Subject: Capital Market & Portfolio Management
Sem 3Dec 2026 Solved Assignments
Last Date: 28 October
Q1 A mid-cap Indian company has been experiencing low trading volumes and wide bid-ask spreads in its shares. At the same time, institutional investors are increasingly using algorithmic trading to execute large orders, while retail investors primarily use online discount-broker platforms.
As a Capital Market Consultant, analyse how market structure and trading mechanisms can influence the liquidity, price discovery and execution quality of such
a security. In your response:
- compare the roles of exchange-based and OTC markets;
- evaluate the suitability of market orders, limit orders and stop-loss orders for different market participants;
- analyse the role of liquidity and market depth in execution; and
- evaluate how algorithmic trading can influence market efficiency and create risks for market participants.
(10 Marks)
Q2 (A) During a sharp rise in the Indian stock market, a large number of retail investors begin purchasing a particular stock simply because “everyone is buying it.” Some investors continue holding the stock despite deteriorating fundamentals because they fear realising a loss.
As an investment advisor, analyse the behavioural biases reflected in this situation and evaluate how such behaviour challenges the assumptions of the Efficient Market Hypothesis (EMH). Design two practical decision-making measures that investors
could adopt to reduce the influence of these biases.
(5 Marks)
Q2 (B) Two diversified equity portfolios, Alpha Fund and Beta Fund, have generated the following annual performance:
| Particulars | Alpha Fund | Beta Fund |
| Portfolio Return | 16% | 14% |
| Risk-free Rate | 6% | 6% |
| Standard Deviation | 12% | 10% |
| Beta | 1.25 | 0.90 |
The market return during the period was 12%. Required:
- Calculate the Sharpe Ratio and Treynor Ratio for both portfolios. (3 Marks)
- Based on the results, identify which portfolio provides better risk-adjusted performance under each measure and explain briefly why the rankings differ. (2 Marks)
(5 Marks)
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