Portfolio Management – An Introduction and Process

Portfolio Management: Meaning, Evolution, Phases, Role of Portfolio Managers, Advantages of Portfolio Management.

Investment Environment in India and Factors Conducive for Investment in India.

Portfolio Analysis: Meaning and its Components, Calculation of Expected Return and Risk, Calculation of Covariance, Risk – Return Trade off.

Portfolio Selection: Meaning, Feasible Set of Portfolios, Efficient Set of Portfolios, Selection of Optimal Portfolio, Markowitz Model, Limitations of Markowitz Model, Measuring Security Return and Portfolio Return and Risk under Single Index Model and Multi Index Model.

Portfolio Evaluation: Meaning, Need, Measuring Returns.

(Sharpe, Treynor and Jensen Ratios) and Decomposition of Performance.

Bond Valuation: Meaning, Measuring Bond Returns, Yield to Maturity, Yield to Call and Bond Pricing. Bond Pricing Theorems, Bond Risks and Bond Duration. (Practical Problems on YTM and Bond Duration.)

Company Analysis: Financial Statements, Analysis of Financial Statements, (Practical questions on Debt Equity Ratios, Total Debt Ratio, Proprietary ratios, interest coverage ratio, Profitability ratios related to sales, investment and equity shares Efficiency or Activity Ratios) and Assessment of risk (Leverages).

Mathematical Indicators: Calculation of Moving Averages (Simple and Exponential Moving Average), Oscillators and Relative Strength Index.

Market Indicators.

Fundamental Analysis V/s Technical Analysis.

The Efficient Market Hypothesis.

Forms of Market Efficiency.

Competitive Market Hypothesis.

CAPM: Fundamental Notions of Portfolio Theory, Assumption of CAPM, Efficient Frontier with Riskless Lending and Borrowing, Capital Market Line, Security Market Line and Pricing of Securities with CAPM.

Arbitrage Pricing Theory (APT): The Return Generating Model, Factors Affecting Stock Return, Expected Return on Stock, APT V/s CAPM.

Assessee, Assessment, Assessment Year, Annual Value, Business, Capital Assets, Income, Previous Year, Person, Transfer.

Determination of Residential Status of Individual, Scope of Total Income (S.5)

Income from House Property (S. 22-27)

Profit and Gain from Business and Profession (S. 28, 30,31,32, 35, 35D,36,37, 40, 40A and 43B)

Income from other sources (S.56- 59)

Exclusions from Total Income (S.10)

(Exclusions related to specified heads to  be covered with relevant heads of income)

S. 80C, 80CCC, 80D, 80DD, 80E, 80U, 80TTA

Section 2: Assessee, Assessment Year, Assessment, Annual value, Business, Capital asset, Income, Person, Previous Year, Transfer

Basis of Charge:

Section 3 to 9: Previous Year, Residential Status, Scope Of Total Income, Deemed

Income

Exclusions from Total Income:

Section 10: restricted to, Agricultural Income, Sums Received From HUF By Member, Share of Profit from Firm, Casual & Non – Recurring Receipts, Scholarships, Income of Minor Child, Allowance to Members of Parliament and Legislative Assembly.

Note -Exemptions related to specific Heads of Income to be covered with Relevant Provisions.

Salary Income:

Section 15 to 17, Including Section 10 relating to

House Rent Allowance, Travel Concession, Special Allowance, Gratuity, Pension –

Commutation, Leave Encashment, Compensation, Voluntary Retirement, Payment from Provident Fund

Income From House Property:

Section 22 to 27, Including Section 2 – Annual Value

Profits & Gains From Business & Profession:

Vocation Section 28 to 32, 36, 37, 40, 40A, 43B, 44AD, 44ADA & 44AE

including.: Section 2: Business

Capital Gains:

Section 45, 48, 49, 50, 54 and 55

Income from Other Sources:

Section 56 – 59

80 C: Payment of LIC/PF and other eligible investments

80CCC: Contribution to certain Pension Fund

80D: Medical Insurance Premium

80DD: Maintenance and medical treatment of handicapped dependent

80E: Interest on Educational Loan

80TTA: Interest on Saving Bank account

80U: Deduction in the case of totally blind or physically handicapped or mentally retarded resident person

Assesse, Assessment, Assessment Year, Annual Value, Business, Capital Assets, Income, Previous Year, Person, Transfer.

(B)    Determination of Residential Status of Individual, Scope of Total Income (S. 5)

(B)    Income from House Property (S. 22-27)

(C)    Profit & Gain from Business and Profession (S. 28, 30,31,32, 35, 35D, 36, 37, 40, 40A and 43B)

(B)    Income from other sources (S.56- 59)

(C)    Exclusions from Total Income (S.10)

(Exclusions related to specified heads to  be covered with relevant heads of income)

S. 80C, 80CCC, 80D, 80DD, 80E, 80U, 80TTA.

(B)    Computation of Taxable Income of Individuals.

Assesse, Assessment, Assessment Year, Annual Value, Business, Capital Assets, Income, Previous Year, Person, Transfer.

Determination of Residential Status of Individual, Scope of Total Income (Sec 5)

Exclusions from total income Sec 10

(Exclusions relating to specific heads to be covered with relevant heads of income)

Income from House Property: (Sec. 22-27)

Profit and Gain from Business and Profession: (Sec. 28, 30,31,32, 35, 35D, 36,37, 40, 40A and 43B)

Capital Gain: (Sec. 45, 48, 49, 50 and 54)

Income from other sources: (Sec. 56- 59)

S. 80C, 80CCC, 80D, 80DD, 80E, 80U, 80TTA

Assesse, Assessment, Assessment Year, Annual Value, Business, Capital Assets, Income, Previous Year, Person, Transfer.

(D)    Determination of Residential Status of Individual, Scope of Total Income (S. 5)

(E)     Income from House Property (S. 22-27)

(F)     Profit & Gain from Business and Profession (S. 28, 30, 31, 32, 35, 35D, 36, 37, 40, 40A and 43B)

(E)     Income from other sources (S. 56- 59)

(F)     Exclusions from Total Income (S. 10)

(Exclusions related to specified heads to  be covered with relevant heads of income)

S. 80C, 80CCC, 80D, 80DD, 80E, 80U, 80TTA.

(D)    Computation of Taxable Income.

Section 2 –Assessee, Assessment Year, Assessment, Annual value, Business, Capital asset, Income, Person, Previous Year, Transfer

Basis of Charge:

Section 3- 9 -Previous Year, Residential Status, Scope Of Total Income, Deemed Income

Note -Exemptions related to specific Heads of Income to be covered with Relevant Provisions.

Section 15 – 17, Including Section 10 relating to

House Rent Allowance, Travel Concession, Special Allowance, Pension – Commutation, Leave Encashment, Compensation, Voluntary Retirement, Payment from Provident Fund

Income From House Property

Section 22 – 27, Including Section 2 – Annual Value

Profits & Gains From  Business & Profession

Vocation Section 28-32, 36, 37, 40, 40A & 43B.

including.: Section 2 – Business

Capital Gains 

Section 45, 48, 49, 50, 54 and 55

Income from Other Sources

Section 56 – 59

80 C – Payment of LIC/PF and other eligible investments

80CCC – Contribution to certain Pension Fund

80D – Medical Insurance Premium

80 DD- Maintenance and medical treatment of handicapped dependent

80E – Interest on Educational Loan

80 TTA- Interest on Saving Bank account

80U –  Deduction in the case of totally blind or physically handicapped or mentally retarded resident person

Capital Assets, Income, Person, Previous Year, Transfer

Residential Status (S: 6) for Individual assessee

¨          Income from House Properties (S: 22 to 27)

¨          Profit and Gain From Business (S:28, 30, 31, 32, 35, 35D, 36, 37, 40, 40A 43B.

¨          Capital Gains (S: 45, 48, 49, 50, 54, 54 EC) restricted to computation of Capital gain on transfer of residential house property only

¨          Income from Other Sources (S: 56 to S: 59)

Exclusions From Total Income (S: 10)

Exclusion related to specified heads to be covered with relevant head.eg. Salary, Business Income, Capital Gain, Income from Other Sources