PORTFOLIO MANAGEMENT (Theory)

Paper Code: 
25MFM423
Credits: 
4
Contact Hours: 
60.00
Max. Marks: 
100.00
Objective: 

This course will enable the students to construct, analyze and manage a portfolio.

Course Outcomes: 

Course Outcomes (Cos):

 

Course

Learning outcome

(at course level)

Learning and teaching strategies

Assessment Strategies

Course Code

Course

title

 

25MFM423

 

Portfolio Management (Theory)

 

CO619: Evaluate risk and return of a portfolio and explore approaches of portfolio construction.

CO620: Analyze a portfolio using financial models and construct an optimal portfolio.

CO621: Evaluate return of an asset using CAPM, Analyze the Capital Market Line (CML) and Security Market Line (SML), Examine the arbitrage mechanism underlying APT

CO622: Analyze various measures of portfolio return and apply portfolio analysis techniques and evaluation measures in practical investment scenarios

CO623: Analyze different types of formula plans used for portfolio revision,

CO624: Contribute effectively in course-specific interaction

Approach in teaching:

Interactive Lectures, Group Discussion, Tutorials, Case Study

Learning activities for the students:

Self-learning assignments,

presentations

.Class test, Semester end examinations, Quiz, Assignments, Presentation

 

12.00
Unit I: 
Introduction to Portfolio Management and Portfolio Construction

Introduction to Portfolio Management: Meaning, process, Calculating Risk and Return of a portfolio, Beta estimation: concept, assumptions, calculation of beta of a portfolio, utility of beta.
Portfolio construction-Approaches, Selection of portfolio

12.00
Unit II: 
Markowitz & Sharpe Index Portfolio Model

Portfolio Markowitz Model-Simple Diversification, The Markowitz model, Risk and return with different correlation, Markowitz efficient frontier
The Sharpe Index Model-Single Index Model, Corner’s portfolio, Sharpe’s optimal portfolio, Construction of the optimal portfolio

12.00
Unit III: 
Capital Asset Pricing & Arbitrage Pricing Model

Capital Asset pricing model: concept, assumptions, capital market line, security market line, Limitation
Arbitrage Pricing Model, Arbitrage mechanism, comparison of APT and CAPM, application of APT.

12.00
Unit IV: 
Portfolio Analysis & Evaluation

Portfolio Analysis: concept, Kinds of portfolios analysis- Traditional Portfolio Analysis and Modern Portfolio Analysis
Portfolio Evaluation: Meaning & Need of Portfolio Evaluation, Measures of Portfolio Return-Sharpe’s Ratio, Treynor’s ratio and Jensen’s ratio

12.00
Unit V: 
Portfolio Revision

Portfolio Revision: Passive Management, Active Management, The Formula plans, Assumptions, Advantages, Disadvantages, Rupee cost averaging, Constant Rupee Plan, Constant Ratio plan, Variable ratio plan, Revision and the cost.

*Case studies related to entire topics are to be taught.

Essential Readings: 

• Investment Analysis and Portfolio Management, Prasanna Chandra, Tata McGraw Hill, 3rd Edition, 2009.
• Punithavathy Pandian, Security Analysis and Portfolio Management, Vikas Publishing House

References: 

Suggested Readings:
• V.K. Bhalla, Investment Management, 7th Edition, S. Chand & Co., New Delhi, 2000.
• Gordon J. Alexander, William F. Sharpe & Jeffery V. Bailey, Fundamentals of Investments, Prentice Hall, India, 2003 edition.
• Preetam Singh, Investment Management, 9th edition, Himalaya Publishing House, New Delhi 2000.
• Prasanna Chandra, Managing Investments, Tata McGraw Hill, 2002

E-Resources:
• Security Analysis and Portfolio Management,2e; Elibrary.in.pearson.com
• SecurityAnalysisandPortfolioManagement; https://www.expresslibrary.mheducation.com/pdfreader

Journals:
• South Asian Journal of Business and Management Cases; https://sagepub.com
• Indian Journal of Finance
• Asian Journal of Management Cases

Academic Year: 
2025-2026
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