Portfolio Management for UG Students

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ISBN 9789393665560

Publication Date Sun Jul 01 00:00:00 UTC 2018

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Description

Table of contents

Biographical note

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Description

Perhaps, the first undergraduate level textbook based on syllabus, this book is designed to address the requirements of undergraduate students of commerce and management and provides a crisp and clear text on Portfolio Management, theory and framework.

Salient Features

· Authoritative text on the subject.

· Covers problem-oriented chapters such as Time Value of Money and Risk and Return with numerous solved and self-practice problems.

· Succinct coverage of Portfolio Management, steps to Portfolio Analysis and Portfolio Theory.

· Covers Derivatives, Futures, Swaps and Options adequately.

· Has a separate chapter on Wealth Management.

Cover
Title Page
Copyright Page
Dedication
Contents
Preface
Chapter 1 INVESTMENT – AN OVERVIEW
- Meaning
- Definition
- Economic Investment
- Financial Investment
- Investment Practice
- Features of Investment
- Savings Vs Investment
- Investment Vs Speculation
- Factors and Constraints of Investment
- Investment Objectives
- Rules of Stock Investment
- Sources of Investment Information
- Type of Information
- Review Questions
Chapter 2 FINANCIAL SECURITIES – AN OVERVIEW
- Meaning
- Features of Financial Instruments
- Types of Financial Instruments
  - Preference Shares
  - Equity Shares
  - Non-Voting Equity Shares
  - Cumulative Convertible Preference Shares (CCPS)
  - Company Fixed Deposits
  - Warrants
  - Debentures and Bonds
- Shares Vs Debentures
- Global Debt Instruments
  - Income Bonds
  - Asset Backed Securities
  - Junk Bonds
  - Masala Bonds
  - Indexed Bonds
  - Zero Coupon Bonds (ZCBs)/ Zero Coupon Convertible Debentures
  - Floating Rate Bonds (FRBs)
  - Secured Premium Notes (SPNs)
  - Euro Convertible Bonds
- Importance of Bond and Debentures
  - Advantages to the Company
  - Advantages to Investors
- Drawbacks of Bond and Debentures
- Mutual Funds
- Mutual Funds in India
- Review Questions
Chapter 3 PORTFOLIO MANAGEMENT – AN OVERVIEW
- Portfolio
  - Meaning
  - Types of Portfolio
- Portfolio Management
  - Meaning
  - Definition
  - Need
  - Types
  - Objectives/Features /Importance
- Review Questions
Chapter 4 PORTFOLIO MANAGER
- Meaning
- Types
- Functions
- Strategies
- Legal Requirements for Portfolio Managers
  - Registration
  - Capital Adequacy
  - Minimum Business
  - Agreement
  - Reports to be Furnished
  - Disclosure Document
  - Funds Management
- Review Questions
Chapter 5 SEBI REGULATIONS FOR PORTFOLIO OPERATIONS/MANAGERS
- Genesis
- Features of the SEBI Bill
- Powers and Functions
  - Under the SEBI Act
- SEBI Regulations for Portfolio Operations/Managers
  - Application for Grant of Certificate
  - Conformance to Requirements
  - Furnishing of Further Information, etc.
  - Consideration of Application
  - Capital Adequacy Requirement
  - Procedure for Registration
  - Renewal of Certificate
  - Procedure where Registration is not Granted
  - Effect of Refusal to Grant Certificate
  - Payment of Fees
  - No Person to Act as Portfolio Manager without Certificate
  - Conditions for Grant or Renewal of Certificate to Portfolio Manager
  - Period of Validity of the Certificate
- Fees
- General Obligations
  - Contract with Clients
  - Contents
  - Disclosures
- General Responsibilities
  - Independent Management
  - Acting in Fiduciary Position
  - Transaction within Limits
  - Not Deriving any Personal Benefit
  - Not Lending Securities
  - Proper Handling of Complaints
- Investment of Clients’ Funds
  - Acting as Per Agreement
  - Withdrawal of Funds and Securities
  - Investing in Money Market Instruments
  - Not Indulging in Speculation
  - Undertaking Client-Wise Dealings
  - Adopting Prevailing Price
  - Safekeeping of Funds and Securities
  - Acting as Agent
  - Securities Lending
  - Conformance to Rule
- Maintenance of Books of Accounts, etc.
  - Books of Accounts
  - Intimation to the SEBI
  - Furnishing Statements of Accounts
  - Submission of Half-yearly Results
- Accounts and Audit
  - Reports to be Furnished
  - Report on Steps Taken on Auditor’s Report
  - Disclosures to the Board
  - Appointment of Compliance Officer
- Inspection and Disciplinary Proceedings
  - Right of Inspection by the Board
  - Notice Before Inspection
  - Obligations of Portfolio Manager on Inspection
  - Submission of Report
  - Action on Inspection or Investigation Report
  - Appointment of Auditor
- Procedure for Action in Case of Default
  - Liability for Action in Case of Default
  - Penalties (Since Deleted)
  - Suspension of Registration
  - Cancellation of Registration
  - Order of Suspension and Cancellation
  - Manner of Holding Enquiry
  - Show-Cause Notice and Order
  - Effect of Suspension and Cancellation
  - Publication of Order of Suspension
  - Appeal to the Securities Appellate Tribunal
- Code of Conduct (Regulation 13)
- Model Disclosure Document
  - Minimum Disclosure
- Review Questions
Chapter 6 TIME VALUE OF MONEY (TVM)
- Meaning
- Objectives
- Importance
- TVM as a Losing Proposition
- TVM as a Gaining Proposition
- Time Preference for Money (TPM)
  - Meaning
  - Reasons
- Dimensions of TVM
  - Discounting Technique
  - Compounding Technique
  - Use of Time Value Tables
- Computing Values Under Discounting Technique
  - Computation of Present Value of Future Sum
  - Computation of Present Value of Ordinary Annuity
  - Computation of Present Value of Annuity Due
  - Computation of Present Value of Future Cash Flows
  - Computation of Net Present Value
  - Computation of Beneficial Retirement Option
  - Computation of Present Value of Expected Pension
  - Computation of Present Value of Constantly Growing Annuity
- Computing Values Under Compounding Technique
  - Simple Annual Compounding
  - Multiple Compounding
  - Computation of Future Value of Ordinary Annuity
  - Computation of Future Value of Annuity Due
  - Effective Rate of Interest (ERI)
  - Implicit Rate of Interest (IRI)
  - Computation of Future Value of Uneven Cash Flows
  - Computation of Annual Payment to Accumulate a Lump Sum of Money
- CAGR (Compounded Annual Growth Rate)
- True Rate of Interest (TRI)
- Doubling Period (DP)
- Review Questions
Chapter 7 INTRODUCTION TO FUNDAMENTAL ANALYSIS AND TECHNICAL ANALYSIS
- Fundamental Analysis
  - Meaning
- Analytical Framework
  - Global Economic Analysis
  - National Economic Analysis
  - National Industry Analysis
  - Company Analysis
  - DuPont Analysis
  - Technical Analysis
- Review Questions
Chapter 8 PORTFOLIO MANAGEMENT FRAMEWORK
- Planning the Portfolio
- Selection of Portfolio
- Evaluation of Portfolio
- Revision of Portfolio
- Portfolio Management Process in Mutual Funds
  - Setting Investment Goal
  - Identifying Specific Securities
  - Portfolio Designing
  - Portfolio Revision
- Portfolio Performance
  - Treynor’s Portfolio Performance Measure
  - Jensen’s Portfolio Performance Measure
  - Fama’s Portfolio Performance Measure
- Review Questions
Chapter 9 PORTFOLIO THEORY
- Portfolio Analysis
- Portfolio Theory
- Objectives/Importance
- Markowitz Portfolio Analysis
  - Features
- Indifference Curve Analysis
  - Meaning
  - Analysis – How Risk-Averse Investor Could Increase Utility
  - Investor Risk Preference Model
  - Further Northwest Principle/Risk-Aversion Model
  - Assumption of Non-Satiation
  - Assumption of Risk Aversion
  - Further Northeast Model
  - Further North Model
- Random Walk Theory (RWT)
  - Statement
  - Mechanism
  - Assumptions
  - Exceptions
  - RWT Vs Other Theories
  - Role of Luck
  - Practical Implications
- Capital Asset Pricing Model (CAPM)
  - Meaning
  - Risk-Free and Risky Security
  - Risk-Averse Investor
  - Risk-Friendly Investor
  - Objectives of CAPM
  - Assumptions of CAPM
  - Validity of CAPM
  - Criticisms of CAPM
  - Components of CAPM
  - Beta Measures
- Arbitrage Pricing Model (APM)
  - Arbitrage
  - Types of Return
- CAPM Vs APM
- Efficient Market Hypothesis (EMH)
  - Statement
  - Assumptions
  - Three Levels
- Efficient (Market) Portfolio (EP)
  - Meaning
  - EP Set (Two Securities Case)
- Efficient Frontier (EF)
  - Principle of Dominance
- Sharpe Index Model
  - Assumptions
- Statement of Sharpe’s Single Index Model
  - Sharpe’s Single Index Model – Graphical Presentation
  - Components of Return
  - Single Index Model – Risk Characteristics Line
- Review Questions
Chapter 10 INTRODUCTION TO RISK AND RETURN
- Genesis
- Certainty
- Uncertainty
- Risk
  - Types of Risk
  - Sources of Risk
- Return
  - Measurement of Return – Approaches
  - Risk-Return Relationship
  - Historical Return
  - Historical Risk
  - Expected Rate of Return (ERR) and Expected Risk (ER)
- Review Questions
Chapter 11 PORTFOLIO DIVERSIFICATION AND PORTFOLIO RISK AND RETURN
- Portfolio
  - Portfolio Theory
- Diversification
  - Portfolio Diversification
- Mean – Variance Analysis
  - Portfolio Return
  - Portfolio Risk (For Two Securities, A and B and for Single Period)
  - Correlation & Portfolio Variance
- Risk Diversification
- Components of Portfolio Risk
- Review Questions
Chapter 12 VALUATION OF FINANCIAL SECURITIES
- Meaning of Financial Security
- Definition of ‘Valuation’
  - Types of Valuation
- Valuation of Bonds
  - Required Rate of Return, Bond Rate of Interest and Bond Value – Relationship
  - Methods of Valuation
- Valuation of Preferred Stock
- Valuation of Equity Share
- Review Questions
Chapter 13 INTRODUCTION TO DERIVATIVES, FUTURES, OPTIONS AND SWAPS
- Genesis
- Derivatives
  - Meaning
  - Growth of Derivatives Market – Factors
  - Limitations of Derivatives Market
  - Functions of Derivatives Market
- Categories of Derivatives
- Forward-Based Derivatives
  - Forward Contracts
  - Characteristics
  - Swaps
  - Mode
  - Futures Contracts
- Option-Based Derivatives
  - Options
- Futures and Options – Participants
- General Functions of Dealers
- Benefits of Derivatives
  - Benefits to Government Entities
  - Benefits to Institutional Investors
- Risks in Derivatives Market
  - Market Risk
  - Credit Risk
  - Settlement Risk
  - Operational Risk
  - Legal Risk
- Derivatives and Financial System
  - Capital Standards for Derivatives
  - Regulating Derivatives Market
  - Advent of Derivatives Market in India
- Stock Index Futures
  - Genesis
  - Derivatives Contract
  - Futures Contract
- Stock Index
- Stock Index Futures (SIF)
- Review Questions
Chapter 14 WEALTH MANAGEMENT
- Genesis
- Wealth Management – An Emerging Sector
- Concept of Wealth Management
- Key Challenge Areas
- Need for Wealth Management
- Wealth Management - Components
- Wealth Management - Major Steps
  - Financial Planning
  - Portfolio Strategy Definition/Asset Allocation
  - Portfolio Management
  - Strategy Review and Alignment
- Portfolio Management Vs Wealth Management
- Review Questions
Appendix
Index

Dr. Gurusamy holds a doctorate in Financial Services. He is currently Professor and Head, Department of Commerce, University of Madras, Chennai. He has more than 30 years of teaching and research experience. His area of interest includes accounting and finance, banking and insurance. A prolific writer, he has published books on Financial Services and Systems, Financial Markets and Institutions, Banking Theory Law and Practice and Merchant Banking and Financial Services.

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