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AIMA Question Paper of June 2015 for FM03

All India Management Association (AIMA) Question Paper details of June 2015 examination.

AIMA (All India Management Association)

JUNE 2015 EXAMINATION

FM 03 / eFM 03

SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT

Time: Three Hours Maximum Marks: 100

Note:

1. The paper is divided in three sections: SECTION-A, SECTION-B and SECTION-C.

2. There are seven questions in SECTION-A. Students are required to attempt ANY FOUR.

3. SECTION-B has five questions, attempt ANY THREE.

4. All the questions of SECTION-C (Case Study) are compulsory.

SECTION-A (10 Marks each)

1. State the economic and financial meaning of investment. What are the risks associated with investment in stock market?

2. What is SML? How is SML different from CML?

3. Explain in details fundamental analysis. How is fundamental analysis different from technical analysis?

4. What do you understand by EMH? Distinguish between the three levels of market efficiency.

5. Name the different types of Mutual Fund Schemes available. What are advantages and disadvantage of investing through mutual funds?

6. Distinguish between primary and secondary market. What are the major roles of stock market regulator for these markets?

7. Explain multifactor model of portfolio. Which are the major factors in the model?

SECTION-B (15 Marks each)

8. The mean return, standard deviation and beta of mutual fund scheme are 13%, 17% and 1.2 respectively. Risk free return during this time period was 5%. Calculate the Treynor measure, Sharpe measure and Jensen measure. What inferences do you draw from these measures?

9. From the following information available calculate:

Stock A Stock B

Expected returns 14% 20%

Standard deviation 25% 40%

Coefficient of Correlation of Stock A, B = 0.40

a) the Co-variance between Stock A and B.

b) the expected returns and risk of a portfolio in which A and B are equally weighted.

10. The following information is available:

Expected return for the market = 14%

Standard deviation of the market return = 20%

Risk-free return = 6%

Correlation coefficient between stock X and the market = 0.7

Correlation coefficient between stock Y and the market = 0.8

Standard deviation of stock X = 24%

Standard deviation of stock Y = 32%

You are required to:

a) Calculate the beta for stock X and stock Y

b) Calculate the required rate of return for each stock.

11. Explain various investment alternatives available for an Indian investor. Which of these alternatives are eligible for saving taxes?

12. What do you understand by efficient frontier? Explain Markowitz portfolio theory.

SECTION-C (15 Marks)

Case Study (Compulsory)

The current dividend on equity shares of the Shopkart Ltd, an online shopping firm is Rs. 5. In view of boom in e-commerce business Shopkart is expected to enjoy an above normal growth rate of 40% for 5 years. Thereafter the growth rate will fall and stabilize at 15%. Equity investors require a return of 20% from Shopkart’s stock.

13. Case Question:

What is the intrinsic value of the equity shares of Shopkart?

AIMA Strategic Management & Ethics (GM14)

AIMA Online Assignments

Strategic Management & Ethics (GM14)

NOTE: The answers are boldly marked.

Question 1:- Strategy formulation was not as important 50 years back as the environment during the pre-liberalization era was more:

a) Flexible

b) Stable and Predictable

c) Cyclical

d) Dynamic, Unstable and turbulent

Question 2:- Business Strategy should be formulated keeping in a mind a time horizon of:

a) 3 - 5 years

b) 3 -6 months

c) less than one year

d) None of these

Question 3:- Business Success hinges on the capability of a firm to

a) formulate and execute action plans

b) Craft Internal plans

c) Allocate Resources efficiently

d) predict the internal environment

Question 4:- Mergers and Acquisitions is an integral portion of what level of strategy

a) Corporate level

b) Operational Level

c) Business Level

d) Functional Level

Question 5:- Which of the following is NOT part of the micro environment

a) Technology

b) Competitors

c) Customers

d) Publics

Question 6:- The strategy of TATA Motors and TCS would be classified as:

a) Business Strategy

b) Corporate Strategy

c) Operational Strategy

d) Process Level

Question 7:- Growth, retrenchment and stability are examples of

a) Corporate level Strategy

b) SBU Strategy

c) Integration Strategy

d) All of These

Question 8:- Porter's Generic strategies comprises of:

a) Cost leadership, differentiation and scope

b) Product and Market Focus

c) Integrated approach

d) Hyper competition

Question 9:- Typically, profits are highest in which stage of the industry life-cycle

a) Growth

b) Introductory

c) Stagnation

d) Decline

Question 10:- Which of the following industries is least likely to follow the conventional stable life-cycle model

a) Computer software

b) Coal Mining

c) Insurance Broking

d) Saloon

Question 11:- Strengths and weaknesses are important ingredients of:

a) The industry

b) The Organization and the competitors

c) The Market

d) The firm

Question 12:- Opportunities and threats are posed by the

a) Internal resources

b) External environment

c) Firm level competencies

d) Government policies only

Question 13:- Reputation' in the context of an organization's resources can provide competitive advantage because:

a) It is implicit

b) It is difficult to copy

c) It is a resource

d) It leads to easy word of mouth publicity

Question 14:- Which of these is not a reason why some firms do not have strategic planning

a) Laziness

b) Competitive Leadership

c) Differences in opinion

d) Poor reward structures

Question 15:- Which one of these is NOT a __________ part of Porter's competitive forces in industry analysis

a) Bargaining power of consumers

b) Development of substitutes

c) Competitive Rivalry

d) Threat of new entrants

Question 16:- In which matrix of the BCG growth share matrix should a firm consider to diversify

a) Problem Child

b) Cash Cow

c) Star

d) None of these

Question 17:- In which stage of the product life cycle should a firm consider investing heavily in advertising

a) Maturity Phase

b) Introductory and emergent phase

c) Growth Phase

d) Research Phase

Question 18:- One of the features of strategy is that it should be:

a) focused on survival of the firm

b) Flexible and altered frequently

c) Robust and long term

d) Short term

Question 19:- Which one of the following is not a component of the internal environment

a) Tangible Resources

b) Brand reputation

c) Laws and Regulations

d) Physical Assets

Question 20:- In the case where an organization acquires its supplier, this is an example of

a) Horizontal Integration

b) Forward Integration

c) Backward Vertical Integration

d) Value Chain Dynamics

Question 21:- Firms having superior value chain capabilities have a competitive …………………….. over rivals

a) disadvantage

b) environment

c) advantage and edge

d) battle

Question 22:- The _________ answers the question "What do we want to become?" whereas _________answers the question "What is our business?"

a) Short term objectives; long term objectives

b) Short term plans; long term plans

c) Vision Statement; Mission Statement

d) Objectives; Strategies

Question 23:- __________ is based on the assumption that the future will be just like the past.

a) Delphi Forecasts

b) Econometric forecasts

c) Linear Regression

d) Scenario Planning

Question 24:- In terms of the PESTLE analysis, the changes in the tariff structures and regimes could go in which section

a) Demographics

b) Political

c) Legal

d) Eco-systems

Question 25:- A strategy can be defined as:

a) Operational plans

b) Line and direction followed by a firm

c) Plans designed irrespective of the environmental conditions

d) Integrated Broad set of action plans cutting across all business functions

Question 26:- Which one of the following is not a component of the external environment

a) Technology

b) Political

c) Socio- Cultural

d) Business Processes

Question 27:- Cultural values would be part of which of the following factor in macro environment

a) Economic

b) Natural

c) Ecological

d) Social

Question 28:- The word tactic is most likely to be associated with

a) Functional; Level

b) Business Level

c) Unstructured planning

d) Operational Level Strategy

Question 29:- Adding new, unrelated products or services for present customers is a phenomenon known as:

a) Horizontal Diversification

b) Concentric Diversification

c) Product Development

d) Conglomerate Diversification

Question 30:- An industry characterized by irregular patterns of stability, rapid technological change, high uncertainty and global competition can be described as

a) Irregular

b) Inconsistent

c) Hyperactive

d) Hypercompetitive

AIMA Assignment Strategic Management & Ethics (GM14)

AIMA Fourth Semester Assignments

Strategic Management & Ethics (GM14)

Question 1:- A significant change in strategy calls for a complete overhaul of the

a) Organization resources

b) Organization structure, systems, processes, resources

c) Business activities

d) None of these

Question 2:- Change management is essential for strategy execution following the:

a) Drastic change in environmental and competitive conditions

b) need for resource allocation

c) reduction in barriers to change

d) business imperatives

Question 3:- The critical 7 S model was developed and created by reputed consulting firm:

a) Mckinsey

b) Bain & Co

c) A T Kearney

d) Accenture

Question 4:- A ………………...Top Management team may infuse desired changes for spearheading successful strategic change

a) Heterogeneous

b) Homogenous

c) Aggressive

d) Motivated

Question 5:- Change in culture, attitude, and mindset calls for:

a) engagement, involvement and motivation of employees

b) Rigorous performance appraisal

c) Performance benchmarking

d) Organization design change

Question 6:- If change management initiatives are successful then the firm may

a) Measure results and reinforce the same

b) Reorganize resources

c) Bring about rapid change always

d) explore expansion options

Question 7:- Partnership with firm like NIKE and VISA are typical examples of which form of collaboration

a) Strategic Alliance

b) 100% FDI

c) Network arrangements

d) All of these

Question 8:- Under International Level Strategy - the distribution of Wrigley's chewing gum using EID Parry channel network is a typical example

a) Piggybacking

b) 60:60 Joint Venture

c) Licensing

d) Export Management

Question 9:- Strategic leadership facilitates strategy execution through

a) Exploitation of core competencies

b) elimination of non-core competencies

c) non cohesive functioning

d) business integration

Question 10:- Business ethics suggests that business should be run profitably without causing:

a) Unnecessary environmental damage

b) Depletion of resources

c) Insider trading

d) All of these

Question 11:- The Balanced Scorecard Model was a model first developed by:

a) Johnson & Scholes

b) NORTON & KAPLAN

c) Mintzberg

d) Michael Porter

Question 12:- The difference between strategy formulation and strategy implementation is that:

a) Strategy is developed by Top Management Team and implemented by Managers

b) Strategy is created by a few but implemented by all

c) Strategy is customer centric and implementation is operations centric

d) All of these

Question 13:- A functional organization structure created for implementing cost leadership strategy will emphasize more on:

a) Marketing

b) Technology and process efficiency

c) Human Resource Intervention

d) Corporate Finance

Question 14:- A functional organization structure created for implementing differentiation related strategies will emphasize more on:

a) Cutting Unwarranted costs

b) Marketing and New Product Development Initiatives

c) Legal and Administrative efficiency

d) Recruiting Productive Manpower

Question 15:- Contingency planning is a scenario where a firm has in place

a) Identical strategy to be executed irrespective of environmental changes

b) Different strategy alternatives available for different environmental scenarios

c) Combination strategies only

d) Expansion and diversification strategies only

Question 16:- An international structure in which local operations imitate those of the home country, and which is dominated by home-nation personnel is an ________approach

a) Polycentric

b) Ethnocentric

c) Regiocentric

d) Transnational

Question 17:- Recognizing and admiring employees for their contribution in the workplace is indicative of

a) Feel good factor

b) Non-Monetary Motivation strategy

c) Nondiscrimination of employees

d) Equal Opportunity for all

Question 18:- Which one of the following is not a part of the Critical 7S model

a) Strategy

b) Style

c) Settings

d) Staff

Question 19:- Which one of the following is not a part of Business Ethics

a) Equal Opportunity employer

b) Marketing quality goods at most competitive prices

c) Window dressing of balance sheet

d) Avoiding insider trading

Question 20:- Change in style of functioning of organization calls for significant modification in

a) Organization response

b) Decision Making

c) Organization Culture and approach

d) None of these

Question 21:- Which of the following is not PART of the Balanced Scorecard Model

a) Financial Perspective

b) Customer Perspective

c) Internal audit

d) Innovation and Learning

Question 22:- Strategy audit is performed to identify:

a) Critical gaps between targets and achievements

b) Chalk out corrective actions

c) Both A and B

d) A only

Question 23:- When a firm seeks the benefits of global integration and local adaptation, it is best described as which type of strategy

a) Multinational

b) Global

c) Multi-Domestic

d) Transnational

Question 24:- Democratic leadership is a phenomenon which implies

a) Junior Employees have no say

b) Senior officials are empowered

c) Involvement and consultation with all employees prior to business decision-making

d) All employees are empowered

Question 25:- Under 7S framework Systems imply which of the following

a) Recruitment Policy

b) IT up gradation

c) Innovative work ethics

d) Set of standardized procedures

Question 26:- Which of the following is an example of Lack of Corporate Governance

a) Satyam-Maytas financial irregularities

b) Inappropriate organization structure

c) Failure of Enron project in India

d) Both options A and C

Question 27:- Effective strategy execution calls for Business Process Reengineering with a view to

a) achieve cost and process efficiency

b) Outsource non-core activities

c) Automate systems and avoid duplication of tasks

d) All of these

Question 28:- Audit and review are done periodically and continuously on the basis of performance related to

a) Sales and Marketing

b) Business Operations

c) Finance

d) All Business functions

Question 29:- Firms forming a cartel is a typical example of

a) Non-Collusive oligopoly

b) Aggressive actions

c) Undercutting competitors

d) Collusive oligopoly

Question 30:- Corporate Governance is a tool for ensuring strategy execution in line with objectives by putting in place

a) Suitable organization processes

b) optimal utilization of resources

c) proper system of planning

d) Transparency, accountability and disclosure of information

AIMA Online Assignment Business Law GM06

AIMA Online Assignments

Business Law & Corporate Governance (GM06)

NOTE: The answers are boldly marked.

Question 1:- The legal term for tangible property is:

a) trust

b) chattel

c) mortgage

d) private property

Question 2:- Law is enforced by

a) Parliament

b) Legislature

c) Executive

d) Society

Question 3:- Ignorance of Law is:

a) a good excuse

b) cannot be excused

c) no excuse

d) always an excuse

Question 4:- Substantive Law defines:

a) methods by which law is made

b) the legal rights/ obligations

c) principle underlying a decision

d) decision of the judge

Question 5:- An artificial person is also called:

a) Corporation

b) Company

c) Office

d) legal entity

Question 6:- An offer made to a specific person is called:

a) express offer

b) implied offer

c) specific offer

d) general offer

Question 7:- An agreement of a purely social nature is:

a) a valid contract

b) a void contract

c) a voidable contract

d) not a contract

Question 8:- The parties to a contract must be competent to contract. The flaw in capacity to contract may be due to-

a) minority

b) lunacy

c) idiocy

d) any of the three mentioned as options A,B,C

Question 9:- At the time of entering into a contract, parties must be thinking of the same thing in the same sense. This is also known as:

a) intention to create a legal relationship

b) lawful consideration

c) consensus-ad-idem

d) free and genuine consent

Question 10:- Which option is a true statement?

a) All contracts must be reduced to writing

b) No contract need to be in writing

c) If a particular type of contract is required by law to be in writing it must comply with the necessry formalities

d) None of the given Options is correct

Question 11:- In the context of consideration for a contract, the Rule is that:

a) Consideration need not be adequate

b) Consideration must be real and competent

c) both the options i.e. A and B are correct

d) none of the options is correct

Question 12:- A saves B's life. B promises to pay A Rs. One lac out of gratitude.

a) There is no consideration, hence the contract is void

b) It is a void contract as Rs. One lac is too little for saving life.

c) it is a valid contract because the consideration for B's promise is present consideration

d) it is a valid contract because the consideration for B's promise is past consideration

Question 13:- A dealer enters into an agreement to sell a smuggled item to X. import of such type of goods is illegal. A refuses to deliver the item as promised. What are the rights of X?

a) sue the dealer for breach of a contract.

b) wait till such imports become legal and then sue the dealer.

c) it is a voidable contract.

d) it is a void contract

Question 14:- A' signed a promissory note which he was told was a letter of guarantee. Will he be bound to honor the Promissory Note?

a) Yes, he affixed his signatures on the promissory note

b) No, he did not know how to sign properly.

c) He is not bound as there was no consent to the agreement entered into by him

d) He could have made a verbal agreement

Question 15:- With respect to causing any person to enter into an agreement, "Coercion" is-

a) the committing any act forbidden by Indian Penal Code

b) threatening to commit any act forbidden by Indain Penal Code

c) unlawful detaining any property to the prejudice of any person

d) all the three options under A, B, and C

Question 16:- The party to contract aggrieved or wronged by 'misrepresentation' can:

a) avoid the performance of the contract

b) avoid the contract and sue for damages

c) neither avoid the contract, nor can he sue for damages

d) none of the given option is correct

Question 17:- A clause in agreement provides that no action should be brought after two years. The Limitation Act, 1963, however an action for breach of contract may be brought within three years from the date of breach. In view of given facts, the correct position is:

a) parties are free to agree upon any terms they like, the clause in the Agreement is operative.

b) the clause in the Agreement is valid, as there is no ambiguity in the language, and both the parties have agreed upon it

c) the clause in the Agreement is void, as it is opposed to the provisions of the Limitation Act

d) none of the given option is correct

Question 18:- A agrees to sell to B 100 tons of oil.

a) the agreement is void for uncertainty, as it does not show what kind of oil was intended

b) this agreement is valid

c) this agreement s voidable at the option of A

d) this agreement is voidable at the option of B

Question 19:- A agrees to pay B Rs. Ten lacs if B's house is burnt.

a) It is not a valid agreement

b) it is a void agreement being 'uncertain'

c) it is a void agreement being 'contingent 'upon happening or non-happening of the event

d) it is a valid 'contingent' contract

Question 20:- Quasi contract' is a situation in which law imposes upon one person an obligation similar to that which arises from a true contract. It is based on natural justice. In view of these provisions which of the option is a quasi-contract?

a) A supplies B, a lunatic, with necessaries suitable to his condition in life

b) A tradesman leaves goods at B's house by mistake

c) a party pays to another money by mistake, which is not due to him

d) all the three cases mentioned under varios options ar quasi contracts

Question 21:- the phrase “quantum meruit” means:

a) as much as earned

b) to each according to his need

c) to each according to his condition

d) none of the options is correct

Question 22:- Section 10 of the Contract Act enumerates some essentials of a valid contract. Which if the options is thus enumerated in Section 10?

a) agreements made by free consent of parties, competent to contract

b) agreements made for a lawful consideration and with lawful object

c) agreements not expressed declared by law to be void

d) All given the options are enumerated in Section 10

Question 23:- A promisor offers performance of his obligation under the contract, at the proper time and place, but the promisee refuses to accept the performance. This is called:

a) Tender

b) Attempted performance

c) both A, and B options are correct

d) none of the options is correct

Question 24:- A contract is deemed to have become impossible of performance under the circumstances that the subject matter of a contract is destroyed for no fault of the promisor. Such circumstances are called:

a) inherent impossibility

b) supervening impossibility

c) Expected impossibility

d) all given options are correct

Question 25:- A contract is discharged by death of the promisor, by insolvency of the promisor, by entering into a new contract where inferior rights under the previous agreement are merged in the new one; such discharge of a contract is called: discharge by

a) Operation of law

b) by breach

c) supervening impossibility

d) all given options are correct

Question 26:- A contract to perform the promise or discharge the liability of a third person in case of his default is called:

a) a contract of insurance

b) a contract of guarantee

c) a contact of bailment

d) none of the given options is correct

Question 27:- In a contract of guarantee the person for whom the guarantee is given is called:

a) surety

b) principal debtor

c) creditor

d) none of the options is correct

Question 28:- Which of the options is correct, about a contract of guarantee?

a) a contract of guarantee is not a cotract 'uberrimae fidei'

b) the creditor must inform the surety about all his previous dealings with the debtor

c) both options A and B are correct

d) none of the options is correct

Question 29:- Which of the options is correct, about a contract of guarantee?

a) a contract of guarantee may either be oral or in writing

b) a contract of guarantee must be in writing

c) both options A and B are correct

d) none of the options is correct

Question 30:- which of the options is correct with regard to rights of a creditor ina contract of guarantee?

a) all remedies against the principal debtor should be exhausted by the creditor before proceeding against the surety

b) the creditor is entitled to demand payment from the surety as soon as the principal debtor refuses to pay or makes a default in payment

c) both options A and B are correct

d) none of the options is correct