portfolio management

Mr. Prashant Gupta is interested in investing in equity shares of Infosys and Hamdard. Infosys Technologies Ltd. (NASDAQ: INFY) which was started in 1981 by seven people with US$ 250. Today, it is a global leader in the "next generation" of IT and consulting with revenues of over US$ 4 billion. It offers span business and technology consulting, application services, systems integration, product engineering, custom software development, maintenance, re-engineering, independent testing and validation services, IT infrastructure services and business process outsourcing. Hamdard (Wakf) Laboratories, India is a famous pharmaceutical company in India known for its Unani and Ayurvedic products. It is the world's largest manufacturer of Unani medicinesSome of its more famous products include Safi, Sharbat Rooh Afza, Cinkara, Roghan Badam Shirin and Pachnol. It is associated with Hamdard Foundation, India.

Being conservative in nature, he wants to determine the risk associated with investments. In specific terms, he wants to seek data related to both levered and unlevered beta of these companies. He approaches Nitin Shah, a financial consultant to do the needful. Nitin has collected the relevant information detailed below:

Number

(MONTHS)

INFOSYS*

HAMDARD*

S&P CNX NIFTY**

1

0.1455

0.0432

0.0654

2

0.1291

0.307

0.1536

3

-0.1036

-0.0498

-0.0749

4

-0.0643

-0.0369

0.0473

5

-0.0673

-0.0272

-0.0178

6

0.1361

0.0286

-0.0291

7

-0.0111

-0.1088

-0.1465

8

0.0452

-0.1338

0.0194

9

0.0277

0.0913

0.0663

10

0.0581

0.011

-0.0022

11

0.0313

0.0581

0.0854

12

0.1021

0.1043

0.0127

13

0.1652

0.0876

0.0914

14

-0.0237

0.0617

0.0604

15

-0.0581

0.0877

-0.0099

16

-0.0077

0.14

0.0119

17

-0.0401

--0.0369

-0.008

18

-0.0589

0.0473

-0.0605

19

0.1335

0.1054

0.0746

20

0.0693

0.0249

0.0596

21

-0.0391

0.1082

0.048

22

-0.0086

0.048

0.0378

23

0.0196

0.068

0.0813

(i) Monthly returns on equity shares of Infosys and Hamdard for a period of 2 years (w.e.f. October 2006 to September 2008) along with portfolio of S&P CNX NIFTY.

(ii) Return on 364-days treasury bills issued by Government of India for the period 2007-08 is 5.15 per cent per annum and 0.419 per month. This rate is to be used as a proxy for risk-free rate of return.

(iii) Debt-equity ratio (based on the average of 2004 to 2008) is 1.6 per cent for Wipro and 31.4 per cent for Dabur.

(iv) Corporate tax is 35 per cent.

Mr. Prashant Gupta is interested in investing in equity shares of Infosys and Hamdard. Infosys Technologies Ltd. (NASDAQ: INFY) which was started in 1981 by seven people with US$ 250. Today, it is a global leader in the "next generation" of IT and consulting with revenues of over US$ 4 billion. It offers span business and technology consulting, application services, systems integration, product engineering, custom software development, maintenance, re-engineering, independent testing and validation services, IT infrastructure services and business process outsourcing. Hamdard (Wakf) Laboratories, India is a famous pharmaceutical company in India known for its Unani and Ayurvedic products. It is the world's largest manufacturer of Unani medicinesSome of its more famous products include Safi, Sharbat Rooh Afza, Cinkara, Roghan Badam Shirin and Pachnol. It is associated with Hamdard Foundation, India. Being conservative in nature, he wants to determine the risk associated with investments. In specific terms, he wants to seek data related to both levered and unlevered beta of these companies. He approaches Nitin Shah, a financial consultant to do the needful. Nitin has collected the relevant information detailed below: Number INFOSYS* HAMDARD* S&P CNX NIFTY** 1 0.1455 0.0432 0.0654 2 0.1291 0.307 0.1536 3 -0.1036 -0.0498 -0.0749 4 -0.0643 -0.0369 0.0473 5 -0.0673 -0.0272 -0.0178 6 0.1361 0.0286 -0.0291 7 -0.0111 -0.1088 -0.1465 8 0.0452 -0.1338 0.0194 9 0.0277 0.0913 0.0663 10 0.0581 0.011 -0.0022 11 0.0313 0.0581 0.0854 12 0.1021 0.1043 0.0127 13 0.1652 0.0876 0.0914 14 -0.0237 0.0617 0.0604 15 -0.0581 0.0877 -0.0099 16 -0.0077 0.14 0.0119 (MONTHS) 17 -0.0401 --0.0369 -0.008 18 -0.0589 0.0473 -0.0605 19 0.1335 0.1054 0.0746 20 0.0693 0.0249 0.0596 21 -0.0391 0.1082 0.048 22 -0.0086 0.048 0.0378 23 0.0196 0.068 0.0813 (i) Monthly returns on equity shares of Infosys and Hamdard for a period of 2 years (w.e.f. October 2006 to September 2008) along with portfolio of S&P CNX NIFTY. (ii) Return on 364-days treasury bills issued by Government of India for the period 2007-08 is 5.15 per cent per annum and 0.419 per month. This rate is to be used as a proxy for risk-free rate of return. (iii) Debt-equity ratio (based on the average of 2004 to 2008) is 1.6 per cent for Wipro and 31.4 per cent for Dabur. (iv) Corporate tax is 35 per cent