DCM3102 INVESTMENT OPTIONS & MUTUAL FUNDS MARCH 2025

Description

SESSION	MARCH 2025
PROGRAM	BACHELOR of commerce (B.com)
SEMESTER	V
course CODE & NAME	DCM3102 INVESTMENT OPTIONS & MUTUAL FUNDS

 

 

Assignment Set – 1

 

 

Q1 Elaborate on the various investor- specific and other factors influencing investment decisions.  

Ans 1.

Investment Decisions

Investment decisions refer to the choices individuals or entities make regarding where, when, and how to allocate their funds to earn potential returns. These decisions are influenced by a range of personal and external factors. Understanding these factors is essential for creating a successful investment strategy that aligns with an individual’s goals, risk appetite, and financial situation.

Investor-Specific Factors

The first set of factors influencing investment decisions are individual-specific. One of the most

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Q2 Write notes on the following-

1. Online stock trading.
2. Behavioural Portfolio Theory.

Ans 2.

1. Online Stock Trading

Online stock trading refers to the process of buying and selling stocks, bonds, mutual funds, and other financial securities using internet-based platforms. This method of trading has gained significant popularity due to technological advancements and the ease of access it offers to retail investors.

Functioning of Online Trading Platforms

Online trading platforms are provided by brokerage firms that allow investors to open a demat and trading account. Once registered, investors can log into these platforms using a secure login

 

 

Q3. a. Explain the term Beta and its relevance in investment decisions.

1. Calculate the expected return using the CAPM formula. Given: Risk-free rate = 4%, Beta = 1.5, Expected return of the market = 9% 4+6

Ans 3.

1. Explain the Term Beta and Its Relevance in Investment Decisions

Understanding Beta in Investment

Beta is a statistical measure used in finance to determine the volatility or systematic risk of a security or portfolio compared to the overall market. It is a core concept in the Capital Asset Pricing Model (CAPM), helping investors evaluate the risk associated with an investment in relation to market movements. The market itself has a beta of 1. A beta greater than 1 indicates that the security is more volatile than the market, while a beta less than 1 indicates lower

 

 

Assignment Set – 2

 

 

Q4 Analyze the reasons to invest in Real Estate and the risks associated with Real Estate Investment.           

Ans 4.

Real Estate Investment

Real estate is one of the oldest and most popular investment options, offering both capital appreciation and regular income. It includes residential, commercial, and industrial properties. Investors are attracted to real estate due to its tangible nature, potential for long-term gains, and ability to diversify portfolios.

Reasons to Invest in Real Estate

1. Capital Appreciation: Real estate typically appreciates in value over time, especially in

 

 

Q5. Examine the similarities and differences between Forwards and Futures derivative contracts. 

Ans 5.

Derivative Contracts

Derivative contracts are financial instruments whose value is derived from an underlying asset such as stocks, commodities, currencies, or indices. Among the most commonly used derivative instruments are forward contracts and futures contracts. While both serve similar purposes such as hedging risk or speculation, they differ significantly in terms of structure,

 

 

Q6. Elaborate on the role of various parties associated with the Mutual Funds in India.

Ans 6.

Mutual Fund Ecosystem

A mutual fund is a professionally managed investment vehicle that pools money from various investors to invest in a diversified portfolio of securities. In India, mutual funds are regulated by the Securities and Exchange Board of India (SEBI) and involve multiple parties that ensure the fund operates efficiently, transparently, and in the best interest of investors. Each entity involved in the mutual fund ecosystem plays a unique role in maintaining the fund’s