Sharekhan project report ,mba

A

SUMMER INTERNSHIP PROJECT ON

INVESTMENT PATTERN ON THE BASIS OF RISK PROFILE OF

INVESTORS

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE TWO YEAR FULL TIME POST GRADUATE DIPLOMA IN MANAGEMENT

PREPARED BY:- UNDER THE GUIDANCE OF :-

VIJAY MANNEWAR 1) Dr. SHALINI SINGH

Roll Number: - 14002 I.T.S-IM

Batch :- 2012-14 2) MR. AMIT SHARMA

BRANCH HEAD

(SHAREKHAN LTD.)

ITS-INSTITUTE OF MANAGEMENT

46, KNOWLEDGE PARK-III, GREATER NOIDA

PH.:- 0120-2331073, 2331000, E-mail: [email protected]

CERTIFICATE :-

This is to certify that “Vijay Mannewar” a student of Post graduate diploma in management,

Batch (2012-14) of ITS-INSTITUTE OF MANAGEMENT, Roll No. 14002 has undertaken

the Summer Internship Project under my guideance for the Project Title “Investment Pattern on

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the basis of Risk Profile of Investors”. This Project Report is prepared in partial fulfillment for

the Post graduate diploma in management.

To the best of my knowledge, this research work is original and no part of this report has been

submitted by the student earlier to any other institution / university.

Date:-…………………… Faculty Mentor’s Name: …………

(Signature)

ACKNOWLEDGEMENT

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The satisfaction of the successful completion of any task wouldn’t be complete without the

expression of gratitude to the people who made it possible.

I express my gratitude to Mr. Amit Sharma (Branch head) SHAREKHAN LTD, for his support

and guidance during the survey.

I am very thankful to Dr. Shalini Singh, Faculty, ITS- INSTITUTE OF MANAGEMENT, for

the guidance and interest evinced throughout the preparation of this project.

I also extend my heartfelt gratitude and thanks to Prof. Shekhar Ghosh, General Director, ITS-

INSTITUTE OF MANAGEMENT.

I take this opportunity, also to express my love and sincere thanks to my family members and

friends for their support and advice during various stage of work.

I also extend my gratitude to the respondents of my survey for their kind co-operation.

But last not the least I thank God almighty for giving me the support for the completion of the

task.

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DECLARATION

I Vijay Mannewar Student of ITS- Institute of Management Greater Noida Batch 2012-14

declare that every part of the project report on “Investment Pattern on the basis of Risk profile

of Investors (A Research report of Sharekhan ltd) ” that I have submitted is original . The

information has been collected from genuine & authentic sources.

The project work is done under the supervision of Dr.Shalini Singh. The work has been

submitted in the partial fulfillment of the required degree PGDM.

Date of Submission of Project: _____________

Place of Submission of Project: _____________

Vijay Mannewar

Faculty’s Comments:

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TABLE OF CONTENT

CHAPTERS CONTENTS PAGE NUMBERS

1 Executive summary 6-7

2 Introduction of topic 8-12

3 Introduction of Company 13-33

4 Objectives of the study 34-35

5 Research methodology 36-39

6 Data analysis & interpretation 40-72

7 Findings & conclusions 73-74

8 References 75

9 Appendix 76-77

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EXECUTIVE SUMMARY

People invest their money for generating good returns. But in this investment some kind of risk

is involved. All investors have different attitudes towards risk. When it comes to investing, it is

important to consider your risk profile or tolerance carefully, including how comfortable you are

with the possibility of losing money, or that returns on your investments. The risk profile of

investors depends upon their demographic structures or characteristics.

The project deals with the analyzing the investment pattern on the basis of risk profile of

investors at Sharekhan Limited and what are the risk factors that influence the type of investment

made by individuals . As we all know that every person who wants to gain better returns in

future they must have to invest their money in stock market or anywhere else. This study

describes the investment pattern use by different persons while doing investment in stock market

keeping different risk in mind.

The main reason to choose this research is to find out the investment pattern behavior in respect

of their risk bearing capacity and this research helps the company to target the investors

according to their risk ability. The research process chosen by me is qualitative and quantitative

research. Questionnaires in part help me a lot in finding the actual position of the market under

the survey method.

.A sample size of about 96 respondents which includes individual investors as well as corporate

investors was taken for purpose from various parts of Delhi and N.C.R . After the survey was

completed, the data was first stored and then analyzed on the chosen parameters. This analyzed

data was later on converted into graphs. Such as pie chart, bar graphs, etc this was to make result

easily comprehensible by any one going through the report. Later on, all this information was

compiled in the form of a presentable and highly comprehensible report.

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After analyzing the data, the problem which has been identified that most of the investors are

ready to bear risk in expectation of higher returns. There is a strong relationship in investment

pattern and risk bearing capacity of investors while doing investment. For analyzing the data we

used chi- square and phi-Cramer V test in SPSS V 19.0 and use MS Excel 2007 for making

graphs.

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INVESTMENT PATTERN ON THE BASIS OF RISK PROFILE OF INVESTORS

WHAT IS RISK?

The word ‘risk’ has a definite financial meaning. It refers to possibility of incurring a loss in a

financial transaction. In a broad sense, investment is considered to involve limited risk and is

confined to those avenues where the principal is safe. ‘Speculation’ is considered as an

involvement of funds of high risk.

TYPES OF RISK

1. SYSTEMATIC RISK

2. UNSYSTEMATIC RISK

SYSTEMATIC RISK

Systematic risk refers to that portion of the total variability of the return caused by common

factor affecting the prices of all securities alike through economic, political and social factors.

UNSYSTEMATIC RISK

Unsystematic risk refers to that portion of the total variability of the return caused due to unique

factors, relating that firm or industry, through such factors as management failure, labour strikes,

raw material scarcity etc.

WHAT IS INVESTMENT?

Investment is the purchase of an asset or item with the hope that it will generate income or

appreciate in the future and be sold at the higher price.

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http://en.wikipedia.org/wiki/Asset

INVESTMENT RISK PROFILE

All investors have differing attitudes towards risk. When it comes to investing, it is important to

consider your risk profile or tolerance carefully, including how comfortable you are with the

possibility of losing money, or that returns on your investments could vary widely from year to

year.

Understanding your personal risk tolerance will help you choose an appropriate asset allocation -

the following points can help you to determine an investment mix that's appropriate for your

needs.

INVESTMENT EXPERIENCE

How would you describe your investment experience and understanding of financial markets?

Just started investing in the last year

You understand the basics of investing

You have been investing on your own for several years and are reasonably confident of

your knowledge of financial markets

Your knowledge of financial markets is well above average and you make investment

decisions confidently

RISK TOLERANCE

To establish investment strategies that suit your profile of risk and will be comfortable with, you

need to consider the possibility that the value of your investment may decline even though this

may be temporary. Are you prepared to accept the possibility of a negative return at any time in

exchange for potentially higher long term returns? What percentage of your money would you be

prepared to invest in higher-risk investments?

Which of the following is important to you:

Avoiding any short-term losses

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http://www.2020directinvest.com.au/investor-education/asset-classes.aspx

Receiving regular income from investments

Long-term growth in the value of investments

Protection against inflation

In October 1987 the stock market fell more than 20% in one day. If you owned an

investment that fell by 20% in a short time what would you do or what did you do in

1987:Sell all of the remaining investment (Conservative)

Sell a portion of the remaining investment (Conservative to Balanced)

Hold the investment and sell nothing (Balanced or Aggressive)

Buy more of the investment (Aggressive)

INVESTMENT GOALS AND OBJECTIVES

Why are you investing? Is it for something in the near future (new car, or down payment on a

home) or something farther off (a young child's education or your own retirement)? If your

investing goals are short term you want your money to be there - with interest - when you need

it. Therefore you will need to focus on relatively short term investments like term deposits or a

cash management trust. If on the other hand, you are investing for the long term, you may be

able to afford to take some risk in pursuit of a higher return. Shares, property, and growth

orientated managed which historically have provided higher returns than fixed interest or cash

over time, may be more appropriate.

INVESTMENT TIMEFRAME

When do you expect to need to access all or part of your investments:

Less than 1 year (immediate access)

Less than 2 years (short term)

2 to 5 years (short to mid-term)

6 to 10 Years (mid to long term)

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Over 10 Years (long term)

LIQUIDITY / CASH REQUIREMENTS

How much money do you need to keep available for emergencies such as house repairs, a

dental emergency or serious car repairs? These emergencies can be a serious setback if

you are not prepared. The amount of your emergency fund will depend on your current

lifestyle and expenses. As a general rule you should have about 3 months of income set

aside to meet emergencies without needing to rely on credit cards. A cash management

trustthat pays high interest can be a good place to keep emergency funds.

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http://www.2020directinvest.com.au/investment-opportunities/cash-management-trusts.aspx

http://www.2020directinvest.com.au/investment-opportunities/cash-management-trusts.aspx

http://www.creditcards.com.au/

Age and Income

Your age and your income - particularly the stability of your income - are important factors to

consider when determining your investment profile. If you are young you can afford to take a

longer term view and any short-term losses may have minimal effect. If your income or

employment is unstable you will need to take this in to account when setting your investment

goals.

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Risk Profile Investment Style

Conservative Your primary investment goal is capital protection. You require

stable growth and/or a high level of income, and access to your

investment within 3 years.

Cautious Your primary investment goal is capital protection. Investors in

this risk profile require fairly stable growth and/or a moderate

level of income. Your investment term is 3 years or more.

Moderate Your primary investment goal is capital growth. You can tolerate

some fluctuations in the value of your investment in the

anticipation of a higher return. You don't require an income and

you are prepared to invest for 5 years or more.

Moderatley

aggressive

Your primary investment goal is capital growth. Investors in this

risk profile can tolerate a fair level of fluctuations in the value of

you investment in anticipation of possible higher returns. You

don't require an income and you are prepared to invest for 5 to 10

years.

Aggressive Your primary investment goal is long-term capital growth. You

can tolerate substantial fluctuations in the value of your

investment in the short-term in anticipation of the highest possible

return over a period of 10 years or more.

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SHAREKHAN LIMITED

INTRODUCTION

Sharekhan is one of the leading retail broking House of SSKI Group which was running

successfully since 1922 in the country. It is the retail broking arm of the Mumbai-based SSKI

Group, which has over eight decades of experience in the stock broking business. Sharekhan

offers its customers a wide range of equity related services including trade execution on BSE,

NSE, Derivatives, depository services, online trading, investment advisory, Mutual Fund

Advisory etc.

The firm’s online trading and investment site - www.sharekhan.com - was launched on

Feb 8, 2000. The site gives access to superior content and transaction facility to retail customers

across the country. Known for its jargon-free, investor friendly language and high quality

research, the site has a registered base of over two lakh customers. The number of trading

members currently stands More than 8 Lacs. While online trading currently accounts for just

over 8 per cent of the daily trading in stocks in India, Sharekhan alone accounts for 32 per cent

of the volumes traded online.

The content-rich and research oriented portal has stood out among its contemporaries

because of its steadfast dedication to offering customers best-of-breed technology and superior

market information. The objective has been to let customers make informed decisions and to

simplify the process of investing in stocks.

On April 17, 2002 Sharekhan launched Speed Trade, a net-based executable application

that emulates the broker terminals along with host of other information relevant to the Day

Traders. This was for the first time that a net-based trading station of this caliber was offered to

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the traders. In the last six months Speed Trade has become a de facto standard for the Day

Trading community over the net.

On October 01, 2007 Sharekhan again launched his another integrated Software based

product Trade Tiger, a net-based executable application that emulates the broker terminals along

with host of other information relevant to the Day Traders. It has another quality which differs it

from other that it has the combined terminal for EQUITY and COMMODITIES both.

Share khan’s ground network includes over 1005 centers in 410 cities in India, of which

210 are fully-owned branches. Sharekhan has always believed in investing in technology to build

its business. The company has used some of the best-known names in the IT industry, like Sun

Microsystems, Oracle, Microsoft, Cambridge Technologies, Nexgenix, Vignette, Verisign

Financial Technologies India Ltd, Spider Software Pvt Ltd. to build its trading engine and

content. Previously the Morakiya family holds a majority stake in the company but now a world

famous brand CITI GROUP has taken a majority stake in the company. HSBC, Intel & Carlyle

are the other investors.

With a legacy of more than 80 years in the stock markets, the SSKI group ventured into

institutional broking and corporate finance 18 years ago. Presently SSKI is one of the leading

players in institutional broking and corporate finance activities. SSKI holds a sizeable portion of

the market in each of these segments. SSKI’s institutional broking arm accounts for 7% of the

market for Foreign Institutional portfolio investment and 5% of all Domestic Institutional

portfolio investment in the country. It has 60 institutional clients spread over India, Far East, UK

and US. Foreign Institutional Investors generate about 65% of the organization’s revenue, with a

daily turnover of over US$ 4 million. The Corporate Finance section has a list of very prestigious

clients and has many ‘firsts’ to its credit, in terms of the size of deal, sector tapped etc. The group

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has placed over US$ 1 billion in private equity deals. Some of the clients include BPL Cellular

Holding, Gujarat Pipavav, Essar, Hutchison, Planetasia, and Shopper’s Stop.

Sharekhan business

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1. Brokering business.

2. White feathering house production.

Vision

To be the best retail broking brand in the retail business of the stock market.

Mission

To educate and empower the individual investor to make better investment decisions through

quality advices and superior services.

Stock exchange Mumbai

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80 years of taming Bulls & Bears

Share khan is the retail broking arm of SSKI, an organization with more then eight

decade of trust and credibility in the stock market.

Amongst pioneers of investment research in the Indian market.

In 1984 venture into institutional broking and the corporate finance.

Leading domestic player in the Indian institutional business.

Over US$5 billion of private equity deal.

SSKI group companies

SSKI investor services ltd (Sharekhan)

S.S. Kantilal Isharlal securities

SSKI corporate finance.

SSKI - Corporate Structure

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SHAREKHAN PROFILE

SHAREKHAN RETAIL BROKING

Among the top three (3) branded retail services providers (Rs 856 crs average daily

volume.

NO. 2 player in online business

Large network of branded broking outlets in the country servicing around 5, 45, 000

Clients

MANAGEMENT TEAM

Tarun P. Shah Mr. Jaideep Arora Shankar Vailaya

BOARD OF DIRECTORS

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BENEFITS

· Free Depository A/c

· Secure Order by Voice Tool Dial-n-Trade.

· Automated Portfolio to keep track of the value of your actual purchases.

· 24x7 Voice Tool access to your trading account.

· Personalized Price and Account Alerts delivered instantly to your Cell Phone & E-mail

address.

· Special Personal Inbox for order and trade confirmations.

· On-line Customer Service via Web Chat.

· Anytime Ordering.

· NSDL Account

· Instant Cash Tranferation.

· Multiple Bank Option.

· Enjoy Automated Portfolio.

· Buy or sell even single share.

Branch - Head Office

A-206, Phoenix House, 2nd Floor, Senapati Bapat Marg, Lower Parel, Mumbai- 400 013.

Telephone No: 67482000

Email: [email protected]

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KEY OFFICIALS DESIGNATION

1. Mr. Shripal Morakhia Chairman

2. Mr. Tarun Shah CEO

3. Mr. Kaliyan Raman Online Sales Head

4. Mr. Jason Pandey and DP Head

Mr. Pradeep

5. Mr. Hemendra Aggarwal Cluster Head

6. Mr Amit pal Singh and Regional Sales Manager

Mr. Maneet Rastogi

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PRODUCTS OF SHAREKHAN

CLASSIC ACCOUNT

This account allows the client to trade through the website www.sharekhan.com and is suitable

for the retail investor who is risk-averse and hence prefers to invest in stocks or who do not trade

too frequently.

It allows investor to buy and sell stocks online along with the following features like multiple

watch lists, Integrated Banking, De-mat and Digital contracts, Real-time portfolio tracking with

price alerts and Instant money transfer.

FEATURES

· Online trading account for investing in Equity and Derivatives via www.sharekhan.com

· Live Terminal and Single terminal for NSE Cash, NSE F&O, BSE & Mutual Funds (online

and offline).

· Integration of On-line trading, Saving Bank and De-mat Accounts.

· Instant cash transfer facility against purchase & sale of shares.

· Competative transaction charges.

· Instant order and trade confirmation by E-mail.

· Streaming Quotes (Cash & Derivatives).

· Personlized market watch.

· Single screen interface for Cash and derivatives and more.

· Provision to enter price trigger and view the same online in market watch.

TRADE TIGER

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TRADE TIGER is an internet-based software application which is the combination of

EQUITY & COMMODITIES, that enables you to buy and sell share and well as commodities

item instantly. It is ideal for every client of SHAREKHAN LTD.

FEATURES

· Integration of EQUITY & COMMODITIES MARKET.

· Instant order Execution and Confirmation.

· Single screen trading terminal for NSE Cash, NSE F&O & BSE & Commodities.

· Technical Studies.

· Multiple Charting.

· Real-time streaming quotes, tic-by-tic charts.

· Market summary (Cost traded scrip, highest value etc.)

· Hot keys similar to broker’s terminal.

· Alerts and reminders.

· Back-up facility to place trades on Direct Phone lines.

· Live market debts.

DIAL-N-TRADE

Along with enabling access for your trade online, the CLASSIC and TRADE TIGER

ACCOUNT also gives you our Dial-n-trade services. With this service, all you have to do is dial

our dedicated phone lines which are 1800-22-7500, 3970-7500.

PORTFOLIO MANAGEMENT SERVICES

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Sharekhan is also having Portfolio Management Services for Exclusive clients.

1. PROPRIME - Research & Fundamental Analysis.

Ideal for investors looking at steady and superior returns with low to medium risk appetite. This

portfolio consists of a blend of quality blue-chip and growth stocks ensuring a balanced portfolio

with relatively medium risk profile. The portfolio will mostly have large capitalization stocks

based on sectors & themes that have medium to long term growth potential.

2. PROTECH - Technical Analysis .

Protech uses the knowledge of technical analysis and the power of derivatives market to identify

trading opportunities in the market. The Protech lines of products are designed around various

risk/reward/ volatility profiles for different kinds of investment needs.

THRIFTY NIFTY : Nifty futures are bought and sold on the basis of an automated

trading system that generates calls to go long/short. The exposure never exceeds value of

portfolio i.e. there is no leveraging; but being short in Nifty allows you to earn even in

falling markets and there by generates linear

BETA PORTFOLIO : Positional trading opportunities are identified in the futures

segment based on technical analysis. Inflection points in the momentum cycles are

identified to go long/short on stock/index futures with 1-2 month time horizon. The idea

is to generate the best possible returns in the medium term irrespective of the direction of

the market without really leveraging beyond the portfolio value. Risk protection is done

based on stop losses on daily closing prices.

STAR NIFTY : Trailing Stops Momentum trading techniques are used to spot short term

momentum of 5-10 days in stocks and stocks/index futures. Trailing stop loss method of

risk management or profit protection is used to lower the portfolio volatility and

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maximize returns. Trading opportunities are explored both on the long and the short side

as the market demands to get the best of both upwards & downward trends.

3. PROARBITRAGE - Exploit price analysis

- ONLINE IPO'S AND MUTUAL FUNDS ADVISORY IS AVAILABLE.

PROCESS OF ACCOUNT OPPENING

LEAD MANAGEMENT SYSTEM (LMS) / REFERENCES

CONTACT

TELEPHONE AND PRESONAL VISIT

APPOINTMENT

DEMONSTRATION

AGREE DISAGREE (CLOSE)

DOCUMANTATION

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FILLING THE FORM

SUBMISSION THE FORM

LOGIN OF THE FORM

SENDING THE ACCOUNT OPENING KIT TO THE CUSTOMER FOR TRADING

CHARGE STRUCTURE

1)- PRE PAID OR AMC A/C : -

Advance Amount which will be fully adjsted against your brokerage you paid in One

year.

Following Schemes Are Available: - Brokerage will be chagred -

1) - 750/- Scheme:- 0.05 / 0.50 %

2) - 1000/- Scheme 0.045 / 0.45 %

3) – 2,000/- Scheme: - 0.035 / 0.40 %

4) – 6,000/- Scheme: - 0.025 / 0.25 %

5) – 18,000/- Scheme: - 0.020 / 0.20 %

6) – 30,000/- Scheme: - 0.015 / 0.18 %

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7) – 60,000/- Scheme: - 0.010 / 0.15 %

8) – 1,00,000/- Scheme: - 0.0075 / 0.10 %

Minimum Margine of Rs. 25000/- is Required for Account Opening.

Annual Maintanance Charges will NIL for 1st year and Rs. 400/- from 2nd year.

- EXPOSURE : 4 TIMES (ON MARGINE MONEY)

- EXPOSURE : 10 TIMES (ON MAX TRADING)

- ONLINE IPO'S AND MUTUAL FUNDS ADVISORY IS AVAILABLE.

We are having tie-up with Eleven banks for online fund transfering i.e. HDFC, ICICI, IDBI,

CITI, Union Bank of India, Oriental Bank of Commerce, INDUSIND, AXIS, Centurian

Bank of Punjab, Bank of India and Yes Bank.

Company Provide 4-6 E-mail to there customers per day.

Online Trade in Share

Sharekhan customers can online trade through there computers, through internet during the

market timings.

Online Fund Transfer

We have tie up with Eleven Banks for online fund transferring i.e. HDFC, IDBI, CITI, UBI,

OBC, INDSLANDAND and UTI BANK, Yes bank, Bank of India for Online Money Transfer.

Research based investment advice

Investment and trading services

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Trading and seminars

Technology based investment tools

Integrated demat facility

CUSTOMER CAN TRADE IN

o Equities

o Derivatives

o Commodities

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SWOT ANALYSIS OF SHAREKHAN

(My observation)

STRENGTHS

1. Big client base

2. In-house research house

3. online as well as offline trading

4. Online IPO/ MF services

5. Share shops

6. Transparent

7. User friendly tie ups with 10 banks

8. Excellent order execution speed and reliability

WEAKNESS

1. Lack of awareness among customer

2. Less focus on customer retention

3. Less Exposure

OPPORTUNITIES

1. Diversification

2. Product modification

3. Improve Web based trading

4. Provide competitive brokerage

5. Concentrate on PMS

6. Focus on Institutional investors

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7. Concentrate on HNI’s (high net worth investor)

THREATS

1. Aggressive promotional strategies by close competitor like Religare, Angel Broking and India

bulls.

2. More and more players are venturing into this domain, which can further reduce the earning of

Share Khan.

3. Stock market is very volatile, risk involves is very high.

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LITERATURE REVIEW

A number of academic studies have provided evidence of demographic and non demographic

characteristics related to the financial risk tolerance of individuals. The most common variables

researched by academics to determine their relationship with financial risk tolerance are gender,

age, marital status, number of dependents, income, wealth, education and financial knowledge.

We report the main findings as well as a number of less-researched variables. Gender differences

have been widely examined, with a large number of studies reporting higher financial risk

tolerance for males (Grable, 2000; Grable and Joo, 2000; Bemasek and Shwiff, 2001; Chaulk,

Johnson, and Bulcroft, 2003; Yook and Everett, 2003; Grable, Lytton, and O'Neill, 2004;

Hallahan, Faff, and McKenzie, 2004; Yao, Hanna, and Lindamood, 2004; Fan and Xiao, 2006;

Van de Venter and Michayluk, 2007; Gilliam, Chatterjee, and Zhu,2010).

Studies have also argued that financial risk tolerance decreases with age (Xiao,

Alhabeeb, Hong, and Haynes, 2000; Chaulk, Johnson, and Bulcroft, 2003; Hallahan, Faff, and

McKenzie, 2004; Yao, Hanna, and Lindamood, 2004; Fan and Xiao, 2006; Van de Venter and

Michayluk, 2007; Faff, Hallahan, and McKenzie, 2009). Furthermore, a nonlinear aspect to age

has been observed (Hallahan, Faff, and McKenzie, 2004; Grable, Lytton, O'Neill, Joo, and

Klock, 2006; Faff, Hallahan, and Mckenzie, 2009). The primary explanation for the observation

of a significantly negative coefficient for age and the nonlinear relationship has been attributed to

the time horizon to recover losses that is lower with age and the higher reliance on investment

funds as individuals’ age.

Marital status has been widely studied, especially because of its interaction with

age and gender. Financial risk tolerance is higher for single individuals (Grable and Joo, 2004;

Hallahan, Faff, and McKenzie, 2004; Yao, Hanna, and Lindamood, 2004; Fan and Xiao,2006).

The main justification for this result is that single individuals do not hold the same

responsibilities as those that are married and thus the single individuals are willing to accept

more financial risk. For example, Chaulk, Johnson, and Bulcroft (2003) propose that married

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individuals tend to have a lower financial risk tolerance because of a greater need for wealth

protection. When gender and marital status are incorporated together, Jianakoplos and Bemasek

(1998) and Bemasek and Shwiff (2001) find that single men tend to be more risk tolerant than

single women. A negative relationship between financial risk tolerance and the number of

dependents is identified by Chaulk, Johnson, and Bulcroft (2003) and Hallahan, Faff, and

McKenzie (2004), with Faff, Hallahan, and McKenzie (2009) proposing a statistically significant

nonlinear linkage. This negative relationship has been identified with marital status and may

exist because of the added responsibilities and more conservative outlook to risk when

dependents are considered.

Higher financial risk tolerance is reported for individuals in high income and

wealth categories (Grable, 2000; Chaulk, Johnson, and Bulcroft, 2003; Yook and Everett, 2003;

Chang, DeVaney, and Chiremba, 2004; Grable and Joo, 2004; Grable, Lytton, and O'Neill, 2004;

Hallahan, Faff, and McKenzie, 2004; Yao, Hanna, and Lindamood, 2004; Fan and Xiao, 2006).

In addition, Grable and Joo (1999) indicate a significantly positive relationship between financial

risk tolerance and an individual's level of financial solvency.

A positive relationship has been identified between financial risk tolerance and education

(Grable, 2000; Chang, DeVaney, and Chiremba, 2004; Grable and Joo, 2004; Hallahan, Faff, and

McKenzie, 2004; Yao, Hanna, and Lindamood, 2004; Fan and Xiao, 2006). Hallahan, Faff, and

Mckenzie (2004) also observe high positive correlations between income, wealth, and education,

suggesting that financial risk tolerance could be a function of income and wealth rather than

education.

Financial or investment knowledge has a positive relationship with financial risk tolerance

(Grable, 2000; Grable and Joo, 2000, Grable and Joo, 2004; Van de Venter and Michayluk,

2007). However, Davey (2004) challenges the view that educating individual investors about

financial markets and instruments will necessarily increase their financial risk tolerance.

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Although the financial education of an advisor's clients is considered best practice, it will most

likely not have any direct influence on the risk preference of an individual as even the most

knowledgeable and educated could potentially have a low financial risk tolerance.

When advising clients about investment decisions, financial advisors have to consider both their

financial goals and financial risk tolerance. In many cases these two could conflict, leading

advisors to recommend that individuals take on more risk than they are comfortable with to meet

their financial goals. Bemasek and Shwiff (2001) report that individuals generally tend to

increase the level of risk of their retirement savings after they have consulted a financial advisor.

Furthermore, this increase was found to be statistically significant for both the respondent and

the spouse or partner consulting a financial advisor, possibly suggesting the existence of a

relationship between gender and marital status as well.

In contrast to the earlier finding. Van de Venter and Michayluk (2007) find no statistically

significant effect on financial risk tolerance when a financial advisor is consulted. When

examining whether a financial advisor has any impact on investment behavior. Hung and Yoong

(2009) conclude that unless financial guidance is actively sought by the individual, consulting a

financial advisor has no impact on investment behavior. This finding highlights the difficulty

when interpreting survey questions that encompass financial advisors, and whether their advice

is undertaken.

Finally, Grable (2000) reports that individuals with positive economic expectations have higher

financial risk tolerance scores than those with less positive expectations, with Van de Venter and

Michayluk (2007) also finding evidence that financial risk tolerance is positively related to both

future expectations and previous investment performance. These previous findings identify many

factors that might influence risk tolerance on their own or in combination with others.

37 | P a g e

38 | P a g e

39 | P a g e

OBJECTIVES OF THE STUDY

1. To understand the risk profile of investors.

2. To study risk bearing capacity on the basis of gender, education, occupation, age, family

income and number of dependents.

40 | P a g e

41 | P a g e

RESEARCH METHODOLOGY

Research methodology is way to systematically solve the research problem. Research, in

common terms refers to a search for knowledge. Research methodology consists of different

steps that are generally adopted by a researcher to study the research problem along with the

logic behind them.

RESEARCH DESIGN:

Research design is the plan, structure and strategy of investigation conceived so as to

obtain answers to research question.

There are two types of research design. One is exploratory research and other is

descriptive research

EXPLORATORY RESEARCH:

We studied the company report, talked to the customers and employee of the company. We

identified that inspite of providing various opportunities customers may not be aware of de-

rivative and commodity products.

DESCRIPTIVE RESEARCH

Survey method was adopted for this research

DATA SOURCES:

The study is mainly based on the data collection from primary as well as secondary

sources.

Primary data: Data collected for specific purposes in the form of questionnaire

Secondary data: Data existing in the form of Books, Internet, Catalogues etc.

42 | P a g e

SAMPLING DESIGN:

Definition of population: All the customers of share khan.

Sampling procedure: A non probability sampling technique i.e. convenient sampling procedure

was adopted.

Sampling size: A sample of 96 customers was selected from the target population for the study.

RESEARCH METHODOLOGY:

Research design : descriptive in nature.

Data source : data collected from primary and secondary sources.

Primary data : primary data is collected from the respondent through

these structured questionnaires.

SAMPLING DESIGN:

Sample size : 96

Sampling procedure : Convenience sampling

Statistical tool : Percentage method, mean, chi-square test.

STATISCAL TOOLS:

For the purpose of analysis, Mean and percentage methods are used for the calculation

and the result was interpreted. This test was used to minimize the error of the data collected.

43 | P a g e

STATISTICAL TOOLS USED:

Sample tools are used for analyze purpose, they are follows:

1. Cross tab method

2. Chi square test

3. Phi and Cramer V test

Null hypothesis (HO) states: the two attributes are independent of each other.

Alternative hypothesis (HI) states: the two attributes are dependent of each other.

44 | P a g e

45 | P a g e

Q9. What do you expect when you invest ?

CHART-1

Interpretation:- This chart-1 shows, out of 96 respondents 40 people are ready to bear nominal

risk and 36 people don’t want to take any risk. This shows that around 79% respondents are

conservative in terms of taking risk and only 21% respondents are ready to bear risk and out of

these 21 % only 3% are ready for high risk situation.

46 | P a g e

NO RISK NOMINAL RISK

MODERATE RISK

HIGHER RISK

Series1 36 40 18 2

2.57.5

12.517.522.527.532.537.542.5

RISK

Axis Title

Q10 . How long do you normally hold investment?

CHART -2

FOR A DAY FOR A WEEK FOR A MONTH FOR A YEAR

Series1 22 25 18 31

2.5

7.5

12.5

17.5

22.5

27.5

32.5

TIME PERIOD

Axis Title

Interpretation:- As per Chart-2,most of the respondents invest for a longer time period i.e. around 32% and rest of the respondents have very less variability regarding holding of investment as all other respondents are equally interested in daily, weekly or monthly holding of investment i.e. around 20% go for each kind of investment holding.

47 | P a g e

Q11. If your investments were to fall in value by 15 per cent over a one-year period, you will

Chart -3

WITH-DRAW ALL

MONEY FROM SHARE

MARKET

TAKE OUT SOME

MONEY AND MOVE

IT TO SAFER IN-VESTMENT

WAIT UNTIL MARKET

RECOVERS THE LOSS

AND THEN CONSIDER OTHER IN-

VESTMENTS

STICK TO THE IN-

VESTMENT

INVEST MORE

MONEY IN THE SAME

INVEST-MENT AS IT IS 15 % CHEAPER

Se-ries1

13 21 26 23 13

2.5

12.5

22.5

INVESTMENT FALL BY 15%

Axis Title

.

Interpretation:- Chart-3 is giving the overview regarding respondents reaction related to their

investment, if market falls in value. We can see here the respondents /investors are neither very

conservative nor aggressive in market condition i.e. only 15% investors are willing to withdraw

all money or invest more money in such situation. Most of the respondents are aware & ready for

such condition. They want to be in the market in expectation of money of market.

48 | P a g e

Q12. You are ready for limited losses in expectation of higher long-term returns?

Chart-4

STRONGLY DISAGREE

DISAGREE NEITHER AGREE OR DISAGREE

AGREE STRONGLY AGREE

Series1 14 16 24 36 6

2.57.5

12.517.522.527.532.537.5

LIMITED LOSSES IN EXPECTATION OF HIGHER RETURNS

Axis Title

Interpretation:- Chart-4 is about that whether investors are ready to bear limited loss in

expectation of high returns we find that only around 30% investors are not agree for this but

around 70% are considering the idea i.e. most of the respondents are aware about the ups &

downs of stock market & ready for risks involved in it in expectation of getting higher returns.

49 | P a g e

Q.13 . I am willing to experience the ups and downs of the market for the potential of greater returns.Chart-5

STRONGLY DISAGREE



Series1 5 11 39 35 6

2.57.5

12.517.522.527.532.537.542.5

EXPERIENCE UPS AND DOWNS OF MARKET

Axis Title

Interpretation:- Chart-5 is about that whether investors are ready to experience ups and downs

of market we find that only around 16% investors are not agree for this but around 84% are

considering the idea i.e. most of the respondents are aware about the ups & downs of stock

market & want to experience that.

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Q14. My main concern is security; keeping money safe is more important than earning high returns.

Chart-6

STRONGLY DISAGREE



Series1 2 4 24 32 34

2.57.5

12.517.522.527.532.537.5

MAIN CONCERN IS SAFETY

Axis Title

Interpretation:- This chart -6 shows the investors are aware about the highs and lows of security market and want to experience that also they are quite positive towards market as they expect after a low market will recover & give them higher return still the safety is major concern of investors. Out of total 96 respondents only less than 10% disagree with the fact.

51 | P a g e

Q15. I am fairly experienced in investment.Chart-7

STRONGLY DISAGREE



Series1 4 15 43 29 5

2.57.5

12.517.522.527.532.537.542.547.5

FAIRLY EXPERIENCED IN INVESTMENT

Axis Title

INTERPRETATION:- As we can see in the chart-7, most of the respondents i.e. around 50% are not sure about their investment capabilities. They are not very sure that their expectation of decision is fair enough. Here I want to mention that the market is so volatile in India that very less investors find themselves fairly enough experienced & don’t bear losses.

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Q16. I am very secure related to my future income (such as from salary, pension or other investments)?Chart-8

STRONGLY DISAGREE



Series1 2 4 15 23 52

51525354555

SECURE RELATED TO FUTURE INCOME

Axis Title

Interpretation:- Chart-8 shows that most of people involve in security market are quite secured related to their future income. We can also understand the statement that the people who have fair enough income resources, comes in security investment as they consider all the pros. & cons. Of the market they know that the market is good place to get better returns but it also contain risk so losses bearable only in the case of secured future returns.

53 | P a g e

2. To study risk bearing capacity on the basis of gender, education, occupation, age, family income and number of dependents

To fulfill this objective I used cross tabs & chi-square test

The results are compiled in a sheet which shows the significance value & chi- square values of all the cross tabs. Here I am providing 2 null hypothesis & 2 alternative hypothesis conditions as sample.

Sample- Null Hypothesis

Gender in respect of expectation from an investment

X1 * X9 Crosstabulation

Count

X9 Total

NO RISK NOMINAL RISK MODERATE

RISK

HIGHER RISK

X1 MALE 27 29 13 2 71

FEMALE 9 11 5 0 25

Total 36 40 18 2 96

Chi-Square Tests

Value Df Asymp. Sig. (2-sided)

Pearson Chi-Square .797a 3 .850

Likelihood Ratio 1.299 3 .729

Linear-by-Linear Association .011 1 .917

N of Valid Cases 96

a. 3 cells (37.5%) have expected count less than 5. The minimum expected count is .52.

Interpretation: - As the chi-square shows the value of P is higher than .05, we will accept null

hypothesis i.e. there is no significant relationship in between the expectation from investment

54 | P a g e

with change in gender. Males and females are equally risk averse & conservative related to

taking risk in stock market.

55 | P a g e

Gender in respect of holding time of investment


Count

X10 Total

DAY WEEK MONTH YEAR

X1 MALE 15 19 13 24 71

FEMALE 7 6 5 7 25

Total 22 25 18 31 96

Chi-Square Tests


Pearson Chi-Square .656a 3 .883

Likelihood Ratio .647 3 .886


N of Valid Cases 96

a. 1 cells (12.5%) have expected count less than 5. The minimum expected count is 4.69.

Interpretation :- As the chi-square shows the value of P is higher than .05, we will accept null

hypothesis i.e. there is no significant relationship in between the investment holding with change

in gender. Males and females are equally risk averse & conservative in holding the investment.

56 | P a g e

Sample- Alternate Hypothesis

Family income in respect of risk bearing capacity


Count

X9 Total

NO

RISK

NOMINAL

RISK

MODERATE

RISK

HIGHER

RISK

X7 < 5LAKH 21 17 4 1 43

5-15 LAKH 15 23 10 1 49

15-25

LAKH

0 0 4 0 4

Total 36 40 18 2 96

Chi-Square Tests

Value df Asymp. Sig. (2-sided)

Pearson Chi-Square 21.932a 6 .001


Linear-by-Linear Association 9.013 1 .003

N of Valid Cases 96


Interpretation :-As the chi-square shows the value of P is higher than .05, we will accept

alternative hypothesis i.e. there is a significant relationship in between the expectation from

investment with change in family income. Investors are balanced & aggressive related to taking

risk in stock market.

57 | P a g e

Education in respect of holding time period for investmentX4 * X10 Crosstabulation

Count

X10 Total

DAY WEEK MONTH YEAR

X4 UNDER GRADUATE 1 1 3 10 15

GRADUATE 14 15 5 17 51

POST GRADUATE 6 7 9 4 26

PH.D. 1 2 1 0 4

Total 22 25 18 31 96

Chi-Square Tests





N of Valid Cases 96


Interpretation :- As the chi-square shows the value of P is higher than .05, we will accept null

hypothesis i.e. there is a significant relationship in between the investment holding with change

in education. Investors are risk averse & conservative related to holding the investment.

As from the above crosstabs the table- 1 is drawn in reference with the chi- square values and the

significance values on different parameters and fills the box with yellow color who gives the best

alternative hypothesis value. Then after interpret that value which is come under that yellow box

and show their cross tabs.

58 | P a g e

TABLE-1

S.No. QUESTIONS GENDER OCCUPATION AGE EDUCATION

Pearson chi-square

Significance

Pearson chi-square

Significance

Pearson chi-square

significance

Pearson chi-square

Significance

1 What do you expect when you invest?

0.797 0.85 9.131 0.425 8.871 0.449 8.854 0.451

2 How long do you normally hold investments?

0.656 0.883 5.669 0.773 4.203 0.898 20.330 0.016

3 If your investments were to fall in value by 15 per cent over a one-year period, you will

6.934 0.139 13.707 0.32 16.943 0.152 11.253 0.507

4 You are ready for limited losses in expectation of higher long-term returns?

6.266 0.18 17.361 0.137 9.682 0.644 28.133 0.005

5 I am willing to experience the ups and downs of the market for the potential of greater returns.

3.639 0.457 7.389 0.831 14.934 0.245 10.855 0.541

6 My main concern is security; keeping money safe is more important than earning high returns.

2.453 0.653 13.083 0.363 9.164 0.689 9.537 0.657

7 I am fairly experienced in investment.

0.570 0.966 7.997 0.785 16.547 0.167 11.665 0.473

8 I am very secure related to my future income (such as from salary, pension or other investments)?

2.561 0.634 9.092 0.695 5.942 0.919 3.830 0.986

59 | P a g e

S.No. QUESTIONS INCOME No. of dependents in

Family

FAMILY INCOME PERCENTAGE OF TOTAL INVESTMENT

Pearson chi-square

Significance

Pearson chi-square

Significance

Pearson chi-square

significance

Pearson chi-square

Significance

1 What do you expect when you invest?

12.718 0.176 10.880 0.539 21.932 0.001 11.360 0.078

2 How long do you normally hold investments?

7.112 0.625 10.015 0.615 5.675 0.461 10.966 0.089

3 If your investments were to fall in value by 15 per cent over a one-year period, you will

11.086 0.522 12.448 0.713 7.197 0.516 7.471 0.487

4 You are ready for limited losses in expectation of higher long-term returns?

21.667 0.041 26.948 0.042 21.371 0.006 15.920 0.044

5 I am willing to experience the ups and downs of the market for the potential of greater returns.

9.029 0.7 16.915 0.391 5.955 0.652 2.999 0.934

6 My main concern is security; keeping money safe is more important than earning high returns.

10.156 0.602 23.013 0.113 4.279 0.831 10.899 0.207

7 I am fairly experienced in investment.

9.603 0.651 22.605 0.125 5.714 0.679 7.066 0.529

60 | P a g e

8 I am very secure related to my future income (such as from salary, pension or other investments)?

7.621 0.814 22.073 0.141 6.356 0.607 3.412 0.906

61 | P a g e

Expectation of risk from an investment

From the Table-1 we can see that the all respondents’ views are indifferent in terms of expectation of risk from investment irrespective of their gender, occupation, age, education, income, No. of dependent in the family and the percentage of total income they invest as most of the respondents wish to tale either no risk or nominal risk. This defines the conservatism related to risk profile of the respondents. But on the basis of Family income it shows a significant relationship as p-value is less than .05, which suggests accepting alternate hypothesis. The relationship is defined as follows:

Table-2

Family income in respect of expectation of risk from an investment


Count

X9 Total

NO

RISK

NOMINAL

RISK

MODERATE

RISK

HIGHER

RISK

X7 < 5LAKH 21 17 4 1 43

5-15 LAKH 15 23 10 1 49

15-25

LAKH

0 0 4 0 4

Total 36 40 18 2 96

< 5LAKH 5-15 LAKH 15-25 LAKH

49%31%

0%

40% 47%

0%9%

20%

100%

2% 2% 0%

Family income in respect of expecta-tion of risk

NO RISK NOMINAL RISK MODERATE RISK HIGHER RISK

62 | P a g e

Chi-Square Tests

Value Df Asymp. Sig.

(2-sided)



Linear-by-Linear

Association

9.013 1 .003

N of Valid Cases 96

a. 6 cells (50.0%) have expected count less than 5. The minimum

expected count is .08.

Symmetric Measures

Value Approx.

Sig.

Nominal by Nominal Phi .478 .001

Cramer's V .338 .001

N of Valid Cases 96

Here from Table -2, it is clear that all the respondents belong to the family income group of < 5

Lakh and 5-15 Lakh are willing to take only nominal or no risk. In this situation as the income

level increases the risk taking ability is shifted towards the bearing the more risk.

This chart shows that most of the respondents lie in the income level group of <5 lakh want to go

for no risk situation but as the income level increases to 5-15 lakh people get shifted from no risk

to nominal risk situation. In the chart it is shown that out of 43 respondents who lies between the

income level group of<5lakh around 50% respondents do not want any risk in their investments.

are go for no risk and only 2% are going for high risk investments. Out of 49 respondents who

lies in between income group of 5-15 lakh 46% are go for moderate risk ,30% are for no risk . So

it defines that there is direct relationship between income and risk bearing capacity of persons.

63 | P a g e

People belong to the income group of 15-25 Lakh as are more towards taking moderate risk. But

the strength of relationship is very low as the value of Cramer’s V is .338.

Investment holding

From the Table-1 we can see that the all respondents’ views are indifferent in terms of expectation of risk from investment irrespective of their gender, occupation, age, education, income, No. of dependent in the family and the percentage of total income they invest as most of the respondents wish to hold investments either for a week or for a year. This defines the conservatism related to risk profile of the respondents. But on the basis of Education it shows a significant relationship as p-value is less than .05, which suggests accepting alternate hypothesis. The relationship is defined as follows:

Table-3

Education in respect of their investment holding


Count

X10 Total

DAY WEEK MONTH YEAR

X4 UNDER GRADUATE 1 1 3 10 15

GRADUATE 14 15 5 17 51

POST GRADUATE 6 7 9 4 26

PH.D. 1 2 1 0 4

Total 22 25 18 31 96

64 | P a g e

UNDER GRADUATE GRADUATE POST GRADUATE PH.D.0%

10%

20%

30%

40%

50%

60%

70%

80%

7%

27%23% 25%

7%

29% 27%

50%

20%

10%

35%

25%

67%

33%

15%

0%

Education in respect of investment holdings

DAYWEEKMONTHYEAR

Chi-Square Tests





N of Valid Cases 96


Symmetric Measures

Value Approx. Sig.



N of Valid Cases 96

Here from Table -3, it is clear that all the respondents belong to the education group of graduates are willing to hold investments for a week or for a year.

This chart shows that most of the respondents lie in the education level group of graduate wants to go for week or a year trading but as the education level increases to post graduates people get diversify their investment holding period. In the chart it is shown that out of 51 respondents who

65 | P a g e

lies between the education level group of graduates around 33% respondents go for a year based investment holding. And only 7% are going for a day investment holding. Out of 26 respondents who lies in between education group of post graduates 35% are go for month investment holding, 15% are for year investment holding. So it defines that there is direct relationship between education and investment holding tenure.

People belong to the education group of graduates are more towards the holding investment for a week or a year . But the strength of relationship is very low as the value of Cramer’s V is .266.

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Limited losses in expectation of higher long term returns

From the Table-1 we can see that the all respondents’ views are indifferent in terms of bearing limited losses in the expectation of higher long term returns irrespective of their gender, occupation, age, education, income, No. of dependent in the family and the percentage of total income they invest as most of the respondents wish to tale either agree or neither agree or disagree in respect of bearing losses in expectation of higher long term returns. This defines the balanced approach related to risk profile of the respondents. But on the basis of Education it shows a significant relationship as p-value is less than .05, which suggests accepting alternate hypothesis. The relationship is defined as follows:

Table-4 ( Education in respect of bearing limited losses in expectation of higher long term returns)


Count

X12 Total

STRONGLY

DISAGREE

DISAGRE

E

NEITHER

AGREE NOR

DISAGREE

AGREE STRONGLY

AGREE

X4 UNDER

GRADUATE

3 7 2 1 2 15

GRADUATE 8 8 17 17 1 51

POST GRADUATE 3 1 4 15 3 26

PH.D. 0 0 1 3 0 4

Total 14 16 24 36 6 96

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UNDER GRADUATE GRADUATE POST GRADUATE PH.D.0%

10%

20%

30%

40%

50%

60%

70%

80%

20%16%

12%

0%

47%

16%

4%0%

13%

33%

15%

25%

7%

33%

58%

75%

13%

2%

12%

0%

STRONGLY DISAGREE

DISAGREE

NEITHER AGREE NOR DISAGREE

AGREE

STRONGLY AGREE

Education in respect of bearing limited losses in expectation of higher long term re-turns

Chi-Square Tests

Value df Asymp. Sig.

(2-sided)



Linear-by-Linear

Association

10.020 1 .002

N of Valid Cases 96

a. 13 cells (65.0%) have expected count less than 5. The minimum

expected count is .25.

Symmetric Measures

Value Approx.

Sig.



N of Valid Cases 96

Here from Table -4, it is clear that all the respondents belong to the education group of graduate are willing to take limited losses in expectation of higher returns.

68 | P a g e

This chart shows that most of the respondents lie in the education level group of graduate and under graduates wants to bear limited losses in expectation of higher returns but as the education level decreases to under graduates’ people is more concern about bearing limited losses in expectation of higher returns. In the chart it is shown that out of 51 respondents who lies between the education level group of graduates around 33% respondents are agree with bearing limited losses in expectation of higher returns . And only 13% are not agree with it. Out of 26 respondents who lies in between education group of post graduates 58% are agree, 12% are strongly agree with it. So it defines that there is direct relationship between education and bearing limited losses in expectation of higher returns.

People belong to the education group of graduates as are more towards in taking the limited losses in expectation of higher returns. But the strength of relationship is very low as the value of Cramer’s V is .313.

69 | P a g e

Income in respect of limited losses in expectation of higher long term return’s

From the Table-1 we can see that the all respondents’ views are indifferent in terms of bearing limited losses in the expectation of higher long term returns irrespective of their gender, occupation, age, education, income, No. of dependent in the family and the percentage of total income they invest as most of the respondents wish to tale either agree or neither agree or disagree in respect of bearing losses in expectation of higher long term returns. This defines the balanced approach related to risk profile of the respondents. But on the basis of income it shows a significant relationship as p-value is less than .05, which suggests accepting alternate hypothesis. The relationship is defined as follows:

Table -5 Income in respect of limited losses in expectation of higher long term return’s


Count

X12 Total

STRONGLY

DISAGREE

DISAGRE

E

NEITHER

AGREE NOR

DISAGREE

AGREE STRONGLY

AGREE

X5 < 3 LAKH 4 7 10 13 2 36

3-5 LAKH 7 9 10 13 2 41

5-10 LAKH 3 0 4 10 1 18

10-20

LAKH

0 0 0 0 1 1

Total 14 16 24 36 6 96

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< 3 LAKH 3-5 LAKH 5-10 LAKH 10-20 LAKH0%

20%

40%

60%

80%

100%

120%

11%17% 17%

0%

19% 22%

0% 0%

28% 24% 22%

0%

36% 32%

56%

0%6% 5% 6%

100%STRONGLY DISAGREE

DISAGREE


AGREE

STRONGLY AGREE

Income in respect of limited losses in expectation of higher long term return’s

Chi-Square Tests





N of Valid Cases 96


Symmetric Measures

Value Approx.

Sig.



N of Valid Cases 96

Here from Table -5, it is clear that all the respondents belong to the income group of <3 lakh and 3-5 lakh are willing to take limited losses in expectation of higher returns.

71 | P a g e

This chart shows that most of the respondents lie in the income level group of <3 lakh are agree for taking limited losses in expectation of higher returns but as the income level increases to 10-20 lakh more people get shifted towards agree for taking limited losses in expectation of higher returns. In the chart it is shown that out of 41 respondents who lies between the income level group of 3-5lakh around 32% respondents are agree in taking limited losses in expectation of higher returns. and only 2% are strongly agree with it.But if the income increases to 10-20 lakh most of the persons are move towards strongly agree situation. So it defines that there is direct relationship between income and limited losses in expectation of higher returns.

People belong to the income group of <3 lakh and 3-5 lakh as are more towards in taking the limited losses in expectation of higher returns. But the strength of relationship is very low as the value of Cramer’s V is .274.

TABLE-6 (No. of dependents in family in respectof limited losses in expectation of higher long term return’s)


Count

X12 Total

STRONGLY

DISAGREE

DISAGRE

E

NEITHER

AGREE NOR

DISAGREE

AGREE STRONGLY

AGREE

X6 NO

DEPENDENT

1 0 0 3 1 5

1-2 5 3 1 3 1 13

3-4 5 7 18 19 2 51

5-7 3 4 5 11 1 24

>7 0 2 0 0 1 3

Total 14 16 24 36 6 96

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NO DEPENDENT 1 to2 3 to4 5 to7 >70%

10%

20%

30%

40%

50%

60%

70%

80%

20%

38%

10%13%

0%0%

23%

14%17%

67%

0%

8%

35%

21%

0%

60%

23%

37%

46%

0%

20%

8%4% 4%

33%

STRONGLY DISAGREE

DISAGREE


AGREE

STRONGLY AGREE

No. of dependents in family in respectof limited losses in ex-pectation of higher long term return’s

Chi-Square Tests





N of Valid Cases 96


Symmetric Measures

Value Approx. Sig.



N of Valid Cases 96

73 | P a g e

Here from Table -6, it is clear that all the respondents belong to the no. of dependents group of 3-4 and 5-7 members are willing to take limited losses in expectation of higher returns.

This chart shows that most of the respondents lie in the No. of dependents level group of 3-4 are agree for taking limited losses in expectation of higher returns but as the No. of dependents level increases to >7 more people get shifted towards disagree for taking limited losses in expectation of higher returns. In the chart it is shown that out of 51 respondents who lies between the No. of dependents level group of 3-4 around 37% respondents are agree in taking limited losses in expectation of higher returns. and only 4% are strongly agree with it. But if the No. of dependents increases to >7 most of the persons are move towards disagree situation. So it defines that there is direct relationship between income and limited losses in expectation of higher returns.

People belong to the income group of 3 -4 and 5-7 members as are more towards in taking the limited losses in expectation of higher returns. But the strength of relationship is very low as the value of Cramer’s V is .265.

74 | P a g e

Family income in respect of limited losses in expectation of higher long term return’s

From the Table-1 we can see that the all respondents’ views are indifferent in terms of bearing limited losses in the expectation of higher long term returns irrespective of their gender, occupation, age, education, income, No. of dependent in the family and the percentage of total income they invest as most of the respondents wish to tale either agree or neither agree or disagree in respect of bearing losses in expectation of higher long term returns. This defines the balanced approach related to risk profile of the respondents. But on the basis of family income it shows a significant relationship as p-value is less than .05, which suggests accepting alternate hypothesis. The relationship is defined as follows:

TABLE-7 ( Family income in respect of limited losses in expectation of higher long term

return’s)


Count

X12 Total

STRONGLY

DISAGREE

DISAGRE

E

NEITHER

AGREE NOR

DISAGREE

AGREE STRONGLY

AGREE

X7 < 5LAKH 6 11 12 12 2 43

5-15 LAKH 8 4 12 23 2 49

15-25

LAKH

0 1 0 1 2 4

Total 14 16 24 36 6 96

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< 5LAKH 5-15 LAKH 15-25 LAKH0%

10%

20%

30%

40%

50%

60%

14%16%

0%

26%

8%

25%28%

24%

0%

28%

47%

25%

5% 4%

50%

Family income in respect of limited losses in expectation of higher long term return’s

STRONGLY DISAGREE

DISAGREE


AGREE

STRONGLY AGREE

Chi-Square Tests





N of Valid Cases 96


Symmetric Measures

Value Approx. Sig.



N of Valid Cases 96

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Here from Table -7, it is clear that all the respondents belong to the family income group of < 5 Lakh and 5-15 Lakh are willing to take limited losses in expectation of higher returns.

This chart shows that most of the respondents lie in the family income group of 5-15 lakh are agree for taking limited losses in expectation of higher returns but as the family income level increases to 15-25 lakh no. of people are decreases towards disagree for taking limited losses in expectation of higher returns. In the chart it is shown that out of 49 respondents who lies between the family income level group of 5-15 lakh around 47% respondents are agree in taking limited losses in expectation of higher returns. and only 16% are strongly disagree with it. But if the family income increases to 15-25 lakh no. of the persons are decreased in disagree situation. So it defines that there is direct relationship between income and limited losses in expectation of higher returns.

People belong to the income group of <5 lakh and 5-15 lakh as are more towards in taking the limited losses in expectation of higher returns. But the strength of relationship is very low as the value of Cramer’s V is .334.

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Percentage of total investment in respect of limited losses in expectation of long term return’s

From the Table-1 we can see that the all respondents’ views are indifferent in terms of bearing limited losses in the expectation of higher long term returns irrespective of their gender, occupation, age, education, income, No. of dependent in the family and the percentage of total income they invest as most of the respondents wish to take either agree or neither agree or disagree in respect of bearing losses in expectation of higher long term returns. This defines the balanced approach related to risk profile of the respondents. But on the basis of percentage of total investment it shows a significant relationship as p-value is less than .05, which suggests accepting alternate hypothesis. The relationship is defined as follows:

TABLE -8 (Percentage of total investment in respect of limited losses in expectation of long term return’s)


Count

X12 Total

STRONGLY

DISAGREE

DISAGRE

E

NEITHER

AGREE NOR

DISAGREE

AGREE STRONGLY

AGREE

X8 BELOW

20%

6 11 20 14 2 53

20%-40% 8 5 4 21 4 42

40%-60% 0 0 0 1 0 1

Total 14 16 24 36 6 96

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BELOW 20% 20%-40% 40%-60%0%

20%

40%

60%

80%

100%

120%

11%19%

0%

21%12%

0%

38%

10%0%

26%

50%

100%

4% 10%0%

Percentage of total investment in respect of limited losses in expectation of long term return’s

STRONGLY DISAGREE

DISAGREE


AGREE

STRONGLY AGREE

Chi-Square Tests

Value df Asymp. Sig. (2-sided)




N of Valid Cases 96


Symmetric Measures

Value Approx. Sig.



N of Valid Cases 96

Here from Table -8, it is clear that all the respondents belong to the percentage of total income in investment group of < 20% and 20%-40% are willing to take limited losses in expectation of higher returns.

This chart shows that most of the respondents lie in the percentage of total investment group of below 20% are neither agree or disagree for taking limited losses in expectation of higher returns

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but as the percentage of total investment level increases to 40%-60% no. of people are increases towards agree for taking limited losses in expectation of higher returns. In the chart it is shown that out of 52 respondents who lies between percentage of total investment level group of below 20% around 38%respondents are neither agree or disagree in taking limited losses in expectation of higher returns and only 26% are agree with it. But if the percentage of total investment increases to 40%-60% no. of the persons is increased in agree situation. So it defines that there is direct relationship between income and limited losses in expectation of higher returns.

People belong to the income group of <20% and 20%-40% as are more towards in taking the limited losses in expectation of higher returns. But the strength of relationship is very low as the value of Cramer’s V is .288.

.

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FINDINGS AND CONCLUSIONS:-

Most of the respondents are ready to take either no risk or nominal risk while doing the investment.

Most of the respondents are generally go for longer time horizon. There is a situation of investment fall by 15% then most of the respondents are neither

conservative nor aggressive. Most of the respondents are agree to take limited losses in expectation of higher returns. Most of the respondents are give their opinion in the favor of experiencing the ups and

downs of the market. Most of the respondents are agreeing with this there main concern is safety. Most of the respondents are said that they are not sure about fairly experienced in invest-

ment. Most of the respondents are in favors of they are very much concern with security related

to future income. This study shows most of the respondents either go for conservative risk profile or

balanced risk profile.

This study helps in describing the risk profile of investors.

This study describes the strong relationship between demographic data in respect of different parameters.

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BIBLOGRAPHY:-

www.google.com

www.wikipedia.com

www.ebscohost.com

www.sharekhan.com

Financial derivatives and risk management by L.C.GUPTA

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http://www.sharekhan.com/

http://www.ebscohost.com/

http://www.wikipedia.com/

http://www.google.com/

QUETIONAIRE

Investment Pattern on the basis of Risk profile of Investors

I am a final year student currently pursuing my Post Graduate Diploma in Management (PGDM) at I.T.S-Institute of Management, Greater Noida. I am conducting a research study on “An analysis on investor behavior on various investment avenues”. This research (project) is taken as a partial requirement for the completion of my PGDM. I seek your kind assistance in completing the attached questionnaire which would take few minutes from your valuable time. Your responses will be treated as Strictly Confidential.

Personal Information1. Gendera) Male b) Female2. Occupation i) Businessii) Service iii) Students iv) House wife3. Agei) 20-30 ii) 30-40 iii) 40-50 iv) Above 504. Educationi) Under Graduate ii) Graduate iii) Post Graduate iv) Ph. D.5. Incomea) < 3 Lakh b) 3-5 Lakh c) 5-10 lakh d) 10-20 Lakh e) > 20 Lakh6. No. of dependents in Familya) No dependent b) 1-2 c) 3-4 d) 5-7 e) >7 7. Family Incomea) <5 Lakh b) 5-15 lakh c) 15-25 Lakh d) > 25 Lakh8. How much percentage of total income he/she invests? a) Below 20% b) 20 % - 40 % c) 40 % - 60% d) > 60 %

The risk-profile questionnaire1. What do you expect when you invest?

a) no riskb) nominal riskc) moderate riskd) higher risk

2. How long do you normally hold investments?a) For a dayb) For a weekc) For a month

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d) For a year

3. If your investments were to fall in value by 15 per cent over a one-year period, you willa) withdraw all money from share marketb) Take out some money and move it to a safer investment. c) Wait until market recovers the loss and then consider other investments. d) Stick to the investment.e) Invest more money in the same investment as it is 15 per cent cheaper

4. You are ready for limited losses in expectation of higher long-term returns?a) Strongly disagreeb) Disagreec) Neither agree nor disagreed) Agree e) strongly agree

5. I am willing to experience the ups and downs of the market for the potential of greater returns.

a) Strongly disagreeb) Disagreec) Neither agree nor disagreed) Agreee) Strongly agree

6. My main concern is security; keeping money safe is more important than earning high returns.

a) Strongly disagree.b) Disagree. c) Neither agree nor disagree. d) Agree. e) Strongly agree.

7. I am fairly experienced in investment.a) Strongly disagree. b) Disagree. c) Neither agree nor disagree. d) Agree. e) Strongly agree.

8. I am very secure related to my future income (such as from salary, pension or other investments)?

a) Strongly disagree. b) Disagree. c) Neither agree nor disagree. d) Agree.

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e) Strongly agree.

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