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Reg. No. : ..................................... Name : ..........................................
B.A. Supple. Degree Examination, August/September 2009 Part III – Group III – ECONOMICS Paper VI – Optional (iii) – Financial System and Portfolio Analysis (New Scheme – 2005 admn. onwards) Time : 3 Hours
Max. Marks : 100
Instruction : Answers may be written either in English or Malayalam. I. Choose the correct answer : 1) NSE was established in a) 1992 b) 1993 c) 1994 d) 1995
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2) All traders on NSE are guaranteed by a) BSE b) NSCC c) Nifty d) KSE 3) Which of the following is not a component of return on equity ? a) Net profit margin b) Asset turnover c) Leverage d) All the above 4) Beta in risk measurement is a) Market risk discount b) Market risk premium c) Market risk dividend d) Range of return 5) Technical analysis seeks to predict a) Short-term price movements b) Long-term values c) Growth of the economy d) Long-term investment
(5×1=5 Marks)
P.T.O.
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II. State true or false : 6) A speculator borrows to supplement others resources. 7) Debt market is the financial market for fixed claims. 8) Depository Act came into being in 1987. 9) Financial markets facilitate price discovery. 10) The risk of an individual security is computed by the variance of its return. (5×1=5 Marks) III. Fill in the blanks : 11) The current yield depends on _________________ and price. (Annual interest/capital gain) 12) Leverage ratio is ________________ (Cash to debt ratio/Debt-equity ratio)
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13) BSE was established in _____________ (1875/1935)
14) Any long-term rate that is equal to the geometric mean of current and future one year rates expected is ______________ (Bank rate/Credit rating) 15) One of the functions of debt ratings is to provide ––––––––––– (Superior information/high-cost information) (5×1=5 Marks) IV. Define any four of the following : 16) Development finance institutions 17) Dematting 18) Extent of speculation 19) IRR 20) Depreciation and tax.
(4×1=4 Marks)
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V. Answer any seven of the following in not more than half a page: 21) What is Eliot wave theory ? 22) Briefly explain about the serial correlation and filter rules tests. 23) What is the basic role of primary market ? 24) Make appropriate classification of financial markets. 25) Give a brief explanation of classification of equity shares. 26) What is private placement ? 27) What are the various mutual fund schemes ? 28) What is the relevance of SENSEX ? 29) What is stock scam ? 30) What is single index model ?
(7Ă—3=21 Marks)
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VI. Answer any six of the following not more than one page : 31) Explain the various sources of risk.
32) What is the role of merchant banking in capital market ? 33) Distinguish between inside trading and screen based trading. 34) Do you think that the roles of RBI and SEBI are duplicate in nature. 35) What is Nifty ? State its significance. 36) Discuss the relative importance and limitation of shares, debentures and bonds. 37) Explain the main objectives of depository system. 38) What are the main objectives of investment ? 39) What is the term structure of interest rates ? How does it affect the investment environment in the capital market ? 40) What is an efficient market ? What are its misconceptions ?
(6Ă—5=30 Marks)
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VII. Answer any three of the following not exceeding three pages each : 41) Do you think that diversification can minimise risk ? Substantiate your arguments. 42) What is capital budgeting ? Are NPV and IRR same ? Justify your arguments. 43) Critically survey the role of market indicators in Indian financial system. 44) Is secondary market secondary in practice ? Elucidate. 45) What is arbitrage ? How much is it effective in India ? 46) Who are the regulators in Indian securities market ? Discuss about the other participants in the market. (3×10=30 Marks)
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