe*te& to !e
Tk 4,00, (4,0)
4
Analytical Questions: Answer all questions
2, 2ou are *omparing 2 mutua$ )un&s an& a sto*k on te !asis o) teir past per)orman*e so
tat (ou *an pi*k one )or (our in#estment, A**or&ing$( (ou a#e *o$$e*te& te )o$$o"ing
in)ormation: (6,0)
Mutua$ 0un&.8to*k >!ser#e& Annua$ 0un&s .8to*k ?esi&ua$ #arian*es
?eturn Beta
2n& Mutua$ 0un& ,32 1,20 0,02
4t Mutua$ 0un& ,22 1,04 0,07
Bexim*o @arma ,40 1,36 0,0A
Te appropriate risk )ree rate ?) = 0,04B ?M = 0,24 an&
2
M = 0,24,
8uggest "i* in#estment opportunit( to pi*k i) =) Censen =n&exB ii) Tre(nor =n&ex an& iii)
8arp's =n&ex is use&, Te$$ "i* measure is more appropriate an& "(1
5
3, /onsi&er te )o$$o"ing per)orman*e &ata )or t"o port)o$io managers (A an& B) an& a
*ommon !en*mark port)o$io:
Ben* mark Manager A Manager B
"eigt ?eturn "eigt ?eturn "eigt ?eturn
8to*k
Bon&s
/as
0,7
0,3
0,1
%4,0:
%3,4
0,3
0,4
0,2
0,3
%4,0:
%2,4
0,3
0,3
0,4
0,3
%4,0
%3,4
0,3
Dsing attri!ution ana$(sis5 *a$*u$ate (i) te se$e*tion e))e*t )or manager A an& (ii) te a$$o*ation
e))e*t )or manager B, /omment on "eter tese managers a#e a&&e& #a$ue troug teir
se$e*tion ski$$s5 teir a$$o*ation ski$$s5 or !ot, (4,0)
6

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