14/16 AHMADU BELLO WAY, VICTORIA ISLAND, LAGOS

SCHOOL OF MANAGEMENT SCIENCES

MARCH 2014 EXAMINATIONS

COURSE CODE: BHM 721 CREDIT UNIT: 2

COURSE TITLE: SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT

TIME ALLOWED: 2 HOURS

Instructions: 1. Attempt question Number one (1) and any other two (2).

2. Question number 1 is compulsory and carries 30 marks, while the other

questions carry equal marks each

3. Present all your points in coherent and orderly manner

QUESTION 1

A. Discuss the following with respect to Bonds:

(i) Junior Issues

(ii) Pledge of Specific Securities

B. Differentiate between Convertible Bonds and Income Bonds

C. Briefly highlight three (3) types of Investment risk,

QUESTION 2

A. Outline the interacting factors that determine the growth of earnings per share.

B. How are the following determined?

i. Rate of return on equity

ii. Return on operating assets

Support your answer with relevant formula.

C. What are the two principal sources of equity growth?

QUESTION 3

A. Discuss the two components of returns.

B. What do you understand by the concept of time value of money? Use relevant illustrations to support / back-up your discussion.

C. Describe the concept of compound interest.

QUESTION 4

A. Write short notes on the following:

I. Financial Risk

II. Interest Rate Risk

III. Liquidity Risk

IV. Market Risk

B. Explain diversifiable and non-diversifiable risks.

QUESTION 5

A. Differentiate between the book and par value of common stocks.

B. Assuming a corporation has N20 million assets, owes N10 million in various forms of Short- and long-term debt, and has N2 million worth of preferred stock outstanding. Assume also, that firm has 100,000 shares of common stock outstanding.

i. What is the book value of the corporation?

ii. What is the firm’s book value per share? GOOD LUCK

For the 2015 – till date past questions for this course CLICK HERE

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