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					      ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
          (Department of Business Administration)
                                          *****




 INVESTMENT AND SECURITIES MANAGEMENT (MBA-577)



                                   CHECK LIST



                        SEMESTER: AUTUMN 2011



        This packet comprises following material:-

        1.      Text Book
        2.      Course Outline
        3.      Assignment No.1, 2.
        4.      Assignment Forms (two sets)

        In this packet, if you find anything missing out of the above mentioned material,
please contact at the address given below:


        The Mailing Officer
        Services Block No. 28
        Allama Iqbal Open University
        H-8, Islamabad.
        Phone: 051-9057611-12




                                                                          Nadia Rashid
                                                                      Course Coordinator
      ALLAMA IQBAL OPEN UNIVERSITY ISLAMABAD
                  (Department of Business Administration)
                                    WARNING
 1.   PLAGIARISM OR HIRING OF GHOST WRITER(S) FOR SOLVING
      THE ASSIGNMENT(S) WILL DEBAR THE STUDENT FROM AWARD
      OF DEGREE/CERTIFICATE, IF FOUND AT ANY STAGE.
 2.   SUBMITTING ASSIGNMENTS BORROWED OR STOLEN FROM
      OTHER(S) AS ONE’S OWN WILL BE PENALIZED AS DEFINED IN
      “AIOU PLAGIARISM POLICY”.

Course: Investment and Securities Management (577)              Semester: Autumn 2011
Level: MBA                                                           Total Marks: 100
                                                                        Pass Marks: 40
                             ASSIGNMENT No. 1
Note: All questions are compulsory.
Q. 1 Discuss in detail the investment decision process of a multi-national firm and the
      external factors that could affect it.                                       (20)

Q. 2 What do you mean by indirect investing? Critically examine the future prospects of
     Indirect investing in Pakistan.                                              (20)

Q. 3 (a)   Describe any six components that make-up a bond’s yield.             (06)
     (b)   Armaan Corporation has just issued a Rs.1,000 par value zero coupon bond
           with an 8 percent yield to maturity, due to mature 15 years from today
           (assume semi-annual compounding).

           i-   What is the market price of a bond?
           ii-  If interest rates remain constant, what will be the price of the bond in
                three years?
           iii- If interest rates rise to 10 percent, what will be the price of the bond in
                three years?                                                           (14)

Q. 4 (a)   Explain the features of various determinants of required rate of return. (05)
     (b)   During the past 5 years, Ahmad owned two stocks that had the following
           annual rates of return:

                     Year                   Stock T                 Stock B
                      1                       0.19                    0.08
                      2                       0.08                    0.03
                      3                      -0.12                   -0.09
                      4                      -0.03                    0.02
                      5                       0.15                    0.04




                                           2
           Required:
           i- Compute the Arithmetic mean annual rate of return for each stock.
                Which stock is most desirable by this measure?
           ii- Compute the Geometric mean rate of return for each stock.
           iii- Discuss the difference between Arithmetic mean return and the Geometric
                mean return for each stock you calculated in part (i) & (ii).     (15)

Q. 5 Describe the following terms with examples:
     (i) Business Risk
     (ii) Treasury Bills
     (iii) Short Sales
     (iv) Active Management strategies of a bond                                     (20)

GUIDELINES FOR ASSIGNMENT No. 1
You should look upon the assignments as a test of knowledge, management skills, and
communication skills. When you write an assignment answer, you are indicating your
knowledge to the teacher:
    Your level of understanding of the subject;
    How clearly you think;
    How well you can reflect on your knowledge & experience;
    How well you can use your knowledge in solving problems, explaining situations,
     and describing organizations and management;
    How professional you are, and how much care and attention you give to what you do.

To answer a question effectively, address the question directly, bring important related
issues into the discussion, refer to sources, and indicate how principles from the course
materials apply. You must also be able to identify important problems and implications
arising from the answer.

The references should be given at the end of the assignment. For citing references,
writing bibliographies, and formatting the assignment, APA format should be followed.



                              ASSIGNMENT No. 2
                                                                       Total Marks: 100

This assignment is a research activity. You are required to visit any business/ commercial
organization and prepare a research report of about 15 to 20 pages on one of the topics
given below. To avoid the duplication, you are required to select the topic according to
the last digit of your role number. For example if your roll number is I-342718 then you
will select topic # 8 from the given below list (last digit):




                                            3
    As there are five topics, you will select the topic according to the last digit mentioned as
    under:
    Topic Last digit of the role number
1   1        1,3
2   2        2,4
3   3        5,7
4   4        6,8
5   5        0,9
    TOPICS:
    1.  Select an industrial firm and critically examine various types of debt instruments
        used by them. Also give some recommendations.
    2.  Discuss in detail the various capital and money market instruments available in the
        financial markets of Pakistan. Also make a comparison between both two.
    3.  As a bond investor, while investing in corporate bonds, which bonds strategy(ies)
        would you like to prefer in case of high fluctuations in the rate of interest in
        Pakistan.
    4.  Technical Analysis and its importance for investors
    5.  Discuss in detail the portfolio management process of any financial institution in
        Pakistan.

          GUIDELINES FOR THE PREPARATION OF ASSIGNMENT # 2
    The report should follow the following format:
    1.    Title page
    2.    Acknowledgements
    3.    An abstract (one page summary of the paper)
    4.    Table of contents
    5.    Introduction to the issue (brief history & significance of issue assigned)
    6.    Data collection methods
    7.    Conclusion (one page brief covering important aspects of your report)
    8.    Recommendations (specific recommendations relevant to issue assigned)
    9.    References (as per APA format)
    10.   Annexes (if any)
    Other Guidelines:
        1.5 line spacing
        Use headers and subheads throughout all sections
        Organization of ideas
        Writing skills (spelling, grammar, punctuation)
        Professionalism (readability and general appearance)
        Do more than repeat the text
        Express a point of view and defend it.

    You should use transparencies and any other material for effective presentation. The
    transparencies are not the presentation, but only a tool; the presentation is the
    combination of the transparencies and your speech. Workshop presentation
    transparencies should only be in typed format.



                                                 4
You are required to prepare two copies of 2nd assignment. Submit one copy to your tutor/
teacher for evaluation and the second copy for presentations in the workshop in the
presence of the resource person and classmates, which will be held at the end of the
semester prior to the final examination.

GUIDELINES FOR WORKSHOP PRESENTATION:
   Make eye contact and react to the audience. Don't read from the transparencies or
    from report, and don't look too much at the transparencies (occasional glances are
    acceptable to help in recalling the topic to cover).
   A 15-minute presentation can be practiced several times in advance, so do that until
    you are confident enough. Some people also use a mirror when rehearsing as a
    substitute for an audience.

WEIGHTAGE OF THEORY & PRACTICAL ASPECTS IN ASSIGNMENT # 2 &
WORKSHOP PRESENTATIONS:
Assignment # 2 & workshop presentations are evaluated on the basis of theory & its
applicability. The weightage of each aspect would be:
Theory                                                60%
Applicability (practical study of the organization)    40%


       INVESTMENT AND SECURITIES MANAGEMENT
                           (COURSE OUTLINE–577)
UNIT 1      BACKGROUND
            Background for Understanding Investment
            • The Nature of Investment
            • Understanding the Investment Process
            • External Factors Affecting the Decision Process
            Types of Securities
            • Organizing Financial Assets
            • Non-Marketable Financial Assets
            • Money Market Securities
            • Capital Market Securities
            • Other Types of Securities
UNIT 2     INVESTMENT ALTERNATIVES
            Investment Companies
            • Investing Indirectly through Investment Companies
            • What is an Investment Company
            • Types of Investment Companies
            • Major Types of Mutual Funds
            • Investing Indirectly
            • Investment Company Performance
            • The Future Prospects of Indirect Investing in Pakistan.
            Securities Markets
            • The Importance of Financial Markets
            • The Primary Markets
            • Secondary Markets


                                           5
         • Bond Markets
         • The Changing Securities Markets
         • Globalization of Securities Market

UNIT 3   TRADING OF SECURITIES AND RISK CONCEPTS
         How Securities are Traded
         • Brokerage Transactions
         • How Orders Work
         • Investor Protection in the Securities Markets
         • Short Sales
         Return and Risk Concepts
         • Return
         • Measuring Returns and Risk
         • Estimating Returns and Risk
         • The Return-Risk Relationship

UNIT 4   FIXED INCOME SECURITIES: ANALYSIS, VALUATION AND
         MANAGEMET
         The Basics of Bonds
         • Understanding Bonds
         • The Bond Market
         • Bond Returns and Risks
         Bond Prices and Yields
         • Bond Prices
         • Bond Price Changes
         • Bond Yields
         • The Level of Market Interest Rates
         Bond: Analysis and Strategy
         • Why Buy Bonds
         • Important Consideration in Managing a Bond Portfolio
         • The Risk Structure of Interest Rates-Yield Spreads
         • Bond Strategies and Management

UNIT 5   COMMON STOCK: ANALYSIS, VALUATION AND
         MANAGEMENT
         Common Stocks
         • Understanding Common Stocks
         • The Stock Market
         • Buying and Selling Stocks
         • Common Stock Returns
         • Common Stock Risks
         • Historical Returns and Risk for Common Stock
         • Why Investors Buy Stocks
         Common Stock Valuation
         • The Present Value Approach
         • The P/E Ratio Approach
         • Which Approach to Use
         • Other Valuation Techniques


                                       6
         Common Stock: Analysis and Strategy
         • Analyzing Common Stock
         • Asset Allocation
         • The Passive Strategy
         • The Active Strategy
         • Approaches for Analyzing and Selecting Stocks
         • Framework for Fundamental Analysis
UNIT 6   DERIVATIVE SECURITIES
         Options
         • Introduction
         • Understanding Options
         • Payoffs and Profits from Basic Option Position
         • Some Basic Option Strategies
         • Option Valuation
         • An Investors Perspective on Puts and Calls
         • Stock Index Options and Interest Rate Options
         Futures
         • Understanding Futures Market
         • The Structure of Future Markets
         • The Mechanics of Trading
         • Using Future Contracts
         • Financial Futures
UNIT 7   ADDITIONAL INVESTMENT OPPURTUNITIES & EFFICIENT
         MARKET
         Warrants and Convertible Securities
         • Warrants
         • Valuing Warrants
         • Speculative Value of a Warrant
         • Convertible Securities
         • Convertible Bonds
         • Risk and Return on Convertibles
         • Should Investors Buy Convertible Bonds?
         • Convertible Preferred Stock
         • Analyzing Convertible Preferred
         Market Efficiency
         • Concept of Efficient Market
         • Why the Market can be Expected to be Efficient?
         • Evidence on Market Efficiency
         • Implication of Efficient Market Hypothesis
         • Evidence of Market Anomalies
UNIT 8   SECURITY ANALYSIS
         Market Analysis
         • What is the Market?
         • Understanding the Stock Market
         • Valuing the Market
         • Forecasting Changes in the Market/Economy


                                       7
           Industry Analysis
           • Performance of Industries Over Time
           • What is an Industry?
           • Analyzing Industries
           Company Analysis
           • Fundamental Analysis
           • Understanding Earnings
           • Determinant of Earning
           • Which Earnings are Important?
           • Analyzing and Forecasting Earning Growth
           • Fundamental Security Analysis in Practice
           • The P/E Ratio
           • Syntax's P/E Ratio
           • Additional Company Analysis
           Technical Analysis
           • What is Technical Analysis?
           • Aggregate Market Analysis
           • Individual Stock Analysis
           • Testing Technical Analysis Strategies
           • Conclusions about Technical Analysis

UNIT 9     INVESTMENT MANAGEMENT
            Portfolio Management
            • Portfolio Management as a Process
            • Formulate an Appropriate Investment Policy
            • Determine and Quantify Capital Market Expectations
            • Constructing the Portfolio
            • Monitor Market Conditions and Investor Circumstances
            • Portfolio Adjustments
            • Performance Measurement
            Portfolio Selection
            • Use the Markowitz Portfolio Selection Model
            • Consider Borrowing and Lending Possibilities
            • Choose the Final Portfolio Based on Preferences
            • Implication of Portfolio Selection
            Capital Market
            • The Assumption of CAPM
            • The Market Portfolio
            • Equilibrium Risk-Return Trade Off
            • Estimating the SML
            • Arbitrage Pricing Theory

Recommended Books:
1.  Investment Analysis and Management by Charles P. Jones (9th edition).
2.  Security Analysis and Portfolio Management by Donald E. Fischer, Ronald J.
    Jordan (6th edition).
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Description: DOWNLOAD Assignments Autumn Semester 2011 for Post Graduate / M.Phil / Ph.D. Courses