COMPARATIVE STUDY BETWEEN INVESTMENT IN STOCKS, MUTUAL FUNDS AND ULIPS By Anant Bhushan Prateek Pandey Karan Gupta

Of BBM [e-Banking & Finance] Course May-June, 2010 (082600024) (082600126) (082600188)

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 Anant Bhushan Prateek Pandey Karan Gupta During 12th,May 25th ,June 2010 Under the Guidance of FACULTY GUIDE Mr. S. SaiSachidhananda, Lecturer COMPANY GUIDE Ms.Swati Singh, Territory Head (082600024) (082600126) (082600188)

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.

Anant Bhushan

(0082600024)

Prateek Pandey

(082600126)

Karan Gupta

(082600188)

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

Chart2:Sample Size Calculator

13

Chart 3: Scatter plot on Regular and steady income and Reasonableness of amount of investment for Bank Deposits. Chart 4: Scatter plot on Provision of premature withdrawal facility and Liquidity of investment for Bank Deposits.

30

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 . Chart 8: Scatter plot on Provision of premature withdrawal facility and Liquidity of investment for Equity .

34

35

Chart 9: Scatter plot on Higher collateral quality of investment and Low intensity of risk for Equity . Chart 10: Scatter plot on The Chances of capital appreciation and Liquidity of investment for Equity

36

37

Chart 11: Scatter plot on Regular and steady income and Reasonableness of amount of investment for Life Insurance

38

Chart 12: Scatter plot on Provision of premature withdrawal facility and of investment for Life Insurance Chart 13: Scatter plot on Higher collateral quality of investment and Low intensity of risk for Life Insurance Chart 14: Scatter plot on The Chances of capital appreciation and Liquidity of investment for Life Insurance Chart 15: Scatter plot on Regular and steady income and Reasonableness of amount of investment for Mutual Funds Chart 16: Scatter plot on Provision of premature withdrawal facility and Liquidity of investment for Mutual Funds. Chart 17: Scatter plot on Higher collateral quality of investment and Low intensity of risk for Mutual Funds. Chart 18: Scatter plot on The Chances of capital appreciation and Liquidity of investment for Mutual Funds LIST OF TABLES Table 1:Descriptive Statistics on Bank Deposits Table 2:Descriptive Statistics on Equity Table 3:Descriptive Statistics on Life Insurance Table 4:Descriptive Statistics on Mutual Funds Table 5: Chi Square Test on Regular and steady income and Reasonableness of amount of investment for Bank Deposits Table 6: Chi Square Test on Provision of premature withdrawal facility and Liquidity of investment for Bank Deposits

39

40

41

42

43.

44

45

22 24 26 28 30

31

Table 7: Chi Square Test on Higher collateral quality of investment and Low intensity of risk for Bank Deposits Table 8: Chi Square Test on Chances of capital appreciation and Liquidity of investment for Bank Deposits Table 9: Chi Square Test on Regular and steady income and Reasonableness of amount of investment for Equity Table 10: Chi Square Test on Provision of premature withdrawal facility and Liquidity of investment for Equity Table 11: Chi Square Test on Higher collateral quality of investment and Low intensity of risk for Equity Table 12: Chi Square Test on Chances of capital appreciation and Liquidity of investment for Equity Table 13: Chi Square Test on Regular and steady income and Reasonableness of amount of investment for Life Insurance Table14: Chi Square Test on Provision of premature withdrawal facility and Liquidity of investment for Life Insurance Table 15: Chi Square Test on Higher collateral quality of investment and Low intensity of risk for Life Insurance. Table 16: Chi Square Test on Chances of capital appreciation and Liquidity of investment for Life Insurance Table 17:Chi square test on Regular and steady income and Reasonableness of amount of investment for Mutual Funds Table 18:Chi square test on Provision of premature withdrawal facility and Liquidity of investment for Mutual Funds Table 19:Chi square test on Higher collateral quality of investment and Low

32

33

34

35

36

37

38

39

40

41

42

43

44

intensity of risk for Mutual Funds

Table 20:Chi square test on Chances of capital appreciation and Liquidity of investment for Mutual Funds Chapter 1 Introduction Chapter 2 Research Design Chapter 3 Industry / Company Profile Chapter 4 Data Analysis Chapter 5- Findings Chapter 6 Suggestions Chapter 7 Conclusion APPENDIX Annexure 1: Bibliography Annexure 2: Questionnaire

45

1-11 11-20 21 22-45 46 47 48

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 everyones 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 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 ICRAs 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 FY0910. 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 some improvement in FY09-10 with comfortable stock liquidity, while gain on directional trading is expected to remain subdued during the period

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 ones 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 todays 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 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.

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 countrys booming economy but still further mutual funds need to create more lucrative solutions to suit investors 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 investors perception towards rewards still they are continuously 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 AMCs 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 schemeAMCs mainly consider for risk return trade off and after completely evaluating the varioussecurities 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 investors also go for sale charges, fund managers reputation, fund history, management fees, clarity in disclosure, and recommendation from media. So, whether it is a winners game or losers 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 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.

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. 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 An equity share is evidence of ownership in a company. The equity shareholders are entitled to vote on company resolutions and share the companys 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 them 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.

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 its 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.

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) 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. 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 investors perception towards risk volatility involved in investment 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 investors perception of risk is quite at odds with the conventional dispersion measures of risk like standard deviation. The importance of accurately gauging a portfolios 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 RiskMetrics 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 investors objective and considering risk orientation of investors that has been categorized as: 1. Studies pertaining to Investors 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 1Kaplan, S. & Garrick, B. J. (1981). On the quantitative definition of risk. Risk Analysis, Vol.1, No.1, pp. 11- 27 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 managers 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 investors 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. 2Elmiger, G., & Kim, S. (2003). Risk Grade your investments: Measure your risk & create wealth. John Wiley & Sons: Hoboken, NJ 3Lopes, 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- 4Sharpe, W. F. (1966). Security prices, risk and maximal gains from diversification: Reply. Journal of Finance, pp 743744 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 investors 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. 5Victor Ricciardi (2004) A Risk Perception Primer: A Narrative Research Review of the Risk Perception Literature in Behavioural Accounting and Behavioural Finance pp.3-24 6De Bondt, Werner (1993). Betting on trends: Intuitive forecast of financial risk and return. International Journal of forecasting, 9 (3), pp. 355-371. 7Fama, Eugene F., and Kenneth R. French. (1988). Permanent and Temporary components of stock prices. Journal of Political Economy, 96(2), pp. 246-273 8Fisher, Kanneth, and Meier Statman. (2000). Investor sentiments and stock returns. Financial Analyst Journal,March/April, Vol. 56 No.2 pp. 16-23. 9Black, Fischer., Michael, Jensen. & Myron, Sholes. (1972). The Capital Asset Pricing Model:

Some Empirical tests 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. 10Suzuki. (1986). A comparative study of financial innovations, deregulation and reforms in Japan and US. Bank of Japan. Monetary Economic Series, 4(10).

Scope of the study 1. Subject matter is related to the investors 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 dont differentiate between ULIPs and a simple Life Insurance Policy.

Chapter-3 Company Profile

FairWealth Securities Limited is a financial services company which has emerged as a onestop 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 IPOs. 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.

Chapter-4 Data Analysis BANK DEPOSITS Descriptive Statistics

Minimum

Maximum

Mean

Std. Deviation

Regular and steady income

170

2.00

5.00

4.0941 9

.9622

Reasonableness 170 of amount of investment Chances of capital appreciation Possibility of tax benefits 170 170

2.00

5.00

4.3471

.88553

2.00

5.00

3.8353

.91467

1.00

5.00

3.8588

.96265

Minimum transaction

170

1.00

5.00

4.3176

.86636

costs Liquidity of investment Provision of premature withdrawal facility Easy Accessibility to avenues Flexibility in timings of investments Benefit of statutory protection to investments Moderate length of investment Accessibility of 170 sources of information Appropriate service delivery Higher collateral quality of investment Low intensity 170 1.00 5.00 4.4412 .88348 170 2.00 5.00 4.1765 .86587 170 2.00 5.00 4.1235 .97424 1.00 5.00 3.8353 1.00704 170 1.00 5.00 3.9176 1.01715 170 1.00 5.00 3.8588 .92504 170 1.00 5.00 4.0059 1.07416 170 1.00 5.00 3.6882 .92460 170 1.00 5.00 3.9235 1.04911 170 2.00 5.00 3.9529 .81271

of risk Valid N (list wise) 170

Table 1: Descriptive Statistics on Bank Deposits

Regular and steady income- High degree of deviation many respondents dont agree to the mean value Reasonableness of amount of investment- High degree of deviation many respondents dont agree to the mean value Chances of capital appreciation -High degree of deviation many respondents dont agree to the mean value Possibility of tax benefits -High degree of deviation many respondents dont agree to the mean value Minimum transaction costs- High degree of deviation many respondents dont agree to the mean value Liquidity of investment- High degree of deviation many respondents dont agree to the mean value Provision of premature withdrawal facility- Very high degree of deviation many respondents dont agree to the mean value Easy Accessibility to avenues- High degree of deviation many respondents dont agree to the mean value Flexibility in timings of investments Very high degree of deviation many respondents dont agree to the mean valu Benefit of statutory protection to investments -High degree of deviation many respondents dont agree to the mean value Moderate length of investment Very high degree of deviation many respondents dont agree to the mean value Accessibility of sources of information- Very high degree of deviation many respondents dont agree to the mean value Appropriate service delivery- High degree of deviation many respondents dont agree to the mean value Higher collateral quality of investment- High degree of deviation many respondents dont agree to the mean value Low intensity of risk- High degree of deviation many respondents dont agree to the mean value Interpretation of Descriptive Statistics of investor perception for Bank Deposits

EQUITY Descriptive Statistics

Maximum

Minimum

Mean

Std. Deviation

Regular and steady income

170

1.00

5.00

2.7059

.93358

Reasonableness 170 of amount of investment Chances of capital appreciation Possibility of tax benefits Minimum transaction costs Liquidity of investment Provision of premature withdrawal facility Easy Accessibility to avenues Flexibility in timings of investments Benefit of 170 170 170 170 170 170 170 170

1.00

5.00

2.3824

1.35032

1.00

5.00

2.5000

1.26046

1.00

5.00

2.7941

1.05974

1.00

5.00

2.5706

1.09234

1.00

5.00

2.6765

1.05809

1.00

5.00

2.9059

1.02193

1.00

5.00

2.6118

.99221

1.00

5.00

2.9059

1.02193

1.00

5.00

2.5235

1.01003

statutory protection to investments Moderate length of investment Accessibility of 170 sources of information Appropriate service delivery Higher collateral quality of investment Low intensity of risk Valid N (list wise) 170 170 1.00 5.00 2.2529 .96115 170 1.00 5.00 2.8353 .98326 170 1.00 5.00 2.6059 .90558 1.00 5.00 2.7000 1.09787 170 1.00 5.00 2.8882 1.02881

Table 2: Descriptive Statistics on Equity

Regular and steady income- High degree of deviation many respondents dont agree to the mean value Reasonableness of amount of investment- Very high degree of deviation many respondents dont agree to the mean value Chances of capital appreciation - Very high degree of deviation many respondents dont agree to the mean value Possibility of tax benefits - Very high degree of deviation many respondents dont agree to the mean value Minimum transaction costs- Very

high degree of deviation many respondents dont agree to the mean value Liquidity of investment- Very high degree of deviation many respondents dont agree to the mean value Provision of premature withdrawal facility- Very high degree of deviation many respondents dont agree to the mean value Easy Accessibility to avenues- High degree of deviation many respondents dont agree to the mean value Flexibility in timings of investments Very high degree of deviation many respondents dont agree to the mean value Benefit of statutory protection to investments - Very high degree of deviation many respondents dont agree to the mean value Moderate length of investment Very high degree of deviation many respondents dont agree to the mean value Accessibility of sources of information- Very high degree of deviation many respondents dont agree to the mean value Appropriate service delivery- High degree of deviation many respondents dont agree to the mean value Higher collateral quality of investment- High degree of deviation many respondents dont agree to the mean value Low intensity of risk- High degree of deviation many respondents dont agree to the mean value Interpretation of Descriptive Statistics of investor perception for Equity

LIFE INSURANCE

Descriptive Statistics

Minimum

Maximum

Mean

Std. Deviation

Regular and steady income

170

1.00

5.00

2.8471

1.04916

Reasonableness 170 of amount of investment Chances of capital appreciation 170

2.00

5.00

3.0118

.87021

2.00

5.00

3.3765

.84232

Possibility of tax benefits

170

1.00

5.00

2.9588

.98723

Minimum transaction costs Liquidity of investment Provision of premature withdrawal facility Easy Accessibility to avenues Flexibility in timings of investments Benefit of statutory protection to investments

170

1.00

5.00

2.9118

.90258

170

1.00

5.00

3.1059

.89738

170

2.00

5.00

3.0118

.81399

170

1.00

5.00

3.3059

1.03802

170

1.00

5.00

3.2294

.88396

170

1.00

5.00

3.0294

1.02874

Moderate length of investment.

170

1.00

5.00

3.5765

88881

Accessibility of 170 sources of information Appropriate 170

2.00

5.00

3.4941

.61776

2.00

5.00

3.0824

.95721

service delivery Higher collateral quality of investment Low intensity of risk Valid N (list wise) 170 170 1.00 5.00 3.4529 .72211 170 2.00 5.00 3.1824 .64975

Table 3:Descriptive Statistics on Life Insurance Regular and steady income- Very high degree of deviation many respondents dont agree to the mean value Reasonableness of amount of investment- High degree of deviation many respondents dont agree to the mean value Chances of capital appreciation - High degree of deviation many respondents dont agree to the mean value Possibility of tax benefits - High degree of deviation many respondents dont agree to the mean value Minimum transaction costsHigh degree of deviation many respondents dont agree to the mean value Liquidity of investment-High degree of deviation many respondents dont agree to the mean value Provision of premature withdrawal facility- High degree of deviation many respondents dont agree to the mean value Easy Accessibility to avenues- Very high degree of deviation many respondents dont agree to the mean value Flexibility in timings of investments High degree of deviation many respondents dont agree to the mean value Benefit of statutory protection to investments Very high degree of deviation many respondents dont agree to the mean value Moderate length of investment Relatively low degree of deviation many respondents agree to the mean value Accessibility of sources of information- Very high degree of deviation many respondents dont agree to the mean value Appropriate service delivery- High degree of deviation many respondents dont agree to the mean value Higher collateral quality of investment- Relatively low degree of deviation many respondents agree to the mean value Low intensity of risk- High degree of deviation many respondents dont agree to the mean value

Interpretation of Descriptive Statistics of investor perception for Life Insurance

MUTUAL FUNDS

Descriptive Statistics

Mean

Minimum

Maximum

Std. Deviation

Regular and steady income

170

1.00

5.00

3.0529

.86525

Reasonableness 170 of amount of investment Chances of capital appreciation Possibility of tax benefits 170 170

1.00

5.00

3.0412

.93173

1.00

4.00

2.8882

.64760

1.00

5.00

2.9412

.95896

Minimum transaction costs Liquidity of investment Provision of premature

170

1.00

5.00

2.9294

1.05234

170

1.00

5.00

2.7176

1.00427

170

1.00

5.00

2.5529

.77697

withdrawal facility Easy Accessibility to avenues Flexibility in timings of investments Benefit of statutory protection to investments 170 1.00 5.00 2.8941 .91047 170 1.00 5.00 3.1118 .83161 170 2.00 5.00 3.1941 1.00471

Moderate length of investment

170

1.00

5.00

3.0412

1.02833

Accessibility of 170 sources of information Appropriate service delivery Higher collateral quality of investment Low intensity of risk Valid N (list wise) 170 170 170 170

1.00

5.00

3.3059

1.02077

1.00

5.00

2.8353

1.19017

2.00

5.00

3.1765

.74859

1.00

5.00

3.1765

.97515

Table 4: Descriptive Statistics on Mutual Funds Regular and steady income- High degree of deviation many respondents dont agree to the mean value Reasonableness of amount of investment- High degree of deviation many respondents dont agree to the mean value 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 dont agree to the mean value Minimum transaction costs- Very high degree of deviation many respondents dont agree to the mean value Liquidity of investment- Very high degree of deviation many respondents dont agree to the mean value Provision of premature withdrawal facility- High degree of deviation many respondents dont agree to the mean value Easy Accessibility to avenues- Very high degree of deviation many respondents dont agree to the mean value Flexibility in timings of investments High degree of deviation many respondents dont agree to the mean value Benefit of statutory protection to investments - High degree of deviation many respondents dont agree to the mean value Moderate length of investment Very high degree of deviation many respondents dont agree to the mean value Accessibility of sources of information- Very high degree of deviation many respondents dont agree to the mean value Appropriate service delivery- Very high degree of deviation many respondents dont agree to the mean value Higher collateral quality of investment- High degree of deviation many respondents dont agree to the mean value Low intensity of risk- High degree of deviation many respondents dont agree to the mean value Interpretation of Descriptive Statistics of investor perception for Mutual Fund

Bank Deposits

Chi-Square Tests

Value

df

Asymp. Sig. (2sided)

Pearson Chi-Square

53.044(a)

.000

Likelihood Ratio Linear-by-Linear Association N of Valid Cases

57.046 19.924

9 1

.000 .000

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.

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

Chi-Square Tests

Value

df

Asymp. Sig. (2-

Sided Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 170 87.999(a) 44.871 8.019 12 12 1 .000 .000 .005

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.

Chart 4: Provision of premature withdrawal facility and Liquidity of investment for Bank Deposits. The two factors are related to each other.

Chi-Square Tests

Value

df

Asymp. Sig. (2sided)

Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases

109.028(a) 76.657 61.146

12 12 1

.000 .000 .000

170

a.12 cells (60.0%) have expected count less than 5. The minimum expected count is .06. 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.

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.

Value

df

Asymp. Sig. (2Sided

Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases

52.487(a) 56.131 7.063

9 9 1

.000 .000 .008

170

a.6 cells (37.5%) have expected count less than 5. The minimum expected count is .40. 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.

Chart 6: Scatter plot The Chances of capital appreciation and Liquidity of investment for Bank Deposits. The two factors are related to each other.

Equity

Chi-Square Tests

Value

df

Asymp. Sig. (2sided)

Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases

155.688(a) 161.052 83.909

16 16 1

.000 .000 .000

170

a.13 cells (52.0%) have expected count less than 5. The minimum expected count is .56. Table 9: Chi Square Test on Regular and steady income and Reasonableness of amount of investment for Equity. The two factors are related to each other.

Chart 7: Scatter plot Regular and steady income and Reasonableness of amount of investment for Equity. The two factors are related to each other.

Chi-Square Tests

Value

df

Asymp. Sig. (2Sided

Pearson Chi-Square

73.172(a)

16

.000

Likelihood Ratio Linear-by-Linear Association N of Valid Cases

82.957 14.121

16 1

.000 .000

170

a.13 cells (52.0%) have expected count less than 5. The minimum expected count is .52. 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.

Chart 8: Scatter plot Provision of premature withdrawal facility and Liquidity of investment for Equity. The two factors are related to each other.

Chi-Square Tests

Value

df

Asymp. Sig. (2Sided

Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases

193.475(a) 147.124 18.668

16 16 1

.000 .000 .000

170

a.16 cells (64.0%) have expected count less than 5. The minimum expected count is .33. Table 11: Chi Square Test on Higher collateral quality of investment and Low intensity of risk for Equity. The two factors are related to each other.

Chart 9: Scatter plot Higher collateral quality of investment and Low intensity of risk for Equity The two factors are related to each other.

Chi-Square Tests

Value

df

Asymp. Sig. (2Sided

Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases

138.072(a) 151.735 45.150

16 16 1

.000 .000 .000

170

a.13 cells (52.0%) have expected count less than 5. The minimum expected count is 1.04. Table 12: Chi Square Test on Chances of capital appreciation and Liquidity of investment for Equity. The two factors are related to each other.

Chart 10: Scatter plot Chances of capital appreciation and Liquidity of investment for Equity The two factors are related to each other.

Life Insurance

Chi-Square Tests

Value

df

Asymp. Sig. (2sided)

Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases

69.676(a) 77.854 20.935

12 12 1

.000 .000 .000

170

a.10 cells (50.0%) have expected count less than 5. The minimum expected count is .59. Table 13: Chi Square Test on Regular and steady income and Reasonableness of amount of investment for Life Insurance

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.

Chi-Square Tests

Value

df

Asymp. Sig. (2sided)

Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases

55.800(a) 59.439 34.515

12 12 1

.000 .000 .000

170

a.11 cells (55.0%) have expected count less than 5. The minimum expected count is .05. Table14: Chi Square Test on Provision of premature withdrawal facility and Liquidity of investment for Life Insurance

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.

Chi-Square Tests

Value

df

Asymp. Sig. (2sided)

Pearson Chi-Square Likelihood Ratio Linear-by-Linear

22.243(a) 18.620 3.844

12 12 1

.098 .098 .050

Association N of Valid Cases 170

a.13 cells (65.0%) have expected count less than 5. The minimum expected count is .07. Table 15: Chi Square Test on Higher collateral quality of investment and Low intensity of risk for Life Insurance. The two factors are related to each other.

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.

Chi-Square Tests

Value

df

Asymp. Sig. (2sided)

Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases

93.623(a) 86.876 16.756

12 12 1

.000 .000 .000

170

a.9 cells (45.0%) have expected count less than 5. The minimum expected count is .34. Table 16: Chi Square Test on Chances of capital appreciation and Liquidity of investment for Life Insurance

Chart 14: Scatter plot on Chances of capital appreciation and Liquidity of investment for Life

Insurance. The two factors are related to each other.

Mutual Funds

Chi-Square Tests

Value

df

Asymp. Sig. (2sided)

Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases

103.615(a) 100.484 44.140

16 16 1

.000 .000 .000

170

a.16 cells (64.0%) have expected count less than 5. The minimum expected count is .03. 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

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

Chi-Square Tests

Value

df

Asymp. Sig. (2sided)

Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases

135.091(a) 79.252 41.747

16 16 1

.000 .000 .000

170

a.16 cells (64.0%) have expected count less than 5. The minimum expected count is .02. 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

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

Chi-Square Tests

Value

df

Asymp. Sig. (2sided)

Pearson Chi-Square Likelihood Ratio Linear-by-Linear

60.628(a) 68.369 9.150

12 12 1

.000 .000 .002

Association N of Valid Cases 170

a.10 cells (50.0%) have expected count less than 5. The minimum expected count is .16. 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

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

Chi-Square Tests

Value

df

Asymp. Sig. (2sided)

Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases

83.267(a) 79.831 6.548

12 12 1

.000 .000 .010

170

a.10 cells (50.0%) have expected count less than 5. The minimum expected count is .09. 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

Chart 18:Scatter plot on Chances of capital appreciation and Liquidity of investment

for Mutual Funds .The two factors are related to each other.

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 dont 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.

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

Chapter-7

Conclusion The present study endeavoured to give a look on investors perceptions towards various investment avenues. Understanding of investors 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 investors expectations should be brought in by these broking houses and Asset Management Companies. 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 ICRAs 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 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

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 [ ] d) 46-55 years [ ] b) 26-35 years [ ] e) Above 55 years [ ] c) 36-45 years [ ]

4. Marital Status: a) Married [ ] b) Unmarried [ ]

5. Education: a) Non-matriculation [ ] d) Masters Degree [ ] b) Matriculation [ ] c) Degree [ ]

6. Occupation: a) Agriculture [ ] d) Professional [ ] b) Business [ ] e) housewife [ ] c) Service [ ] g) Others(specify) [ ]

7. Number of family members: a) Two [ ] d) Five [ ] b) Three [ ] e) More than five [ ] c) Four [ ]

8. Annual income(Rs.): a) less than 2.5 lakh [ ] d) more than 10.0 lakh [ ] b) 2.5-5.0 lakh [ ] c) 5.0-10.0 lakh[ ]

9. What are different investments avenues in which you have invested? a) Equity [ ] d) Bank Deposits [ ] b) Mutual Fund [ ] e) Other (specify) c) Life Insurance Policy [ ]

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