Capital Market and Portfolio Management
1. Assume that you are planning to invest in the capital market. What steps will you follow to start trading in the capital market.
2. You are given the following information on two stocks BI and B2. The stock B1 performed well in slowdown as compared to B2. Both the shares are selling at Rs.90 per share. The estimated rupee return of the stock is given as follows:
| Economy’s Behaviour | ||||
| High Growth | Low Growth | Stagnation | Recession | |
| Probability | 0.45 | 0.25 | 0.2 | 0.1 |
| Return on B1 | 90 | 98 | 106 | 122 |
| Return on B2 | 120 | 104 | 72 | 48 |
Calculate the expected return and risk in the following cases:
1. When you invested 5000 in B1
2. When you invested 5000 in B2
Write down your preferences.
3. There is an ongoing debate regarding the fundamental analysis and technical analysis. One school of thought supports fundamental analysis, while the other school supports that stock market cannot work effectively without technical analysis” these statements have raised a confusion among the investors.
a. As a security analyst how do you effectively explain the difference between fundamental and technical analysis to the investors.
b. Do you prefer one analysis over the other? Give reasons for your choice.
NMIMS Solutions December 2022
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