Comparative Study On Investment in Stocks, Mutual Funds and ULIPs

“COMPARATIVE STUDY
BETWEEN INVESTMENT IN
STOCKS, MUTUAL FUNDS
AND ULIPS”
By
Anant Bhushan (082600024)

Prateek Pandey (082600126)
Karan Gupta (082600188)
Of
BBM [e-Banking & Finance] Course

May-June, 2010
DEPARTMENT OF COMMERCE,
MANIPAL-576104
“COMPARATIVE STUDY BETWEEN
INVESTMENT IN STOCKS, MUTUAL FUNDS
AND ULIPS”
Conducted for
FairWealth Securities Limited, Dehradun

Summer Group Project Report
Submitted In partial fulfillment of the requirement
FOR THE AWARD OF BACHELORS DEGREE
BBM [e-BANKING & FINANCE]
By

During 12th,May – 25th ,June 2010
Under the Guidance of
FACULTY GUIDE COMPANY GUIDE

Mr. S. SaiSachidhananda, Lecturer Ms.Swati Singh, Territory Head
Department of Commerce,
Manipal University, Manipal-576104
DECLARATION
We, the students of BBM [e-Banking & Finance], Department of Commerce, Manipal
University, declare that the Project Report entitled “COMPARATIVE STUDY
BETWEEN INVESTMENT IN STOCKS,MUTUAL FUNDS AND ULIPS”, being
submitted to the Department of Commerce, Manipal University, in partial fulfilment of the
requirements for the award of Degree of BBM [e-Banking & Finance], is our original work
and the same is / was not earlier submitted to any other Degree, Diploma, Fellowship or
any other similar title or prizes.
Date:
ACKNOWLEDGEMENT
It gives us immense pleasure to acknowledge and thank all those who have given consistent
guidance, advice and encouragement in our endeavor. We would also like to thank all those
persons who have spent their valuable time to contribute the required information to us and
gave us support while preparing this report.
We gratefully acknowledge our sincere gratitude to Mr. S. SaiSachidhananda for his kind
guidance and helpful suggestions in every stage of the preparation of this report. We are also
grateful Mr.Sandeep Shenoy Incharge/Coordinator, Department of Commerce, Manipal
University .
We wish to extend our deep and sincere gratitude to Mr. Charanjeet Ratan and Mr.Himanshu
Singh Bisht who provided us with their guidance from day one in Fairwealth, Dehradun and
also helped us whole heartedly to achieve the ultimate goal of the project.
Anant Bhushan
Prateek Pandey
Karan Gupta
CONTENTS PAGE
LIST OF CHARTS
Chart1:Equity Brokerage Turnover for period 07-10 1
Chart2:Sample Size Calculator 13
Chart 3: Scatter plot on Regular and steady income and Reasonableness of
amount of investment for Bank Deposits. 30
Chart 4: Scatter plot on Provision of premature withdrawal facility and Liquidity
of investment for Bank Deposits. 31
Chart 5: Scatter plot on Higher collateral quality of investment and Low
intensity of risk for Bank Deposits. 32
Chart 6: Scatter plot on The Chances of capital appreciation and Liquidity of
investment for Bank Deposits 33
amount of investment for Equity . 34
of investment for Equity . 35
intensity of risk for Equity . 36
investment for Equity 37
amount of investment for Life Insurance 38

Chart 12: Scatter plot on Provision of premature withdrawal facility and
of investment for Life Insurance 39
intensity of risk for Life Insurance 40
investment for Life Insurance 41
amount of investment for Mutual Funds 42
of investment for Mutual Funds. 43
intensity of risk for Mutual Funds. 44
investment for Mutual Funds 45
LIST OF TABLES
Table 1:Descriptive Statistics on Bank Deposits 22
Table 2:Descriptive Statistics on Equity 24
Table 3:Descriptive Statistics on Life Insurance 26
Table 4:Descriptive Statistics on Mutual Funds 28
Table 5: Chi Square Test on Regular and steady income and Reasonableness of
amount of investment for Bank Deposits 30
Table 6: Chi Square Test on Provision of premature withdrawal facility
and Liquidity of investment for Bank Deposits 31

Table 7: Chi Square Test on Higher collateral quality of investment
and Low intensity of risk for Bank Deposits 32
Table 8: Chi Square Test on Chances of capital appreciation and Liquidity
of investment for Bank Deposits 33
Table 9: Chi Square Test on Regular and steady income and Reasonableness
of amount of investment for Equity 34
Table 10: Chi Square Test on Provision of premature withdrawal facility and
Liquidity of investment for Equity 35
Table 11: Chi Square Test on Higher collateral quality of investment and
Low intensity of risk for Equity 36
of investment for Equity 37
Table 13: Chi Square Test on Regular and steady income and Reasonableness
of amount of investment for Life Insurance 38
Table14: Chi Square Test on Provision of premature withdrawal facility and
Liquidity of investment for Life Insurance 39
Table 15: Chi Square Test on Higher collateral quality of investment and Low
intensity of risk for Life Insurance 40
of investment for Life Insurance 41
Table 17:Chi square test on Regular and steady income and Reasonableness
of amount of investment for Mutual Funds 42
Table 18:Chi square test on Provision of premature withdrawal facility and
Liquidity of investment for Mutual Funds 43
Table 19:Chi square test on Higher collateral quality of investment and Low
intensity of risk for Mutual Funds 44

Table 20:Chi square test on Chances of capital appreciation and Liquidity of
investment for Mutual Funds 45
Chapter 1 – Introduction 1-11
Chapter 2 – Research Design 11-20
Chapter 3 – Industry / Company Profile 21
Chapter 4 – Data Analysis 22-45
Chapter 5- Findings 46
Chapter 6– Suggestions 47
Chapter 7 – Conclusion 48
APPENDIX
Annexure 1: Bibliography
Annexure 2: Questionnaire
ABBREVATIONS
AMC-Asset Management Company
F&O-Futures and Options
FY-Financial Year
ICRA- Investment Information and Credit Rating Agency of India
ICT-Information and Communication Technology
IPO-Initial Public Offer
NSE-National Stock Exchange
Q1-1st Quarter of the Financial Year
Q2-2nd Quarter of the Financial Year
Q3-3rd Quarter of the Financial Year
Q4-4th Quarter of the Financial Year
RHS-Right Hand Side
SEBI-Securities Exchange Board of India
Std. Deviation/S.D.-Standard Deviation
ULIPs-Unit Linked Insurance Plans
VSAT- Very Small Aperture Terminal

ABSTRACT
With the growth of the Indian economy and rise in the wealth of the people, there is
growing demand for Wealth Management functions. Wealth Management involves
understanding the clients’ financial requirements and accordingly providing financial
planning services. Wealth Managements professionals emphasize that customer behaviour
and psychology play a vital role in successfully building and sustaining a Wealth
Management relationship. Behavioural finance is new emerging science which focuses on
understanding how psychology affects investment decision. Investors’ perceptions affect
individuals’ investment decisions. This study investigates how investment choice gets
affected by the demographics and perceptions of the investor. Such knowledge will be
highly useful to the financial advisors as it will help them advise their clients regarding
investments which are appropriate with respect to their demographic profile. The study
provides evidence that the investment choice depends on and is affected by the
demographic variables and perceptions. Risk is a distinct attribute for each individual for
the reason that what is perceived by one person as a major risk may be perceived by
another as a minor risk. Risk is a normal aspect of everyone’s daily lives; there is no such
thing as a judgment with zero risk or without a degree of uncertainty. Risk perception is the
way people see or feel regarding a potential danger or hazard.
The study involved a survey in city of Dehradun under banner name of Fairwealth
Securities Limited. Various kinds of perceptions of investors regarding bank deposits,
investment in equity, mutual funds and ULIPs were involved in this survey. The survey
covered only urban population of the city. All the respondents were investors at least in
one of the four avenues if not all .The sample size for the survey of 170 was calculated by
online calculator of ‘Creative Research Systems’ for population of 447,808 (Census 2001
for Dehradun) with a confidence interval of 95%. The inputs were analysed using a
software tool called SPSS 11.5 for Windows. The mathematical models of Standard
Deviation, Chi-Square Tests and Scatter Plots were used to interpret the collected data.
It was observed that most of the investors were unaware of latest investment avenues and
most of them perceive bank deposits as an investment avenue. Most of them were reluctant
to invest in equity market; they associate it with a very high degree of risk and less return
giving avenue. Only few had knowledge about products like Mutual Funds. Many
respondents were unaware about different types of insurances use insurances just for tax
rebates , their objective is not risk cover or investment for future.

Chapter-1
Introduction
Outlook on brokerage industry -
Chart1: Equity Brokerage Turnover for period 07-10
Second highest trading turnover reported in Q1 FY09-10; expected to remain range
bound, going forward; though intermittent volatility to persist…
Domestic equity brokerage volume reported a growth of 66% in Q1 FY09-10 on a sequential
quarter on quarter basis (42% on year on year basis) aided by increasing stock prices, easing
of global concerns and a stable government at the Center. In-fact, brokerage turnover in Q1
FY09-10 was second only to the highest ever volume recorded in Q3 FY07-08. The growth in
Q1 FY09-10 was not driven by the derivative segment but by the cash segment which
accounted for 27% of the total turnover, same as that in Q3 FY07-08, while in Q4 FY08-09
cash segment had accounted for only 23% of the total turnover. Equity brokerage turnover in
Q1 FY09-10 alone equalled 36% of the total turnover in FY08-09 signalling that FY09-10
1
may not be as bad as FY08-09 or may even see some growth during the year. However, given
the prevailing uncertainty in global market which could jeopardise Indian counterparts as
well, ICRA expects high volatility to continue for a while both in terms of stock prices and
also in trading turnover.
Brokerage yield to continue declining, though only marginally …
ICRA expects brokerage yield to remain under pressure with increasing competition and
changed dynamics with a few of the players offering a flat fee structure. The average broking
yields have declined from 7-8 basis points to around 5-6 basis points in the last few years.
However, the fall going forward, is not expected to be as steep and ICRA does not expect the
average broking yields to go below 4 basis points over the medium term. In ICRA’s view,
post recent market turmoil, traders / investors would be more willing to trade through
brokerage houses with sound risk management systems & adequate liquidity in order to
protect their own capital, even if it means premium brokerage rates.
Other non-broking business operations to remain under pressure for a while…
Other non-broking business operations like merchant banking, distribution of financial
products, wealth management services are also expected to remain under pressure in FY09-
10. Although stock prices have shown an increasing trend in the first quarter of FY09-10 and
many IPOs are also lined up for this financial year, ICRA expects the revenue contribution
from merchant banking services to remain low as compared to FY07-08. Distribution income
is also expected to be significantly impacted with SEBI abolishing the entry load on mutual
fund schemes and with the possible shift in insurance products more in favour of non-unit
linked plans in the current volatile capital markets. Insurance commission on non-unit linked
products is lesser than on unit linked products. However, arbitrage trading is expected to see
2
some improvement in FY09-10 with comfortable stock liquidity, while gain on directional
trading is expected to remain subdued during the period.
3
Equity
Most often, investors and asset managers act according to certain guidelines which, however,
are not universal and they change over time. For instance, many experts now believe that the
‘buy and hold’ time of equities which prevailed in the decades after World War II is past.
Therefore, a portfolio of securities has to be dynamically controlled. Technical and
fundamental analysis is a way of providing the needed control information. But analysis also
requires an inquisitive mind, lots of skill pertinent to investment and a great deal of
homework. Doing one’s homework as an investor is a better guide than taking wholesale
advice from experts. Still, the experts do matter (more on this later). The seventh golden rule
for traders and investors is that they should always do their homework in a way which is
meticulous but not arrogant. When people get a big ego, they acquire a one-track mind,
forsake risk control and eventually pay dearly for this failure. The ups and downs
characterizing different in equities document the wisdom behind the dictum, ‘Do not invest
any more money that you are prepared to lose’, as well as of another sound piece of advice:
‘Do not put all of your investments into one asset class or sector.’ Every initiative the investor
takes has an associated execution risk. Hence the need to be always ready to implement
damage control. Financial history says that, four centuries ago, Dirck Pietsersz Staetmaker, a
Dutch citizen, was the first person to receive a formal share certificate. This confirmed he was
the owner of 60 guilders (about $900 in today’s money) of shares in Verenidge Oost-
Indische Compagnie (VOC) – the United Dutch East India Company. By all accounts, this
was the first initial public offering on record. The equity certificate made Staetmaker part
owner of a company which issued shares to the public, and had them publicly traded. The
concept of shareholder equity has significantly evolved since that time, to include – on the
financial side – common stock, preferred stock, convertible bonds; concepts associated with
4
ordinary capital, reserves and general provisions; profits and losses; market capitalization;
subordinated liabilities; net unrealized securities; the impact of interest rate risk and foreign
currency risk; and exposures associated with derivative financial instruments.
Today, an investor informs a broker to place an order on his behalf. The broker enters the
order through his PC, which runs under Windows NT (Windows New Technology) and send
signal to the Satellite via VSAT/leased line/modem. The signal is directed to mainframe
computer at NSE via VSAT at NSE's office. A message relating to the order activity is
broadcast to the respective member. The order confirmation message is immediately
displayed on the PC of the broker. This order matches with the existing passive order(s),
otherwise it waits for the active orders to enter the system. On order matching, a message is
broadcast to the respective member.
The trading system operates on a strict price time priority. All orders received on the system
are sorted with the best priced order getting the first priority for matching i.e., the best buy
orders match with the best sell order. Similar priced orders are sorted on time priority basis,
i.e. the one that came in early gets priority over the later one. Orders are matched
automatically by the computer keeping the system transparent, objective and fair.
5
Mutual Funds
Mutual funds are recognized as a mechanism of pooling together the investment of
unsophisticated investors and turn in the hands of professional fund managers for consistent
return along-with capital appreciation. Money collected in this process is then invested in
capital market instrument such as shares, debentures and other securities. Finally, unit holders
in proportion of units owned by them share the income earned through these investments and
capital appreciation. Mutual funds put forward a way out to investors to approach most
schemes and get well-diversified portfolio because investors with small savings neither have
sufficient expertise nor have access to required diversification. Mutual funds have already
entered into a world of exciting innovative products. These products are now tailor made to
suit specific needs of investors. Intensified competition and involvement of private players in
the race of mutual funds have forced professional managers to bring innovation in mutual
funds. Thus, mutual funds industry has moved from offering a handful of schemes like equity,
debt or balanced funds to liquid, money market, sector specific funds, index funds and gilt
edged funds. Beside this recently mutual funds have also introduced some special specific
funds like children plans, education plans, insurance linked plans, and exchange traded funds.
The result is that over the time Indian investors have started shifting towards mutual funds
instead of traditional financial avenues. Diversification in mutual funds is coming up with
many new faces and as a result Indian mutual fund industry has been growing exceptionally
well on the back of country’s booming economy but still further mutual funds need to create
more lucrative solutions to suit investor’s expectations. The active involvement of mutual
fund in economic development can be witnessed from dominant presence of mutual funds in
worldwide capital and money market. Although mutual funds industry is responding very
quickly to dynamism in investor’s perception towards rewards still they are continuously
6
following this race in their endeavour to differentiate their products responding to sudden
changes in the economy. These acts of innovation include both invention and diffusion that
persist to address information asymmetries. Mutual funds as blessed with professional
management use their diligent skills for efficient resource allocation by making markets more
efficient, bringing transparency and foremost important risk management. Automated
approaches designed by new technology and data mining is helping AMC’s of mutual funds
in strategic planning and investment decision making by uncovering the hidden patterns and
predict future trends and behaviour in financial markets. Intensive global competition and
ICT enabled tools are promoting more demanding investors everyday. To satisfy the needs of
investors’ mutual funds are designing more lucrative and innovative tools considering the
appetite for risk taking of individual investors. While designing these innovative fund scheme
AMCs mainly consider for risk return trade off and after completely evaluating the various
securities on various risk parameters new fund scheme is launched that can satisfy the quest
of every investor to maximize the returns. Although risk and return are the two prime
concerns for any mutual fund investment but investor’s also go for sale charges, fund
manager’s reputation, fund history, management fees, clarity in disclosure, and
recommendation from media. So, whether it is a winner’s game or loser’s game the trick is to
access the level of risk that investor wishes to assume and make certain that collection of
assets fulfil their risk expectations. A successful investor is one who strives to achieve not
less than rate of return consistent with risk assumed. Thus, it becomes imperative for the
Mutual funds AMCs to judge the presence of rationality in investment behaviour.
7
Pros & cons of investing in mutual funds:
For investments in mutual fund, one must keep in mind about the Pros and cons of
investments in mutual fund.
Advantages of Investing Mutual Funds:
1. Professional Management - The basic advantage of funds is that, they are professionally
managed, by well qualified professional. Investors purchase funds because they do not have
the time or the expertise to manage their own portfolio. A mutual fund is considered to be
relatively less expensive way to make and monitor their investments.
2. Diversification - Purchasing units in a mutual fund instead of buying individual stocks or
bonds, the investors risk is spread out and minimized up to certain extent. The idea behind
diversification is to invest in a large number of assets so that a loss in any particular
investment is minimized by gains in others.
3. Economies of Scale - Mutual fund buy and sell large amounts of securities at a time, thus
help to reducing transaction costs, and help to bring down the average cost of the unit for their
investors.
4. Liquidity - Just like an individual stock, mutual fund also allows investors to liquidate
their holdings as and when they want.
5. Simplicity - Investments in mutual fund is considered to be easy, compare to other
available instruments in the market, and the minimum investment is small. Most AMC also
have automatic purchase plans whereby as little as Rs. 2000, where SIP start with just Rs.50
per month basis.
8
Disadvantages of Investing Mutual Funds:
1. Professional Management- Some funds do not perform in neither the market, as their
management is not dynamic enough to explore the available opportunity in the market, thus
many investors debate over whether or not the so-called professionals are any better than
mutual fund or investor himself, for picking up stocks.
2. Costs – The biggest source of AMC income is generally from the entry & exit load which
they charge from investors, at the time of purchase. The mutual fund industries are thus
charging extra cost under layers of jargon.
3. Dilution - Because funds have small holdings across different companies, high returns from
a few investments often don't make much difference on the overall return. Dilution is also the
result of a successful fund getting too big. When money pours into funds that have had strong
success, the manager often has trouble finding a good investment for all the new money.
4. Taxes - when making decisions about your money, fund managers don't consider your
personal tax situation. For example, when a fund manager sells a security, a capital-gain tax is
triggered, which affects how profitable the individual is from the sale. It might have been
more advantageous for the individual to defer the capital gains liability.
9
Platforms of Life Insurance- Unit Linked Insurance Plans
World over, insurance come in different forms and shapes. although the generic names may
find similar, the difference in product features makes one wonder about the basis on which
these products are designed .With insurance market opened up, Indian customer has suddenly
found himself in a market place where he is bombarded with a lot of jargon as well as
marketing gimmicks with a very little knowledge of what is happening. This module is aimed
at clarifying these underlying concepts and simplifying the different products available in the
market. We have many products like Endowment, Whole life, Money back etc. All these
products are based on following basic platforms or structures viz.
Traditional Life
Universal Life or Unit Linked Policies
TRADITIONAL LIFE – AN OVERVIEW
The basic and widely used form of design is known as Traditional Life Platform. It is based
on the concept of sharing. Each of the policy holder contributes his contribution (premium)
into the common large fund is managed by the company on behalf of the policy holders.
Administration of that common fund in the interest of everybody was entrusted to the
insurance company .It was the responsibility of the company to administer schemes for
benefit of the policyholders. Policyholders played a very passive roll. In the course of time,
the same concept of sharing and a common fund was extended to different areas like saving ,
investment etc.
ULIP is the Product Innovation of the conventional Insurance product. With the decline in the
popularity of traditional Insurance products & changing Investor needs in terms of life
protection, periodicity, returns & liquidity, it was need of the hour to have an Instrument that
offers all these features bundled into one.

10
An equity share is evidence of ownership in a company. The equity shareholders are entitled
to vote on company resolutions and share the company’s prosperity by receiving dividend.
Return from investment in shares comes in two forms- capital appreciation and dividends.
Capital appreciation takes place when there is increase in the price of shares.
Mutual funds collect money from a large group of investors, pool it together and invest it in
various securities, in line with their objective. Mutual funds are an alternative to investing
directly.
These popular investment products are offered by institutions with a strong financial strength
and professional expertise. As a result, investment market turns itself into highly competitive
market. The success of each institution offering investment products depends on degree of
favourableness they have earned for themselves in the minds of the investors. A Unit Link
Insurance Policy (ULIP) is one in which the customer is provided with a life insurance cover
and the premium paid is invested in either debt or equity products or a combination of the
two. In other words, it enables the buyer to secure some protection for his family in the event
of his untimely death and at the same time provides him an opportunity to earn a return on his
premium paid. In the event of the insured person's untimely death, his nominees would
normally receive an amount that is the higher of the sum assured or the value of the units
(investments). To put it simply, ULIP attempts to fulfil investment needs of an investor with
protection/insurance needs of an insurance seeker.
11
Chapter-2
Research Design
Objectives of the Study
 To identify the perceptions of individual investors.
 To study whether investors prefer investment in stock market , mutual funds or ULIPS
 To study the approach of investors towards equity shares, mutual funds ,Life Insurances &
Fixed Deposits
Limitations
No study is free from limitations. The limitations of this study can be:
 Sample size taken is small and may not be sufficient to predict the results with 100%
accuracy.
 The result is based on primary and secondary data that has it’s own limitations.
 Reluctance of respondents to disclose data reduced the accuracy
 Few respondents could have been biased in their opinion
 The study only covers the area of Dehradun that may not be applicable to other areas.
12
Sample
A sample of 170 respondents / investors has been taken on the basis of simple random
sampling technique from the city of Dehradun. The respondents include businessmen,
employees, and house wives who have inclination to invest in shares and other financial
instruments.
Chart 2: The sample size for population of 447,808 in Dehradun (as per Census 2001) was 170
with confidence level of 95%. It involved the use of Sample Size Calculator of Creative
Research Systems available online (http://www.surveysystem.com/sscalc.htm)
13
Methodology
The study used descriptive research design, particularly survey research. The study was
completely based on primary data. The personal survey method was used to collect primary
data from respondents. For data collection, structured questionnaire was used. The Lickert
Scaling was used. The sampling method used can best be described as a mix of Judgmental
and Non Probabilistic Convenient sampling. The study is based on responses obtained from
the respondents belonging to a wide cross section in Dehradun and they include businessmen,
servicemen, professionals, housewives and agricultural. Main focus of questionnaire was to
obtain responses of individual investors regarding how they evaluate 4 mentioned investment
avenues in terms of return and risk on their investment. To reduce the complexity of data
responses questionnaires were distributed among those investors only who had prior
experience of mutual fund investment. For reliability of questionnaire 170 individual
investors were selected from different regions of Dehradun, which included selective
investors who were assumed to be have some knowledge of financial environment, and
further they were existing investors in either of the 4 investment avenues. Age constraint
considered in this questionnaire was minimum 20 years. Broad objectives of our survey
include:
1: Evaluate Perception towards risk involved in investment avenues in comparison to each
other
2: Identify critical gaps in mutual funds services towards transparency and disclosure
practices.
14
3: Uncovering the hidden problems investors encountered with because of unprofessional
services of brokerage houses
4: Understanding the willingness and ability to assume different levels of risk capacity
amongst residents of Dehradun
5: Evaluating investor’s perception towards risk volatility involved in investment
15
Review of Literature
Many studies have been carried out to examine the perceptions of the investors and the
investment preferences with regard to gender, age, education, occupation & income. It is not
uncommon for most investors to associate risk with “bad” outcomes such as negative returns
or, more generally, returns below their expectations. They do not associate risk with large
positive returns, returns above their expectations, or upside swings in general. For this reason
a common investor’s perception of risk is quite at odds with the conventional “dispersion”
measures of risk like standard deviation. The importance of accurately gauging a portfolio’s
exposure to downside risk has been long recognized by the practitioners and academicians.
The concept of Value at Risk (VaR) as a single risk measure summarizing all sources of
downside risk was first developed by J. P. Morgan and made available through its Risk-
Metrics TM software in October 1994 as mentioned in “Downside Risk Analysis of Indian
Equity Mutual Funds: A Value at Risk Approach”
Few studies are available that focus on investor’s objective and considering risk orientation of
investors that has been categorized as:
1. Studies pertaining to Investor’s Rationality: Risk –Return trade off
Investors are generally more careful while making investment decision and presence of
rationality in every investor demands higher return at minimum risk but when markets are
efficient it is not possible to gain abnormal returns. Risk is generally, associated with various
applications differently but in common it means negative connotation such as harm or loss or
some undesirable action. Risk expressed by Kaplan and Garrick (1981) 1
1
Kaplan, S. & Garrick, B. J. (1981). On the quantitative definition of risk. Risk Analysis, Vol.1,
No.1, pp. 11- 27
16
demonstrates that risk involves a factor of uncertainty and potential loss that might be
incurred. Elmiger and Kim (2003)2 elucidate risk as .the trade-off that every investor has to
make between the higher rewards that potentially come with the opportunity and the higher
risk that has to be borne as a consequence of the danger. Although different literature
available on risk define it variedly but in common the word risk refers to situations in which a
decision is made whose consequences depend on the outcomes of future events having known
probabilities (Lopes,1987)3. Risk from a strategic management perspective has been defined
as one that is often taken as manager’s subjective judgment of the personal or organizational
consequences and it may result from a specific decision or action. Beta has been accepted as
most appropriate measure of risk that describe the slope of any regression line ,that is, it
reveals the volatility of a stock relative to a market benchmark (Sharpe 1966 )4.Uncertainty in
investment decision prevails when investor’s skills and knowledge fail to have proper access
of decision relevant information due to complexity of financial markets. This incapacity
forces decision makers to adopt a simplified approach where risk is considered to be
exogenous variable. The great trade-off in investing is between risk and return. The main
premise is risky investments must offer at least hope of a higher return than risk-free
investments or extremely safe financial instruments.
2
Elmiger, G., & Kim, S. (2003). Risk Grade your investments: Measure your risk & create
wealth. John Wiley & Sons: Hoboken, NJ
3
Lopes, L. L. (1987). Between hope and fear: The psychology of risk. In L. Berkowitz
Advances in experimental social psychology, San Diego, CA, US: Academic Press, Inc. pp 255-
295
4
Sharpe, W. F. (1966). Security prices, risk and maximal gains from diversification: Reply.
Journal of Finance, pp 743-744
17
Standard financial decision-making makes the assumption that individuals implement
extensive analysis to determine whether to accept the likelihood of success, associated with a
specific reward (expected return) Ricciardi (2004)5.
2. Studies relating to investment expectations
Huge literature available on predicting stock market returns has proved that generally
investors think high past stock market return predict high future return (De Bondt, 1993)6
even though there is no support for such belief in the data (Fama 1988)7. Further, evidence by
Fisher and Statman (2000)8 have shown that individual investor’s stock market return
expectations are positively correlated with past returns. An attempt to relate stock expected
returns and interrelated attributes can be well traced from Asset pricing Model that explains
an assets expected return is positively related to its systematic market risk (Black 1972)9.The
crux of these models is that risky portfolio yields higher return. Although majority of
investors who invest in mutual fund themselves are not clear with the objective and
constraints of their investment but in addition to this most important critical gap that exist in
this process is lack of awareness about presence of risk elements in mutual fund investment.
5
Victor Ricciardi (2004) A Risk Perception Primer: A Narrative Research Review of the Risk
Perception Literature in Behavioural Accounting and Behavioural Finance pp.3-24
6
De Bondt, Werner (1993). Betting on trends: Intuitive forecast of financial risk and return.
International Journal of forecasting, 9 (3), pp. 355-371.
7
Fama, Eugene F., and Kenneth R. French. (1988). Permanent and Temporary components of
stock prices. Journal of Political Economy, 96(2), pp. 246-273
8
Fisher, Kanneth, and Meier Statman. (2000). Investor sentiments and stock returns. Financial
Analyst Journal,March/April, Vol. 56 No.2 pp. 16-23.
9
Black, Fischer., Michael, Jensen. & Myron, Sholes. (1972). The Capital Asset Pricing Model:
Some Empirical tests
18
3. Studies relating to Financial Innovations
New financial product and market designs, improved computer and telecommunication
technologies and advances in theory of finance during past quarter century have led to
dramatic changes in structure of mutual fund industry. Financial innovation is fighter
promoted when the financial authorities recognize the obsolescence of existing statutory
framework and deregulate the essential part of it (Suzuki 1986)10.
10
Suzuki. (1986). A comparative study of financial innovations, deregulation and reforms in
Japan and US. Bank of Japan. Monetary Economic Series, 4(10).
19
Scope of the study
1. Subject matter is related to the investor’s approach towards equity shares, mutual funds, Life
Insurances &Fixed Deposits
2. People of age between 20 to 60
3. Area limited to Dehradun.
4. Demographics include names, age, qualification, occupation, marital status and annual
income
Assumption
Bank deposits and life insurance policies are operationalized as investments along with the
equities and mutual fund survey, reasons are as follows:
1. Bank deposits enjoy high liquidity as they can be withdrawn prematurely or loans can be
raised against deposits so many respondents mentioned it as an investment avenue.
2. Respondents had knowledge about ULIPs but primarily they don’t differentiate between
ULIPs and a simple Life Insurance Policy.
20
Chapter-3
Company Profile
FairWealth Securities Limited is a financial services company which has emerged as a one-
stop investment solutions provider. The company has a sizable presence in the distribution of
3rd party financial products like mutual funds, and insurance products. It also provides expert
Advisory on Life Insurance, General Insurance, Mutual Funds and IPO’s. The distribution
network is backed by in-house back office support to provide prompt and efficient customer
service.
FairWealth Securities Limited is a leading Indian Financial Services firm established in the
year 2005 with an objective of becoming a financial powerhouse providing all financial
solutions under one roof with dedicated customer service and commitment to provide value
for Money to the clients.
FairWealth Group has diversified interests in multiple asset classes including Financial
Services, Currency and Commodities. The company has its network spread over 300 cities
and towns comprising 450 Business Associates, 34 Branch Offices across Pan India.
In the Financial Services Domain, FairWealth Securities Ltd. and FairWealth Commodity
Pvt. Ltd. provides customer centric services in the areas of Equity and Commodities Broking,
Currency Broking, Depository Participant Services, Risk and Investment Planning through
Insurance, Mutual Funds, Portfolio Management Services and Deposits. After successfully
creating a stable platform for dealing in various Financial Products the Company is perfectly
poised to launch its Institutional Business and use its experience and exposure in the Financial
Markets to add value to the clients who do not have adequate resources in terms of time or
research capabilities.
21
Chapter-4
Data Analysis
BANK DEPOSITS
Descriptive Statistics
Std.
N Minimum Maximum Mean Deviation
Regular and steady
income 170 2.00 5.00 4.0941 .96229
Reasonableness of
amount of investment 170 2.00 5.00 4.3471 .88553
Chances of capital
appreciation 170 2.00 5.00 3.8353 .91467
Possibility of tax
170 1.00 5.00 3.8588 .96265
benefits
Minimum transaction
costs 170 1.00 5.00 4.3176 .86636
Liquidity of investment 170 2.00 5.00 3.9529 .81271
Provision of premature
withdrawal facility 170 1.00 5.00 3.9235 1.04911
Easy Accessibility to
avenues 170 1.00 5.00 3.6882 .92460
Flexibility in timings of
investments 170 1.00 5.00 4.0059 1.07416
Benefit of statutory
protection to investments 170 1.00 5.00 3.8588 .92504
Moderate length of
investment 170 1.00 5.00 3.9176 1.01715
Accessibility of sources
of information 170 1.00 5.00 3.8353 1.00704
Appropriate service
delivery 170 2.00 5.00 4.1235 .97424
Higher collateral quality
of investment 170 2.00 5.00 4.1765 .86587
Low intensity of risk 170 1.00 5.00 4.4412 .88348
Valid N (list wise) 170
Table 1: Descriptive Statistics on Bank Deposits
22
Regular and steady income- High degree of deviation many respondents don’t agree to the mean value
Reasonableness of amount of investment- High degree of deviation many respondents don’t agree to the mean value
Chances of capital appreciation -High degree of deviation many respondents don’t agree to the mean value
Possibility of tax benefits -High degree of deviation many respondents don’t agree to the mean value
Minimum transaction costs- High degree of deviation many respondents don’t agree to the mean value
Liquidity of investment- High degree of deviation many respondents don’t agree to the mean value
Provision of premature withdrawal facility- Very high degree of deviation many respondents don’t agree to the mean
value
Easy Accessibility to avenues- High degree of deviation many respondents don’t agree to the mean value
Flexibility in timings of investments –Very high degree of deviation many respondents don’t agree to the mean value
Benefit of statutory protection to investments -High degree of deviation many respondents don’t agree to the mean value
Moderate length of investment –Very high degree of deviation many respondents don’t agree to the mean value
Accessibility of sources of information- Very high degree of deviation many respondents don’t agree to the mean value
Appropriate service delivery- High degree of deviation many respondents don’t agree to the mean value
Higher collateral quality of investment- High degree of deviation many respondents don’t agree to the mean value
Low intensity of risk- High degree of deviation many respondents don’t agree to the mean value
Interpretation of Descriptive Statistics of investor perception for Bank Deposits
23
EQUITY
N Minimum Maximum Mean Std. Deviation

Regular and steady
income 170 1.00 5.00 2.7059 .93358
Reasonableness of
amount of investment 170 1.00 5.00 2.3824 1.35032
Chances of capital
appreciation 170 1.00 5.00 2.5000 1.26046
Possibility of tax benefits 170 1.00 5.00 2.7941 1.05974
Minimum transaction
costs 170 1.00 5.00 2.5706 1.09234
Liquidity of investment 170 1.00 5.00 2.6765 1.05809
withdrawal facility 170 1.00 5.00 2.9059 1.02193
avenues 170 1.00 5.00 2.6118 .99221
investments 170 1.00 5.00 2.9059 1.02193
protection to investments 170 1.00 5.00 2.5235 1.01003
Moderate length of
investment 170 1.00 5.00 2.8882 1.02881
of information 170 1.00 5.00 2.7000 1.09787
Appropriate service
delivery 170 1.00 5.00 2.6059 .90558
of investment 170 1.00 5.00 2.8353 .98326
Table 2: Descriptive Statistics on Equity
24
Reasonableness of amount of investment- Very high degree of deviation many respondents don’t agree to the mean value
Chances of capital appreciation - Very high degree of deviation many respondents don’t agree to the mean value
Possibility of tax benefits - Very high degree of deviation many respondents don’t agree to the mean value
Minimum transaction costs- Very high degree of deviation many respondents don’t agree to the mean value
Liquidity of investment- Very high degree of deviation many respondents don’t agree to the mean value
Provision of premature withdrawal facility- Very high degree of deviation many respondents don’t agree to the mean
value
Easy Accessibility to avenues- High degree of deviation many respondents don’t agree to the mean value
Flexibility in timings of investments –Very high degree of deviation many respondents don’t agree to the mean value
Benefit of statutory protection to investments - Very high degree of deviation many respondents don’t agree to the mean
value
Moderate length of investment –Very high degree of deviation many respondents don’t agree to the mean value
Interpretation of Descriptive Statistics of investor perception for Equity
25
LIFE INSURANCE
Std.
Regular and steady
income 170 1.00 5.00 2.8471 1.04916
Reasonableness of
Chances of capital
appreciation 170 2.00 5.00 3.3765 .84232
Possibility of tax
170 1.00 5.00 2.9588 .98723
benefits
Minimum transaction
costs 170 1.00 5.00 2.9118 .90258
Liquidity of investment 170 1.00 5.00 3.1059 .89738
withdrawal facility 170 2.00 5.00 3.0118 .81399
avenues 170 1.00 5.00 3.3059 1.03802
investments 170 1.00 5.00 3.2294 .88396
protection to 170 1.00 5.00 3.0294 1.02874
investments
Moderate length of
investment 170 1.00 5.00 3.5765 .88881
of information 170 2.00 5.00 3.4941 .61776
Appropriate service
delivery 170 2.00 5.00 3.0824 .95721
of investment 170 2.00 5.00 3.1824 .64975
Table 3:Descriptive Statistics on Life Insurance
26
Regular and steady income- Very high degree of deviation many respondents don’t agree to the mean value
Chances of capital appreciation - High degree of deviation many respondents don’t agree to the mean value
Possibility of tax benefits - High degree of deviation many respondents don’t agree to the mean value
Minimum transaction costs-High degree of deviation many respondents don’t agree to the mean value
Liquidity of investment-High degree of deviation many respondents don’t agree to the mean value
Provision of premature withdrawal facility- High degree of deviation many respondents don’t agree to the mean
value
Easy Accessibility to avenues- Very high degree of deviation many respondents don’t agree to the mean value
Flexibility in timings of investments –High degree of deviation many respondents don’t agree to the mean value
Benefit of statutory protection to investments - Very high degree of deviation many respondents don’t agree to the
mean value
Moderate length of investment – Relatively low degree of deviation many respondents agree to the mean value
Higher collateral quality of investment- Relatively low degree of deviation many respondents agree to the mean value
Interpretation of Descriptive Statistics of investor perception for Life Insurance
27
MUTUAL FUNDS
Std.
Regular and steady
income 170 1.00 5.00 3.0529 .86525
Reasonableness of
Chances of capital
appreciation 170 1.00 4.00 2.8882 .64760
Possibility of tax
170 1.00 5.00 2.9412 .95896
benefits
Minimum transaction
costs 170 1.00 5.00 2.9294 1.05234
Liquidity of investment 170 1.00 5.00 2.7176 1.00427
withdrawal facility 170 1.00 5.00 2.5529 .77697
avenues 170 2.00 5.00 3.1941 1.00471
investments 170 1.00 5.00 3.1118 .83161
protection to 170 1.00 5.00 2.8941 .91047
investments
Moderate length of
investment 170 1.00 5.00 3.0412 1.02833
of information 170 1.00 5.00 3.3059 1.02077
Appropriate service
delivery 170 1.00 5.00 2.8353 1.19017
of investment 170 2.00 5.00 3.1765 .74859
Table 4: Descriptive Statistics on Mutual Funds
28
Chances of capital appreciation - Relatively low degree of deviation many respondents agree to the mean value
Possibility of tax benefits - High degree of deviation many respondents don’t agree to the mean value
Minimum transaction costs- Very high degree of deviation many respondents don’t agree to the mean value
Liquidity of investment- Very high degree of deviation many respondents don’t agree to the mean value
Provision of premature withdrawal facility- High degree of deviation many respondents don’t agree to the mean
value
Easy Accessibility to avenues- Very high degree of deviation many respondents don’t agree to the mean value
Flexibility in timings of investments –High degree of deviation many respondents don’t agree to the mean value
Benefit of statutory protection to investments - High degree of deviation many respondents don’t agree to the
mean value
Moderate length of investment – Very high degree of deviation many respondents don’t agree to the mean value
Appropriate service delivery- Very high degree of deviation many respondents don’t agree to the mean value
Interpretation of Descriptive Statistics of investor perception for Mutual Funds
29
Bank Deposits
Chi-Square Tests
Asymp. Sig. (2-
Value df sided)
Pearson Chi-Square 53.044(a) 9 .000
Likelihood Ratio 57.046 9 .000
Linear-by-Linear Association 19.924 1 .000
N of Valid Cases 170
a. 8 cells (50.0%) have expected count less than 5. The minimum expected count is .58.
Table 5: Chi Square Test on Regular and steady income and Reasonableness of amount of
investment for Bank Deposits. The two factors are related to each other.
5.5
5.0
Reasonableness of amount of investment
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5
Regular and steady income
Chart 3: Scatter plot on Regular and steady income and Reasonableness of amount of
investment for Bank Deposits, the two factors are related to each other
30
Chi-Square Tests
Asymp. Sig. (2-
Value df sided)
a.11 cells (55.0%) have expected count less than 5. The minimum expected count is .19.
Table 6: Chi Square Test on Provision of premature withdrawal facility and Liquidity of
investment for Bank Deposits .The two factors are related to each other.
6
Provision of premature withdrawal facility
0
1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5
Liquidity of investment
Chart 4: Provision of premature withdrawal facility and Liquidity of investment for Bank
Deposits. The two factors are related to each other.
31
Chi-Square Tests
Asymp. Sig. (2-
Value df sided)
Table 7: Chi Square Test on Higher collateral quality of investment and Low intensity of risk
for Bank Deposits. The two factors are related to each other.
5.5
5.0
Higher collateral quality of investment
4.5
4.0
3.5
3.0
2.5
2.0
1.5
0 1 2 3 4 5 6
Low intensity of risk
Chart 5: Scatter plot on Higher collateral quality of investment and Low intensity of risk for
Bank Deposits. The two factors are related to each other.
32
Chi-Square Tests
Asymp. Sig. (2-
Value df sided)
Table 8: Chi Square Test on Chances of capital appreciation and Liquidity of investment for
Bank Deposits. The two factors are related to each other.
5.5
5.0
4.5
Chances of capital appreciation
4.0
3.5
3.0
2.5
2.0
1.5
1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5
Chart 6: Scatter plot The Chances of capital appreciation and Liquidity of investment for Bank
Deposits. The two factors are related to each other.
33
Equity
Chi-Square Tests
Asymp. Sig. (2-
Value df sided)
investment for Equity. The two factors are related to each other.
6
0
0 1 2 3 4 5 6
Chart 7: Scatter plot Regular and steady income and Reasonableness of amount of investment
for Equity. The two factors are related to each other.
34
Chi-Square Tests
Asymp. Sig. (2-
Value df sided)
Table 10: Chi Square Test on Provision of premature withdrawal facility and Liquidity of
investment for Equity. The two factors are related to each other.
6
0
0 1 2 3 4 5 6
Chart 8: Scatter plot Provision of premature withdrawal facility and Liquidity of investment for
Equity. The two factors are related to each other.
35
Chi-Square Tests
Asymp. Sig. (2-
Value df sided)
for Equity. The two factors are related to each other.
5
0
0 1 2 3 4 5 6
Chart 9: Scatter plot Higher collateral quality of investment and Low intensity of risk for Equity
The two factors are related to each other.
36
Chi-Square Tests
Asymp. Sig. (2-
Value df sided)
a.13 cells (52.0%) have expected count less than 5. The minimum expected count is 1.04.
Equity. The two factors are related to each other.
4
0
0 1 2 3 4 5 6
Chart 10: Scatter plot Chances of capital appreciation and Liquidity of investment for Equity
The two factors are related to each other.
37
Life Insurance
Chi-Square Tests
Asymp. Sig. (2-
Value df sided)
investment for Life Insurance
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
0 1 2 3 4 5 6
Chart 11: Scatter plot on Regular and steady income and Reasonableness of amount of
investment for Life Insurance. The two factors are related to each other .
38
Chi-Square Tests
Asymp. Sig. (2-
Value df sided)
Table14: Chi Square Test on Provision of premature withdrawal facility and Liquidity of
investment for Life Insurance
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
0 1 2 3 4 5 6
Chart 12: Scatter plot on Provision of premature withdrawal facility and Liquidity of investment
for Life Insurance .The two factors are related to each other.
39
Chi-Square Tests
Asymp. Sig. (2-
Value df sided)
for Life Insurance. The two factors are related to each other.
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
0 1 2 3 4 5 6
Chart 13: Scatter plot on Higher collateral quality of investment and Low intensity of risk for
Life Insurance. The two factors are related to each other.
40
Chi-Square Tests
Asymp. Sig. (2-
Value df sided)
Life Insurance
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
0 1 2 3 4 5 6
Chart 14: Scatter plot on Chances of capital appreciation and Liquidity of investment for Life
Insurance. The two factors are related to each other.
41
Mutual Funds
Chi-Square Tests
Asymp. Sig. (2-
Value df sided)
Table 17: Chi square test on Regular and steady income and Reasonableness of amount of
investment for Mutual Funds. The two factors are related to each other
4
0
0 1 2 3 4 5 6
Cahrt15: Scatter plot on Regular and steady income and Reasonableness of amount of
investment for Mutual Funds. The two factors are fairly related to each other
42
Chi-Square Tests
Asymp. Sig. (2-
Value df sided)
Table 18: Chi square test on Provision of premature withdrawal facility and Liquidity of
investment for Mutual Funds. The two factors are related to each other
6
0
0 1 2 3 4 5 6
Chart 16: Scatter plot on Provision of premature withdrawal facility and Liquidity of investment
for Mutual Funds. The two factors are fairly related to each other
43
Chi-Square Tests
Asymp. Sig. (2-
Value df sided)
Table 19: Chi square test on Higher collateral quality of investment and Low intensity of risk
for Mutual Funds. The two factors are related to each other
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
0 1 2 3 4 5 6
Chart17: Scatter plot on Higher collateral quality of investment and Low intensity of risk
for Mutual Funds. The two factors are related to each other.
44
Chi-Square Tests
Asymp. Sig. (2-
Value df sided)
Table 20: Chi square test on Chances of capital appreciation and Liquidity of investment
for Mutual Funds .The two factors are related to each other
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
.5
0 1 2 3 4 5 6
Chart 18:Scatter plot on Chances of capital appreciation and Liquidity of investment
for Mutual Funds .The two factors are related to each other.
45
Chapter-5
Findings
 Most people were less interested in knowing about any new investment product.
 They have the impression that Mutual Funds are not safe, as the money is locked in for a
particular period, which is known as the lock in period.
 People don’t have objectives while investing so they basically take Term Deposits which
easiest to understand.
 They have very little knowledge about ULIPs.
 They consider Bank Deposits and Life Insurance as primary option for investment, in the
same order.
 Most the respondents had high value term deposits with the banks.
46
Chapter-6
Suggestions
 There should be more awareness made about the investments in Equity and ULIPS
 The FairWealth Securities Limited should go for investor education seminars and
programs.
 Investors should study investment products before they invest into it and must
understand the various risks involved
47
Chapter-7
Conclusion
The present study endeavoured to give a look on investor’s perceptions towards various
investment avenues. Understanding of investor’s expectations from these avenues has become
necessary issue to study due to Brokerage houses’ inability to accelerate the required pace of
growth in the studied region. Moreover, volatility influencing stock market movements is
turning most of investors from investment in avenues like Equity and Mutual Fund. Although
Mutual Funds can be the most preferred financial avenue provided it is put forth before
investors in the desired form. Facts revealed in this study highlight that investors in a
Dehradun have sufficient fund parked as term deposit with banks but it also require some
innovations and added quality dimensions in existing services. The critical gaps identified in
the study also provide the key information input regarding the discrepancies in existing
framework, more lucrative solutions to suit investor’s expectations should be brought in by
these broking houses and Asset Management Companies.
48
Appendix-Annexure 1
Bibliography
• The Management of Equity Investments –
Capital markets, equity research, investment decisions and risk management with case
studies -ByDimitris N. Chorafas Elsevier Butterworth-Heinemann First published 2005
pp.15-22
• NCFM Module for Capital Markets 2009 by National Stock Exchange of India Ltd.
• Investment Analysis and Portfolio Management- By Prasanna Chandra Third Edition,Tata
McGraw Hill Publishing Company Limited pp.3-86
• ICRA’s Outlook on Brokerage Industry 2009-10
• International Journal of Business and Management Vol. 4 No.5 May, 2009
• Black, Fischer., Michael, Jensen. & Myron, Sholes. (1972). The Capital Asset Pricing
Model: Some Empirical tests
• De Bondt, Werner (1993). Betting on trends: Intuitive forecast of financial risk and return.
International Journal of forecasting, 9 (3), pp. 355-371.
• Fama, Eugene F., and Kenneth R. French. (1988). Permanent and Temporary components
of stock prices. Journal of Political Economy, 96(2), pp. 246-273
• Lopes, L. L. (1987). Between hope and fear: The psychology of risk. In L. Berkowitz
Advances in experimental social psychology, San Diego, CA, US: Academic Press, Inc. pp
255-295
• Sharpe, W. F. (1966). Security prices, risk and maximal gains from diversification: Reply.
Journal of Finance, pp 743-74
i
• Kaplan, S. & Garrick, B. J. (1981). On the quantitative definition of risk. Risk Analysis,
Vol.1, No.1, pp. 11- 27.
• Suzuki. (1986). A comparative study of financial innovations, deregulation and reforms in
Japan and US. Bank of Japan. Monetary Economic Series, 4(10).
• Elmiger, G., & Kim, S. (2003). Risk Grade your investments: Measure your risk & create
wealth. John Wiley & Sons: Hoboken, NJ.
• Fisher, Kanneth, and Meier Statman. (2000). Investor sentiments and stock returns.
Financial Analyst Journal, March/April, Vol. 56 No.2 pp. 16-23.
• Victor Ricciardi (2004) A Risk Perception Primer: A Narrative Research Review of the
Risk Perception Literature in Behavioural Accounting and Behavioural Finance pp.3-24
• Magazine-‘Investors India’ Vol.6 No.9(2008)
• International Research Journal of Finance and Economics - Issue 23 (2009)
© EuroJournals Publishing, Inc. 2009(online) http://ccsenet.org/journal.html
• http://www.surveysystem.com/sscalc.htm
• http://www.fairwealth.in/Aboutus/AboutUs.aspx?id=1
• http://www.scribd.com/
• http://www.cfapubs.org/doi/abs/10.2469/faj.v56.n2.2340
• http://en.wikipedia.org/wiki/Dehradun
• http://business.mapsofindia.com/investment-industry/investment-scenario.html
• http://www.tax4india.com/comparison-of-ulips-and-mutual-funds.html
• http://www.dnb.co.in/equitybroking/industry%20insights.asp
• http://akprabhakar.blogspot.com/2010/04/sebi-vs-irda-ban-on-ulips-impact.html
ii
Appendix-Annexure 2
Questionnaire
Personal Profile of the Investor
1. Name and Address:
…………………………………………………………………………………………………
…………………………………………………………………………………………………
e-mail Address:
Contact No. :
2. Sex:
a) Male [ ] b) Female [ ]
3. Age:
a) Below 25 years [ ] b) 26-35 years [ ] c) 36-45 years [ ]
d) 46-55 years [ ] e) Above 55 years [ ]
4. Marital Status:
a) Married [ ] b) Unmarried [ ]
5. Education:
a) Non-matriculation [ ] b) Matriculation [ ] c) Degree [ ]
d) Masters Degree [ ]
6. Occupation:
a) Agriculture [ ] b) Business [ ] c) Service [ ]
d) Professional [ ] e) housewife [ ] g) Others(specify) [ ]
7. Number of family members:
a) Two [ ] b) Three [ ] c) Four [ ]
d) Five [ ] e) More than five [ ]
iii
8. Annual income(Rs.):
a) less than 2.5 lakh [ ] b) 2.5-5.0 lakh [ ] c) 5.0-10.0 lakh[ ]
d) more than 10.0 lakh [ ]
9. What are different investments avenues in which you have invested?
a) Equity [ ] b) Mutual Fund [ ] c) Life Insurance Policy [ ]
d) Bank Deposits [ ] e) Other (specify)
iv
Choice of Investment Avenues
Among following investment avenues what are your preferences for investment. Using 5 points
scale, offer your responses in the following scales:
5=Highly Interested, 4=Interested, 3=Indifferent, 2=Not interested and 1=Highly

uninterested
Level of
1 2 3 4 5
Preference
Investment
Avenues
a)Equity
b)Mutual Funds
c)Life Insurance Policies
d)Bank Deposits
v
Scaling of Perception
Following are the major perception which anyone has before investment. How much do you consider these perceptions before investing? Using 5
points scale, offer your responses in the following scales:
5=Strongly Agree, 4= Agree, 3=Neutral, 2=Disagree and 1=Strongly Disagree
Investment Equity Mutual Fund Life Insurance Policy Bank Deposits

Avenues
Perceptions 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
1.Reasonableness of amount of
investment
2.Regular and steady income
3.Chances of capital appreciation
4.Possibility of tax benefits
5.Minium transaction costs
6.Provision of premature
withdrawal facility
7.Liquidity of investment
8.Easy Accessibility to avenues

9.Benefit of statutory protection to
investments
10.Flexibility in timings of
investments
11.Moderate length of investment
vi
12.Accessibility of sources
of information
13.Appropriate service delivery
14.Higher collateral quality

of investment
15.Low intensity of risk
7
vii
vii

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“COMPARATIVE STUDY

Anant Bhushan (082600024)

BBM [e-Banking & Finance] Course

FairWealth Securities Limited, Dehradun

FOR THE AWARD OF BACHELORS DEGREE

BBM [e-BANKING & FINANCE]

Anant Bhushan (082600024)

Under the Guidance of

FACULTY GUIDE COMPANY GUIDE

University, declare that the Project Report entitled “COMPARATIVE STUDY

BETWEEN INVESTMENT IN STOCKS,MUTUAL FUNDS AND ULIPS”, being

submitted to the Department of Commerce, Manipal University, in partial fulfilment of the

any other similar title or prizes.

Anant Bhushan (0082600024)

Prateek Pandey (082600126)

Karan Gupta (082600188)

Chart1:Equity Brokerage Turnover for period 07-10 1

Chart2:Sample Size Calculator 13

Chart 3: Scatter plot on Regular and steady income and Reasonableness of

amount of investment for Bank Deposits. 30

Chart 4: Scatter plot on Provision of premature withdrawal facility and Liquidity

of investment for Bank Deposits. 31

Chart 5: Scatter plot on Higher collateral quality of investment and Low

intensity of risk for Bank Deposits. 32

Chart 6: Scatter plot on The Chances of capital appreciation and Liquidity of

investment for Bank Deposits 33

Chart 7: Scatter plot on Regular and steady income and Reasonableness of

amount of investment for Equity . 34

Chart 8: Scatter plot on Provision of premature withdrawal facility and Liquidity

of investment for Equity . 35

Chart 9: Scatter plot on Higher collateral quality of investment and Low

intensity of risk for Equity . 36

investment for Equity 37

amount of investment for Life Insurance 38

of investment for Life Insurance 39

intensity of risk for Life Insurance 40

investment for Life Insurance 41

amount of investment for Mutual Funds 42

of investment for Mutual Funds. 43

intensity of risk for Mutual Funds. 44

investment for Mutual Funds 45

Table 1:Descriptive Statistics on Bank Deposits 22

Table 2:Descriptive Statistics on Equity 24

Table 3:Descriptive Statistics on Life Insurance 26

Table 4:Descriptive Statistics on Mutual Funds 28

amount of investment for Bank Deposits 30

Table 6: Chi Square Test on Provision of premature withdrawal facility

and Liquidity of investment for Bank Deposits 31

and Low intensity of risk for Bank Deposits 32

Table 8: Chi Square Test on Chances of capital appreciation and Liquidity

of investment for Bank Deposits 33

of amount of investment for Equity 34

Liquidity of investment for Equity 35

Low intensity of risk for Equity 36

of investment for Equity 37

of amount of investment for Life Insurance 38

Table14: Chi Square Test on Provision of premature withdrawal facility and

Liquidity of investment for Life Insurance 39

intensity of risk for Life Insurance 40

of investment for Life Insurance 41

of amount of investment for Mutual Funds 42

Table 18:Chi square test on Provision of premature withdrawal facility and

Liquidity of investment for Mutual Funds 43