GET MBA Solved Assignment Solutions Case Studies & Projects Contact: Prakash Call us: +919741410271 Email: smu.assignment@gmail.com Visit: - https://www.mbaassignmentsolutions.com/ Portfolio Management - I
1. A portfolio is constructed with 40% in stock A, whose standard deviation is 20% and 60% in bonds, whose standard deviation is 12%. The correlation between the returns of the stock and the bond is 0.45. What will be the standard deviation of portfolio returns? How would the standard deviation change, if the correlation coefficient would be -1 or 0 or 1? 2. As a portfolio manager, you will be dealing with multiple kinds of clients, each of whom come with unique preferences. In this context, explain the different types of investors and their characteristics. Wherever possible, provide a real life example. 3. An analyst collated the below data: Stock SAI CICIC FDHC ICFD MKB
Current Market Price 100 10 60 1110 457
Expected Price after a year 115 12 72 1190 501
Expected Dividend during the year 10 0.50 0 50 10
Beta 1.0 0.75 1.25 1.10 1.65
The risk free rate can be taken as 5.5% and the market risk premium according literature can be taken as 10%. a. Draw the Security Market Line & suggest an appropriate trading advise for each of the three stocks. b. What are the assumptions made while applying CAPM.