2. Describe the distinction between technical analysis and explain the purpose of each one.
4. Is there any relationship between the improvement in GDP and a greater stock performance. If so, their relationship.
6. Identify some industries in Saudi Arabia, which are either considered to you cyclical and defensive. If you are a portfolio manager, how do you allocate investment during good times and bad times among these industries?

Part II

Your preliminary analysis of two stocks has yielded the information set forth below. The return for the market is 10 percent and the risk-free rate is 5 percent.

	A	B
Beginning of the year earning per share ($)	5	3
Company payout policy	40%	60%
Current share price	30	22
ROE	11%	13%
Beta	1.00	1.5

2. Calculate the required rate of return using CAPM model and identify the growth rate for the dividend.
4. Using Gordon Growth Dividend Discount Model, calculate the stock price for respective asset and determine whether they are under-priced or overpriced.

Question 2

1. Assume that you are an equity portfolio manager with PIF. Some of your clients wish to withdraw from some of their funds. But you are afraid that equity index might slide in the near future. What sort of hedging technique you may apply in this scenario? In this scenario, will you be considered a hedger or speculator?

1. As an equity portfolio manager, you may use certain risk-adjusted performance measures.

Describe and discuss the following measures of performance evaluation!

• Treynor Index, William Sharpe, Michael Jensen

Using the following table evaluate which is better than other using three different measure of performance evaluation.

Asset	E(R)%	beta	Stdv
X	12	1.25	16
Y	11	1.0	12
Risk-free	3	0	0
Market index	12	1	12