Investment plan with reference to Share Market

A project submitted to
University of Mumbai for partial completion of the degree

of

Bachelor of Commerce ( Accounting and Finance)

Under the faculty of Commerce

By

VAISHNAVI SANJAY ADLINGE

Roll no : 702

Under the Guidance of

Ms. ZEBA KHAN

Chikitsak Samuha’s

S.S & L.S Patkar college of Arts & science, and

V.P Varde college of Commerce & Economic S.V.Road,

Goregaon (West) , Mumbai- 400104.

1
Investment plan with reference to Share Market
A project submitted to
University of Mumbai for partial completion of the degree

of

Bachelor of Commerce ( Accounting and Finance)

Under the faculty of Commerce

By

VAISHNAVI SANJAY ADLINGE

Roll no : 702

Under the Guidance of

Ms. ZEBA KHAN

Chikitsak Samuha’s

S.S & L.S Patkar college of Arts & science, and

V.P Varde college of Commerce & Economic S.V.Road,

Goregaon (West) , Mumbai- 400104.

2
 INDEX

CHP CHAPTER SCHEME PAGE

NO. NO.
1 INTRODUCTION
1.1 What is Share Market? 8 - 10
1.2 History 11 - 13
1.3 Shareholder 14
1.4 Buying and selling 15
1.5 Stocks 16-27
1.6 Mutual funds 28-33
1.7 Bonds 34-38
1.8 Debentures 39-42
1.9 Pros and cons while investing 43-45
1.10 Importance of Balance sheet in Fundamental Analysis 46-48
1.11 Importance of Profit and loss in Fundamental Analysis 49-52
1.12 Importance of Cash Flows in Fundamental Analysis 53-54
2 RESEARCH METHEDOLOGY
2.1 Scope of the study 55
2.2 Statement of the problem 56
2.3 Limitations 56
2.4 Hypothesis 57
2.5 Objectives of the study 57
3 LITERATURE REVIEW
3.1 Literature Review 58-60
4 DATA ANALYSIS, INTERPRETETION AND
PRESENTATION
4.1 Positive Growth of Nestle Company 61-62
4.2 Survey 62-68
5 CONCLUSION AND SUGGESTION
5.1 Conclusion 69
5.2 Suggestion 70
6 BIBLIOGRAPHY
6.1 Bibliography 71
Appendix 72-73

3
 CHIKITSTAK SAMUHA’S
S.S.& L.S PATKAR COLLEGE OF ARTS & SCIENCE AND V.P. VARDE COLLEGE OF
COMMERCE & ECONOMICS, S.V ROAD, GOREGAON (WEST), MUMBAI- 400104.

CERTIFICATE

This is to certify that MS. VAISHNAVI ADLINGE has worked and duly completed hisproject
work for the degree of Bachelor in commerce (accounting & finance) under the faculty of
commerce and her project is entitled, “Investments with reference to share market.”

I further certify that the entire work has been done by the leaner under my guidance and that
no part of its has been submitted previously for any Degree or Diploma of any of University.

It is his own work and facts reported by his personal findings and investigations.

Ms. Zeba Khan

(Course Coordinator)

Ms. Zeba Khan

(Project Guide)

Signature of External Guide

4
Date of Submission:

DECLARATION BY LEARNER

I undersigned Vaishnavi Sanjay Adlinge, hereby declare that the work embodied in thisproject
work is titled “Investments with reference to share market” forms my own contribution to
the research work carried out under the guidance of Ms. Zeba Khan is a resultof my own
research work and has not been previously submitted to any other University for any other
Degree/Diploma to this or any other university.

Wherever reference has been made to previous works of others, it has been clearly indicated as
such and included in the bibliography.

I, here by future declare that all information of this document has been obtainedand presented in
accordance with academic rules and ethical conduct.

(Vaishnavi Sanjay Adlinge)

(Roll No – 702)

(Certificated by Ms. Zeba Khan)

5
 ACKNOWLEDGEMENT

To list who all you have helped me is difficult because they are so numerous andthe depth is so
enormous.

I would like the o acknowledge the he following as being idealistic channels andfresh dimension
in the completion of this project.

I take the opportunity to thank the University of Mumbai for giving me chance to do this
project.

I would like to thank my Principal, Dr. SHRIKANT B SAWANT, for providing the necessary
facilities required for completion of this project.

I take this opportunity to thank our Coordinator Ms. Zeba Khan, for her moral support and
guidance.

I would also like to express my sincere gratitude towards my project guide, Ms. ZEBA KHAN,
whose guidance and care made the project successful.

I would like to thank my College library, for having provided various reference books and
magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped in the
completion of this project especially my Parents and Peers who supported me through my
project.

(Vaishnavi Adlinge)
(Roll No. 702)

6
 EXECUTIVE SUMMARY

This study entitled “ Investments with reference to Stock Market” was

conducted to know how much knowledge do people have about investments in stocks. The
primary objective of the study is to find out the investors preferences towards various investing
schemes. The study also aims to find out awareness, factors influencing and satisfaction level
of investors.

Availability of multifaceted information faster and speedier rate with the help of
communication technologies such as internet services, mobile applications, online trading etc
has changed the investors investment behaviour. At the same time improved earning capacity
and increased family income of Indians have increased their investment capacity. Investment
facilities also provides brokers to guide us on right path of investment. This includes
personalized consulting and problem solutions specific to individual investor’s investment and
financial planning issues. Also it shows ratio of people investing in shares, MF’S, Bonds and
debt funds, How important it is to analyze company statements i.e. Balance Sheet, Profit and
loss, Cash flows etc.

Liberalisation and deregulation of financial sector have opened multidimensional growth

opportunities for the financial service providers at same time it has provided more profitable
investment opportunities to the investors to invest their money in more diversified range of
products. In this competitive environment it is very crucial to every business firm to ensure
satisfaction to its investors.

Descriptive research is being used in this research. The primary data is collected from structured
questionnaire method. The sampling technique that was adopted for the study was simple
random sampling.

7
 CHAPTER 1

INTRODUCTION

1.1 What is Share Market?

Share Market is a Market where all financial securities are bought and sold by the investors or
traders in the stock exchange. By buying is making an investment in a company. As company
grows value of share also grows. Stock market allows buyers and sellers to negotiate prices and
make trades. Companies list shares of their stock on an exchange through a process called an
initial public offering, or IPO. Investors purchase those shares, which allows the company to
raise money to grow its business.

A stock exchange is “a body of individuals, whether incorporated or not, constituted for the
purpose of regulating or controlling the business of buying, selling or dealing in securities.”
“Securities refers to shares, bonds, scrip, stocks, debentures stock, and other marketable
securities of incorporated companies or similar, government securities, and rights or interest in
securities.”
In India, the share market is a term used to refer to the two major stock exchanges in the
country— Bombay Stock Exchange (BSE), and the National Stock Exchange of India (NSE).
There are also 22 regional stock exchanges. The stock market broadly refers to the collection
of exchanges and other venues where the buying, selling, and issuance of shares of publicly
held companies take place. Such financial activities are conducted through institutionalized
formal exchanges marketplaces that operate under a defined set of regulations. While both the
terms “stock market” and “stock exchange” are often used interchangeably, the latter term
generally comprises a subset of the former. If one trades in the stock market, it means that they
buy or sell shares on one (or more) of the stock exchange(s) that are part of the overall stock
market. A given country or region may have one or more exchanges comprising their stock
market. The leading Indian stock exchanges include National Stock Exchange (NSE) and
Bombay Stock Exchange (BSE). These leading national exchanges, along with several other
exchanges operating in the country, form the stock market of India. Stock markets are venues
where buyers and sellers meet to exchange equity shares of public corporations. Stock markets
are important components of a free-market economy because they enable democratized access
to trading and exchange of capital for investors of all kinds. They perform several functions in
markets, including efficient dealing and efficient price discovery.
The stock market allows numerous buyers and sellers of securities to interact, meet and
transact. Stock markets allow for price discovery for shares of corporations and serve as a
8
barometer for the overall economy. Since the number of stock market participants is huge, one
can often be assured of a fair price and a high degree of liquidity as various market participants
compete with one another for the best price. The stock exchange shoulders the responsibility
of ensuring liquidity, price transparency, price discovery and fair dealings in such trading
activities. As almost all major stock markets across the globe now operate electronically, the
exchange maintains trading systems that efficiently manage the buy and sell orders from
various market participants. They perform the price-matching function to facilitate trade
execution at a price that is fair to both buyers and sellers. The stock exchanges also maintain
all company news, announcements and financial reporting which can usually be accessed on
their official websites. A stock exchange also supports various other corporate-level,
transaction-related activities. For example, many profitable companies may reward investors
by paying dividends that usually come from part of the company’s earnings. The exchange
maintains all such information and may support its processing to a certain extent.

The economic significance of a stock market results from the increased marketability resulting
from a stock exchange share quotation. The stock exchange is an essential institution for the
existence of the capitalist system of the economy and for the smooth functioning of the
corporate form of organisation. The Securities Contracts (Regulation) Act of 1956 defines, a
stock exchange as “an association, organisation or body of individuals, whether incorporated
or not, established for the purpose of assisting, regulating and controlling, business in buying,
selling and dealing in securities.” Stock Exchanges are noted as “an essential concomitant of
the Capitalistic System of economy. It is indispensable for the proper functioning of corporate
enterprise. It brings together large amounts of capital necessary for the economic progress of a
country. It is a citadel of capital and pivot of money market. It provides necessary mobility to
capital and indirect the flow of capital into profitable and successful enterprises. It is the
barometer of general economic progress in a country and exerts a powerful and significant
influence as a depressant or stimulant of business activity.”

A stock market, equity market, or share market is the aggregation of buyers and sellers
of stocks also known as shares which represent ownership claims on businesses; these may
include securities listed on a public stock exchange, as well as stock that is only traded
privately, such as shares of private companies which are sold to investors through equity
crowdfunding platforms. Investment in the stock market is most often done via stock
brokers and through electronic trading platforms. Investment is usually made with
an investment strategy in mind.

9
A stock exchange is an exchange where stock brokers and traders can buy and
sell shares (equity stock), bonds, and other securities. Many large companies have their stocks
listed on a stock exchange. This makes the stock more liquidate and thus more attractive to
many investors. The exchange may also act as a guarantor of settlement. These and other stocks
may also be traded "over the counter" (OTC), that is, through a dealer. Some large companies
will have their stock listed on more than one exchange in different countries, so as to attract
international investors. Stock exchanges also covers other types of securities, such as fixed-
interest securities (bonds) or (less frequently) derivatives, which are most likely to be traded
OTC. Trade in stock markets means the transfer (in exchange for money) of a stock or security
from a seller to a buyer. This requires these two parties to agree on a price. Equities (stocks or
shares) confer an ownership interest in a particular company. Participants in the stock market
range from small individual stock investors to larger investors, who can be based at any corner
of the world and may include banks, insurance companies, pension funds and hedge funds.
Their buy or sell orders may be executed on their behalf by a stock exchange trader.

Some exchanges are physical locations where transactions are carried out on a trading floor, by
a method known as open outcry. This method is used in some stock exchanges and commodities
exchanges, and involves traders shouting bid and offer prices. This type of stock exchange has
a network of computers where trades are made electronically.

A potential buyer bids a specific price for a stock and a potential seller asks a specific price for
the same stock. Buying or selling at the Market means you will accept any ask price or bid price
for the stock. When the bid and ask prices match, a sale takes place, on a first-come, first-served
basis if there are multiple bidders at a given price.

The purpose of a stock exchange is to facilitate the exchange of securities between buyers and
sellers, thus providing a marketplace. The exchanges are made on real-time trading information
on the listed securities and facilitating price discovery. People trading stock will prefer to trade
on the most popular exchange since this gives the largest number of potential counter parties
(buyers for a seller, sellers for a buyer) and probably the best price. However, there have always
been alternatives such as brokers trying to bring parties together to trade outside the exchange.

Stock market is a place where people buy/sell shares of publicly listed companies. It offers a
platform to facilitate seamless exchange of shares. In simple terms, if A wants to sell shares of
Reliance Industries, the stock market will help him to meet the seller who is willing to buy
Reliance Industries. However, it is important to note that a person can trade in the stock market
only through a registered intermediary known as a stock broker. The buying and selling of
shares take place through electronic medium.
10
1.2 HISTORY

Coming to Indian Stock Market, The first organised stock exchange in India was started in 1875
at Bombay and which is stated to be as the oldest in Asia. In 1894 the Ahmedabad Stock
Exchange was started to facilitate dealings in the shares of textile mills out there. Next, The
Calcutta stock exchange was started in 1908 to provide a market for shares of plantations and
jute mills. Then the madras stock exchange was started in 1920. At present there are 24 stock
exchanges in the India, 21 of them being regional ones with allotted areas. Two others set up in
the reform era which are the National Stock Exchange (NSE) and Over the Counter Exchange
of India (OICEI), have mandate to have nation-wise trading. They are located at Ahmedabad,
Vadodara, Bangalore, Bhubaneswar, Mumbai, Kolkata, Kochi, Coimbatore, Delhi, Guwahati,
Hyderabad, Indore, Jaipur’ Kanpur, Ludhiana, Chennai Mangalore, Meerut, Patna, Pune,
Rajkot.

The Stock Exchanges are being administered by their governing boards and executive chiefs.
Policies relating to their regulation and control are laid down by the Ministry of Finance.
Government also Constituted Securities and Exchange Board of India (SEBI) in April 1988 for
orderly development and regulation of securities industry and stock exchanges. National Stock
Exchange was incorporated in the year 1992 to bring about transparency in the Indian equity
markets. Instead of trading memberships being confined to a group of brokers, NSE ensured
that anyone who was qualified, experienced, and met the minimum financial requirements was
allowed to trade. In this context, NSE was ahead of its time when it separated ownership and
management of the exchange under SEBI's supervision. Stock price information that could
earlier be accessed only by a handful of people could now be seen by a client in a remote
location with the same ease. The paper-based settlement was replaced by electronic depository-
based accounts and settlement of trades was always done on time. One of the most critical
changes involved a robust risk management system that was set in place, to ensure that
settlement guarantees would protect investors against broker defaults.

NSE was set up by a group of leading Indian financial institutions at the behest of
the Government of India to bring transparency to the Indian capital market. Based on the
recommendations laid out by the Pherwani committee, NSE was established with a diversified
shareholding comprising domestic and global investors. The key domestic investors
include Life Insurance Corporation, State Bank of India, IFCI Limited, IDFC
Limited and Stock Holding Corporation of India Limited.

11
 NSE was also instrumental in creating the National Securities Depository Limited (NSDL)
which allows investors to securely hold and transfer their shares and bonds electronically. It
also allows investors to hold and trade in as few as one share or bond. This not only made
holding financial instruments convenient but more importantly, eliminated the need for paper
certificates and greatly reduced incidents involving forged or fake certificates and fraudulent
transactions that had plagued the Indian stock market. The NSDL's security, combined with the
transparency, lower transaction prices, and efficiency that NSE offered, greatly increased the
attractiveness of the Indian stock market to domestic and international investors. Bombay Stock
Exchange was started by Premchand Roychand in 1875. While BSE Limited is now
synonymous with Dalal Street, it was not always so. In the 1850s, five stock brokers gathered
together under a Banyan tree in front of Mumbai Town Hall, where Horniman Circle is now
situated.[9] A decade later, the brokers moved their location to another leafy setting, this time
under banyan trees at the junction of Meadows Street and what was then called Esplanade Road,
now Mahatma Gandhi Road. With a rapid increase in the number of brokers, they had to shift
places repeatedly. At last, in 1874, the brokers found a permanent location, the one that they
could call their own. The brokers group became an official organization known as "The Native
Share & Stock Brokers Association" in 1875.

The Bombay Stock Exchange continued to operate out of a building near the Town Hall until
1928. The present site near Horniman Circle was acquired by the exchange in 1928, and a
building was constructed and occupied in 1930. The street on which the site is located came to
be called Dalal Street in Hindi (meaning "Broker Street") due to the location of the exchange.

On 31 August 1957, the BSE became the first stock exchange to be recognized by the Indian
Government under the Securities Contracts Regulation Act. Construction of the present
building, the Phiroze Jeejeebhoy Towers at Dalal Street, Fort area, began in the late 1970s and
was completed and occupied by the BSE in 1980. Initially named the BSE Towers, the name of
the building was changed soon after occupation, in memory of Sir Phiroze Jamshedji
Jeejeebhoy, chairman of the BSE since 1966, following his death.

In 1986, the BSE developed the S&P BSE SENSEX index, giving the BSE a means to measure
the overall performance of the exchange. In 2000, the BSE used this index to open its
derivatives market, trading S&P

12
BSE SENSEX futures contracts. The development of S&P BSE SENSEX options along with
equity derivatives followed in 2001 and 2002, expanding the BSE's trading platform. On 12
March 1993, a car bomb exploded in the basement of the building during the 1993 Bombay
bombings. Historically an open outcry floor trading exchange, the Bombay Stock Exchange
switched to an electronic trading system developed by Cmc ltd. in 1995. It took the exchange
only 50 days to make this transition. This automated, screen-based trading platform called BSE
On-Line Trading (BOLT) had a capacity of 8 million orders per day. Now BSE has raised
capital by issuing shares and as on 3 May 2017 the BSE share which is traded in NSE only
closed with ₹999. The BSE is also a Partner Exchange of the United Nations Sustainable Stock
Exchange initiative, joining in September 2012. BSE established India INX on 30 December
2016. India INX is the first international exchange of India. BSE launches commodity
derivatives contract in gold, silver.

Today, the BSE is measured as the world’s 11th largest stock exchange and the market
capitalization is likely to be around $1.7 trillion. The market capitalization of the NSE is
estimated to be over $1.65 trillion.
Over 5,000 companies are listed on the BSE and 1,500 figure on the NSE. In terms of share
trading volumes, still, both the exchanges are on parity. Nowadays people are able to
conduct online trading sitting in the comfort of their home. Facilities such as zero brokerage
demat and live updates are all available with the help of internet.

13
1.3 SHAREHOLDER

shareholder (or stockholder) is an individual or company (including a corporation) that

legally owns one or more shares of stock in a joint stock company. Both private and public
traded companies have shareholders.

Shareholders are granted special privileges depending on the class of stock, including the right
to vote on matters such as elections to the board of directors, the right to share in distributions
of the company's income, the right to purchase new shares issued by the company, and the right
to a company's assets during a liquidation of the company. However, shareholder's rights to a
company's assets are subordinate to the rights of the company's creditors.

Shareholders are one type of stakeholders, who may include anyone who has a direct or indirect
equity interest in the business entity or someone with a non-equity interest in a non-profit
organization. Thus it might be common to call volunteer contributors to
an association stakeholders, even though they are not shareholders. Although directors and
officers of a company are bound by fiduciary duties to act in the best interest of the
shareholders, the shareholders themselves normally do not have such duties towards each other.
However, in a few unusual cases, some courts have been willing to imply such a duty between
shareholders. For example, in California, USA, majority shareholders of closely
held corporations have a duty not to destroy the value of the shares held by minority
shareholders. The largest shareholders (in terms of percentages of companies owned) are often
mutual funds, and, especially, passively managed exchange-traded funds.

14
1.4 Buying

There are various methods of buying and financing stocks, the most common being through
a stockbroker. Brokerage firms, whether they are a full-service or discount broker, arrange the
transfer of stock from a seller to a buyer. Most trades are actually done through brokers listed
with a stock exchange.

There are many different brokerage firms from which to choose, such as full service brokers or
discount brokers. The full service brokers usually charge more per trade, but give investment
advice or more personal service; the discount brokers offer little or no investment advice but
charge less for trades. Another type of broker would be a bank or credit union that may have a
deal set up with either a full-service or discount broker.

There are other ways of buying stock besides through a broker. One way is directly from the
company itself. If at least one share is owned, most companies will allow the purchase of shares
directly from the company through their investor relations departments. However, the initial
share of stock in the company will have to be obtained through a regular stock broker. Another
way to buy stock in companies is through Direct Public Offerings which are usually sold by the
company itself. A direct public offering is an initial public offering in which the stock is
purchased directly from the company, usually without the aid of brokers.

SELLING

Selling stock is procedurally similar to buying stock. Generally, the investor wants to buy low
and sell high, if not in that order (short selling); although a number of reasons may induce an
investor to sell at a loss, e.g., to avoid further loss. As with buying a stock, there is a transaction
fee for the broker's efforts in arranging the transfer of stock from a seller to a buyer. This fee
can be high or low depending on which type of brokerage, full service or discount, handles the
transaction.

After the transaction has been made, the seller is then entitled to all of the money. An important
part of selling is keeping track of the earnings. Importantly, on selling the stock, in jurisdictions
that have them, capital gains taxes will have to be paid on the additional proceeds, if any, that
are in excess of the cost basis.

15
1.5 STOCKS

Share is a one single unit of Company’s ownership, where when we buy many shares together
in a lot it is termed as stocks. Higher the number of stocks higher the profit or loss. A company’s
capital is divided into small equal units of a finite number. Each unit is known as a share. In
simple terms, a share is a percentage of ownership in a company or a financial asset. Investors
who hold shares of any company are known as shareholders. For example ; if the market
capitalization of a company is Rs. 10 lakh, and a single share is priced at Rs. 10 then the number
of shares to be issued will be 1 lakh.

In financial markets, a share is a unit used as mutual funds, limited partnerships, and real estate
investment trusts. Share capital refers to all of the shares of an enterprise. The owner of shares
in the company is a shareholder (or stockholder) of the corporation. A share is an indivisible
unit of capital, expressing the ownership relationship between the company and the shareholder.
The denominated value of a share is its face value, and the total of the face value of issued
shares represent the capital of a company, which may not reflect the market value of those
shares. The income received from the ownership of shares is a dividend. There are different
types of shares such as equity shares, preference shares, deferred shares, redeemable shares,
bonus shares, right shares, and employee stock option plan shares.

In finance, stock (also capital stock) consists of all of the shares into which ownership of
a corporation or company is divided. (Especially in American English, the word "stocks" is also
used to refer to shares.)[1][2] A single share of the stock means fractional ownership of the
corporation in proportion to the total number of shares. This typically entitles
the shareholder (stockholder) to that fraction of the company's earnings, proceeds from
liquidation of assets (after discharge of all senior claims such as secured and
unsecured debt), or voting power, often dividing these up in proportion to the amount of money
each stockholder has invested. Not all stock is necessarily equal, as certain classes of stock may
be issued for example without voting rights, with enhanced voting rights, or with a certain
priority to receive profits or liquidation proceeds before or after other classes of shareholders.

Stock can be bought and sold privately or on stock exchanges, and such transactions are
typically heavily regulated by governments to prevent fraud, protect investors, and benefit the
larger economy. The stocks are deposited with the depositories in the electronic format also
known as Demat account. As new shares are issued by a company, the ownership and rights of
existing shareholders are diluted in return for cash to sustain or grow the business.

16
Stocks are a function of capitalism and therefore the stock market operates by the price
mechanism a stock cannot be classified as an investment unless it pays a dividend (the standard
dividend yield is 2%) otherwise it must be classified as a speculation (gambling).

A person who owns a percentage of the stock has the ownership of the corporation proportional
to their share. The shares form stock. The stock of a corporation is partitioned into shares, the
total of which are stated at the time of business formation. Additional shares may subsequently
be authorized by the existing shareholders and issued by the company. In some jurisdictions,
each share of stock has a certain declared par value, which is a nominal accounting value used
to represent the equity on the balance sheet of the corporation. In other jurisdictions, however,
shares of stock may be issued without associated par value. Shares represent a fraction
of ownership in a business. A business may declare different types (or classes) of shares, each
having distinctive ownership rules, privileges, or share values. Ownership of shares may be
documented by issuance of a stock certificate. A stock certificate is a legal document that
specifies the number of shares owned by the shareholder, and other specifics of the shares, such
as the par value, if any, or the class of the shares. In the United Kingdom, Republic of
Ireland, South Africa, and Australia, stock can also refer, less commonly, to all kinds
of marketable securities.

Investments in equity markets and stock markets provides avenue for wealth creation for a
longer period of time. It needs great efforts for research and prudence to understand different
types of opportunities in investment and identify the right time to invest in right stocks. You
also need to time your entry and exit properly and this requires continuous checking of
Investments. Capital Appreciation is the main motive of Investing in Share Market which
happens over a long period of time and is dependent upon market volatility. Stock market can
bring the good returns which is based on risk-appetite, depending on the type of Investors in
India. The good part about investing in share market is that in the long run, of you invest in
right stocks some of them deliver greater inflation adjusted returns when compared with many
other classes of assets.

In simple words, a share indicates a unit of ownership of the particular company. If you are a
shareholder of a company, it implies that you as an investor, hold a percentage of ownership of
the issuing company. As a shareholder you stand to benefit in the event of the company’s
profits, and also bear the disadvantages of the company’s losses. To take the right steps for
becoming a seasoned investor, you must understand that you can invest in a variety of stock
market instruments. These include shares, derivatives, mutual funds and bonds. Among these,
there are around 18 million investors in the stock/equity market. Stocks or equities account for
17
 around 12.9% of the total investments in India. Wondering what are shares, and how they are
different from stocks. When a company wants to raise capital for either expanding its business
or for operational requirements, it has two options: either borrowing money or issuing stocks
that provide part-ownership of the company to investors. Shares are the smallest denomination
of a company’s stocks, indicating a portion of ownership of the company. Shares are Divided
into three different types and each type has its variation. They are Equity shares, preference
shares, dividend rights voting shares.

1. EQUITY SHARES
Equity shares are long-term financing sources for any company. These shares are issued to the
general public and are non-redeemable in nature. An equity share, normally known as ordinary
share is a part ownership where each member is a fractional owner and initiates the maximum
entrepreneurial liability related to a trading concern. These types of shareholders in any
organization possess the right to vote. Investors in such shares hold the right to vote, share
profits and claim assets of a company. The value of equity shares can be expressed in various
terms like face value, par value, book value and so on. These shares are issued by company to
produce funds to meet long term expenses borne by the company. They have associated with
ownership benefits provided to an investor, wherein the individual gains exposure to various
management segments involved in running operations. An individual possessing a large number
of these types of These are also known as ordinary shares, and it comprises the bulk of the
shares being issued by a particular company. Equity shares are transferable and traded actively
by investors in stock markets. As an equity shareholder, you are not only entitled to voting
rights on company issues, but also have the right to receive dividends. However, the dividends
- issued from the profits of the company - are not fixed. You must also note that equity
shareholders are subject to the maximum risk - owing to market volatility and other factors
affecting stock markets - as per their amount of investment. The types of shares in this category
can be classified on the basis of:

• Share capital
• Definition
• Returns

18
 Classification Of Equity Shares On The Basis Of Share Capital

Equity financing or share capital is the amount raised by a particular company by issuing shares.
A company can increase its share capital by additional Initial Public Offerings (IPOs). Here is
a look at the classification of equity shares on the basis of share capital:

• Authorised Share Capital: Every company, in its Memorandum of Associations, requires to

prescribe the maximum amount of capital that can be raised by issuing equity shares. The limit,
however, can be increased by paying additional fees and after completion of certain legal
procedures. This amount is the highest amount an organization can issue. This amount can be
changed time as per the companies recommendation and with the help of few formalities.

• Issued Share Capital: This implies the specified portion of the company’s capital, which has
been offered to investors through issuance of equity shares. For example, if the nominal value
of one stock is Rs 200 and the company issues 20,000 equity shares, the issued share capital
will be Rs 40 lakh. This is the approved capital which an organization gives to the investors.
• Subscribed Share Capital: The portion of the issued capital, which has been subscribed by
investors is known as subscribed share capital. This is a portion of the issued capital which an
investor accepts and agrees upon.
• Paid-Up Capital: The amount of money paid by investors for holding the company’s stocks is
known as paid-up capital. As investors pay the entire amount at once, subscribed and paid-up
capital refer to the same amount. This is a section of the subscribed capital, that the investors
give. Paid-up capital is the money that an organization really invests in the company’s
operation.

Classification Of Equity Shares On The Basis Of Definition

• Bonus Shares: Bonus share definition implies those additional stocks which are issued to
existing shareholders free-of-cost, or as a bonus.
• Rights Shares: Right shares meaning is that a company can provide new shares to its existing
shareholders - at a particular price and within a specific time-period - before being offered for
trading in stock markets.
• Sweat Equity Shares: If as an employee of the company, you have made a significant
contribution, the company can reward you by issuing sweat equity shares.
• Voting And Non-Voting Shares: Although the majority of shares carry voting rights, the
company can make an exception and issue differential or zero voting rights to shareholders.

19
 Classification Of Equity Shares On The Basis Of Returns

• Dividend Shares: A company can choose to pay dividends in the form of issuing new shares,
on a pro-rata basis.
• Growth Shares: These types of shares are associated with companies that have extraordinary
growth rates. While such companies might not provide dividends, the value of their stocks
increase rapidly, thereby providing capital gains to investors.
• Value Shares: These types of shares are traded in stock markets at prices lower than their
intrinsic value. Investors can expect the prices to appreciate over a period of time, thus providing
them with a better share price.

Features of Equity Shares Capital

• Equity share capital remains with the company. It is given back only when the company is closed.

• Equity Shareholders possess voting rights and select the company’s management.

• The dividend rate on the equity capital relies upon the obtainability of the surfeit capital.
However, there is no fixed rate of dividend on the equity capital.

Merits of Equity Shares Capital

• ES (equity shares) does not create a sense of obligation and accountability to pay a rate of
dividend that is fixed

• ES can be circulated even without establishing any extra charges over the assets of an enterprise

• It is a perpetual source of funding, and the enterprise has to pay back; exceptional case – under
liquidation

• Equity shareholders are the authentic owners of the enterprise who possess the voting rights

Demerits of Equity Shares Capital

• The enterprise cannot take either the credit or an advantage if trading on equity when only equity
shares are issued

• There is a risk, or a liability overcapitalization as equity capital cannot be reclaimed

• The management can face hindrances by the equity shareholders by guidance and systematizing
themselves

• When the firm earns more profits, then, higher dividends have to be paid which leads to raising
in the value of the shares in the marketplace and its edges to speculation as well.

20
In addition, shareholder equity can represent the book value of a company. Equity can
sometimes be offered as payment-in-kind. It also represents the pro-rata ownership of a
company's shares. Equity can be found on a company's balance sheet and is one of the most
common pieces of data employed by analysts to assess a company's financial health. Equity
represents the value that would be returned to a company’s shareholders if all of the assets
were liquidated and all of the company's debts were paid off. We can also think of equity as a
degree of residual ownership in a firm or asset after subtracting all debts associated with that
asset. Equity represents the shareholders’ stake in the company, identified on a company's
balance sheet. The calculation of equity is a company's total assets minus its total liabilities,
and is used in several key financial ratios such as ROE. Home equity is the value of a
homeowner's property and is another way the term equity is used.

2. Preference Shares

A share which entitles the holder to a fixed dividend, whose payment takes priority over that of
ordinary share dividends. Preference shares, more commonly referred to as preferred stock, are
shares of a company’s stock with dividends that are paid out to shareholders before common
stock dividends are issued. If the company enters bankruptcy, preferred stockholders are
entitled to be paid from company assets before common stockholders. Most preference shares
have a fixed dividend, while common stocks generally do not. Preferred stock shareholders
also typically do not hold any voting rights, but common shareholders usually do. Preference
shares (preferred stock) are company stock with dividends that are paid to shareholders before
common stock dividends are paid out. There are four types of preferred stock - cumulative
(guaranteed), non-cumulative, participating and convertible. Preference shares are ideal for
risk-averse investors and they are callable (the issuer can redeem them at any time). These
shares which are issued by companies seeking to raise capital, combine the characteristics of
debt and equity investments, and are consequently considered to be hybrid securities.
Preference shareholders experience both advantages and disadvantages. On the upside, they
collect dividend payments before common stock shareholders receive such income. But on the
downside, they do not enjoy the voting rights that common shareholders typically do.
Preference shareholders receive dividend payments before common shareholders. Preference
shareholders do not enjoy voting rights like their common shareholder counterparts do.
Companies incur higher issuing costs with preferred shares than they do when issuing debt.

21
Preference shares are released to raise capital for the company, which is known as preference
share capital. If the company is going through a loss and winding up, the last payments will be
made to preference shareholders before paying to equity shareholders.
Preference shares that can be easily converted into equity shares are known as convertible
preference shares. Some preference shares also receive arrears of dividends, which are called
cumulative preference shares.
In India, preference shares should be redeemed within 20 years of issuance, and these types of
preference shares are called redeemable preference shares.
As per the Companies Act 2013, companies do not have any right to issue irredeemable
preference shares in India. Preference shares, also known as preferred shares, are a type of
security that offers characteristics similar to both common shares and a fixed-income security.
The holders of preference shares are typically given priority when it comes to any dividends
that the company pays. In exchange, preference shares often do not enjoy the same level of
voting rights or upside participation as common shares. Preference shares fall under these
categories:

Convertible Preference Shares

Convertible preference shares are those shares that can be easily converted into equity shares.
Cumulative preference shares are those type of shares that gives shareholders the right to enjoy
cumulative dividend payout by the company even if they are not making any profit.
These dividends will be counted as arrears in years when the company is not earning profit and
will be paid on a cumulative basis the next year when the business generates profits.

Non-Convertible Preference Shares

Non-Convertible preference shares are those shares that cannot be converted into equity shares.
These type of preference shares cannot be converted into equity shares. These shares will only
get fixed dividend payout and also enjoy preferential dividend payout during the dissolution of
a company.

Redeemable Preference Shares

Redeemable preference shares are those shares that can be repurchased or redeemed by the
issuing company at a fixed rate and date. These types of shares help the company by providing
a cushion during times of inflation. Redeemable preference shares are shares that can be
repurchased or redeemed by the issuing company at a fixed rate and date. These types of shares
help the company by providing a cushion during times of inflation.

22
Non-Redeemable Preference Shares

Non-redeemable preference shares are those shares that cannot be redeemed or repurchased by
the issuing company at a fixed date. Non-redeemable preference shares help companies by
acting as a lifesaver during times of inflation. Non-redeemable preference shares are those
shares that cannot be redeemed during the entire lifetime of the company. In other words, these
shares can only be redeemed at the time of winding up of the company.

Cumulative preferred stock includes a provision that requires the company to pay
shareholders all dividends, including those that were omitted in the past, before the common
shareholders are able to receive their dividend payments. These dividend payments are
guaranteed but not always paid out when they are due. Unpaid dividends are assigned the
moniker "dividends in arrears" and must legally go to the current owner of the stock at the
time of payment. At times additional compensation (interest) is awarded to the holder of this
type of preferred stock. Cumulative preference shares are those type of shares that gives
shareholders the right to enjoy cumulative dividend payout by the company even if they are not
making any profit. These dividends will be counted as arrears in years when the company is not
earning profit and will be paid on a cumulative basis the next year when the business generates
profits.

Non-cumulative preferred stock does not issue any omitted or unpaid dividends. If the
company chooses not to pay dividends in any given year, the shareholders of the non-
cumulative preferred stock have no right or power to claim such forgone dividends at any time
in the future. Non - Cumulative Preference Shares do not collect dividends in the form of
arrears. In the case of these types of shares, the dividend payout takes place from the profits
made by the company in the current year.
So if a company does not make any profit in a single year, then the shareholders will not receive
any dividends for that year. Also, they cannot claim dividends in any future profit or year.

Participating preferred stock provides its shareholders with the right to be paid dividends in
an amount equal to the generally specified rate of preferred dividends, plus an additional
dividend based on a predetermined condition. This additional dividend is typically designed
to be paid out only if the amount of dividends received by common shareholders is greater
than a predetermined per-share amount. If the company is liquidated, participating preferred
shareholders may also have the right to be paid back the purchasing price of the stock as well
as a pro-rata share of remaining proceeds received by common shareholders. Participating
preference shares help shareholders demand a part in the company’s surplus profit at the time
23
of the company’s liquidation after the dividends have been paid to other shareholders.
However, these shareholders receive fixed dividends and get part of the surplus profit of the
company along with equity shareholders.

Non-Participating Preference Shares

These shares do not benefit the shareholders the additional option of earning dividends from
the surplus profits earned by the company, but they receive fixed dividends offered by the
company. These shares do not yield the shareholders the additional option of earning dividends
from the surplus profits earned by the company. In this case, the shareholders receive only the
fixed dividend.

Adjustable Preference Shares

In the case of adjustable preference shares, the dividend rate is not fixed and is influenced by
current market rates.

Advantages of Preference Shares

Owners of preference shares receive fixed dividends, well before common shareholders see
any money. In either case, dividends are only paid if the company turns a profit. But there is a
wrinkle to this situation because a type of preference shares known as cumulative shares allow
for the accumulation of unpaid dividends that must be paid out at a later date. So, once a
struggling business finally rebounds and is back in the black, those unpaid dividends are
remitted to preferred shareholders before any dividends can be paid to common shareholders.

Higher Claim on Company Assets

In the event that a company experiences a bankruptcy and subsequent liquidation, preferred
shareholders have a higher claim on company assets than common shareholders do. Not
surprisingly, preference shares attract conservative investors, who enjoy the comfort of the
downside risk protection baked into these investments.

Additional Investor Benefits

A subcategory of preference shares known as convertible shares lets investors trade in these
types of preference shares for a fixed number of common shares, which can be lucrative if the
value of common shares begins climbing. Such participating shares let investors reap

24
additional dividends that are above the fixed rate if the company meets certain
predetermined profit targets.

Disadvantages of Preference Shares

The main disadvantage of owning preference shares is that the investors in these vehicles don't
enjoy the same voting rights as common shareholders. This means that the company is not
beholden to preferred shareholders the way it is to traditional equity shareholders. Although
the guaranteed return on investment makes up for this shortcoming, if interest rates rise, the
fixed dividend that once seemed so lucrative can dwindle. This could cause buyer's remorse
with preference shareholder investors, who may realize that they would have fared better with
higher interest fixed-income securities.

Company Benefits

Preference shares benefit issuing companies in several ways. The aforementioned lack of voter
rights for preference shareholders places the company in a strength position by letting it retain
more control. Furthermore, companies can issue callable preference shares, which affords
them the right to repurchase shares at their discretion. This means that if callable shares are
issued with a 6% dividend but interest rates fall to 4%, then a company can purchase
any outstanding shares at the market price, then reissue those shares with a lower dividend
rate. This ultimately reduces the cost of capital. Of course, this same flexibility is a
disadvantage to shareholders.

Comparison Chart

BASIS FOR EQUITY PREFERENCE

COMPARISON SHARES SHARES

Meaning Equity Preference shares

shares are are the shares that
the ordinary carry preferential
shares of the rights on the
company matters of
representing payment of
the part dividend and
ownership of repayment of
the capital.
shareholder

25
BASIS FOR EQUITY PREFERENCE
COMPARISON SHARES SHARES

in the
company.

Payment of The Priority in

dividend dividend is payment of
paid after the dividend over
payment of equity
all liabilities. shareholders.

Repayment of In the event In the event of

capital of winding winding up of the
up of the company,
company, preference shares
equity shares are repaid before
are repaid at equity shares.
the end.

Rate of dividend Fluctuating Fixed

Redemption No Yes

Voting rights Equity Normally,

shares carry preference shares
voting do not carry
rights. voting rights.
However, in
special
circumstances,
they get voting
rights.

Convertibility Equity Preference shares

shares can can be converted
never be into equity
converted. shares.

Arrears of Equity Preference

Dividend shareholders shareholders
have no generally get the
rights to get arrears of
arrears of the dividend along
dividend for with the present
year's dividend, if

26
 BASIS FOR EQUITY PREFERENCE
COMPARISON SHARES SHARES

the previous not paid in the

years. last previous
year, except in
the case of non-
cumulative
preference
shares.

3. DIFFERENTIAL VOTING RIGHTS SHARES

Differential voting rights ("DVR") refer to equity shares holding differential rights as to
dividend and/or voting. In India, section 43 (a) (ii) of the Companies Act, 2013 ("Companies
Act") allows a company limited by shares to issue DVRs as part of its share capital. Introduced
for the first time in 2000, DVRs are seen as a viable option for raising investments and retaining
control over the company at the same time. Recently, there has been renewed interest in DVRs
with the Securities and Exchange Board of India ("SEBI") releasing a consultation paper on
the 'issuance of shares with differential voting rights (DVRs)' and subsequently approving the
framework for the same in line with the present government's 100 (hundred) day agenda to
revive the economy.

SEBI's Consultation Paper on Issuance of DVRs

Issuance by companies with equity shares not hitherto listed but proposed to be offered to the
public." In a move towards protecting and promoting the rights of founders/promoters of a
company, SEBI noted its assent for permitting the issuance of SRs and FRs, especially for "new
technology firms which have asset light models, with little or no need for debt financing."
Recognising the fact that retaining the founders' interest and control in technology companies
is integral to the success of the company, issuance of DVRs will allow for growth of the
business and thereby for all shareholders. The Consultation Paper also examined the rules and
requirements for issuance of DVRs across various jurisdictions. The proposed regime for India
borrows heavily from the regulations in vogue in jurisdictions abroad.

27
1.6 MUTUAL FUNDS

A mutual fund is a financial vehicle managed by investment companies that pool cash from a
variety of investors and invests that money for them. Mutual funds are available in a broad
number of asset classes but are most commonly used as stock, bond, commodity, and short-
term debt funds. Just like with stock investments, mutual fund investors purchase shares of the
fund, with each share representing partial ownership of the fund along with any returns the
mutual fund managers generate. The percentage of an investor’s fund ownership is dictated by
the number of fund shares purchased. The more shares purchased, the larger the proportion of
fund ownership on the part of the fund investor. Fund valuation and performance is tracked on
a daily basis. The fund is managed by professional portfolio managers, who manage the funds
on a daily basis, adhering to the goals and objectives laid out in the fund prospectus A mutual
fund is a professionally managed investment fund that pools money from many investors to
purchase securities. The term is typically used in the United States, Canada, and India.

Mutual funds are often classified by their principal investments: money market funds, bond or
fixed income funds, stock or equity funds, or hybrid funds. Funds may also be categorized
as index funds, which are passively managed funds that track the performance of an index, such
as a stock market index or bond market index, or actively managed funds, which seek to
outperform stock market indices but generally charge higher fees. Primary structures of mutual
funds are open-end funds, closed-end funds, unit investment trusts.

Open-end funds are purchased from or sold to the issuer at the net asset value of each share as
of the close of the trading day in which the order was placed, as long as the order was placed
within a specified period before the close of trading. They can be traded directly with the issuer
or via an electronic trading platform or stockbroker. Mutual funds have advantages and
disadvantages compared to direct investing in individual securities. The advantages of mutual
funds include economies of scale, diversification, liquidity, and professional
management. However, these come with mutual fund fees and expenses. Mutual funds are
regulated by governmental bodies and are required to publish information including
performance, comparison of performance to benchmarks, fees charged, and securities held. A
single mutual fund may have several share classes by which larger investors pay lower fees.
Hedge funds and exchange-traded funds are not mutual funds.

28
How Mutual Funds Work

When an investor places money in a mutual fund, it's combined with the investable assets of
other fund investors. The money is pooled together and used by the fund managers to purchase
investments for the fund. By and large, stocks and bonds are the most common form of mutual
fund investments. Each share owned by a fund investor represents that investor’s share of the
gains and losses generated by the fund. Ultimately, the fund shares purchased represents a
portion of the stocks, bonds, or other investments purchased by the fund managers. Pricewise,
fund assets are calculated as the net asset value (NAV) of the fund. The NAV represents the
per-share performance of the fund, and is adjusted every day to offer transparency to the
financial markets and the investors who steer money into those mutual funds. The formula used
to calculate mutual fund NAV is fairly straightforward.

NAV = (Assets - Liabilities) / Total number of outstanding shares

Upsides and Downsides to Mutual Funds: Like most investment vehicles, mutual funds have
their benefits and their downside risks.

Benefits of mutual funds

Diversification. Studies show that investment diversification (i.e., spreading risk across
multiple portfolio investments) helps protect investor assets while producing solid returns. By
pooling assets together, mutual funds offer built-in protection if one or two fund investments
decline in value.

Capital gains features. Mutual funds experience price changes all the time. When the price of
a fund investment rises, and the fund sells that security, that triggers a capital gain for the fund.
At year-end, the fund will distribute capital gains to fundholders, minus any capital losses.

Dividend payments a plus. Many stock mutual funds, especially income funds, generate
dividend payments for fund shareholders. When a fund does earn dividend income, it distributes
that dividend payment to fund shareholders.

Disadvantages of Mutual Funds

Even with diversification built-in, you can still lose money. Mutual funds are not immune to
investment losses. Mutual fund values decline on a regular basis, so there are no guarantees
fund shareholders won’t lose money on their investments.

29
 Mutual fund fees can curb portfolio returns. Mutual funds come with an assortment of
management fees that can eat into returns. It’s not uncommon for mutual funds to charge annual
fees of 1.5 percent of an investor’s fund assets – or more.

Loose managerial practices. While most mutual fund managers are highly ethical and
committed to stable fund management practices, some fund managers may engage in risk-laden
behaviors like “churning” stocks to pump up trading fees, selling declining stocks too early to
protect quarterly performance numbers, and not following fund strategy guidelines laid out in
the fund prospectus.

Buying Mutual Funds

Investing in mutual funds is a fairly straightforward process. You can purchase shares of a fund
through the mutual fund company (check the fund company website for specific directions) or
from a stock brokerage company. When you choose to sell or “redeem” fund assets, know that
you can do so any time by contacting the fund company or your broker. They’ll walk you
through the process of selling fund shares and getting any payments due to you. In a word,
mutual funds allow investors to own shares of companies or bond issues, but on a lower scale
of risk. With a history of reliable returns and broad access to the market, mutual funds are still
very much in demand and should continue to be so going forward. Let’s see the different types
of mutual funds Mutual funds are popular investments because of their ease, flexibility and
diversification benefits. The best part of mutual funds is that they provide investment
opportunities for all kinds of investors. Currently, there are over 44 registered mutual funds in
India, offering different schemes to satisfy the dynamic needs of diverse investors. The
different types of mutual funds available can be classified broadly based on structure, asset
class, and investment goals. Going a step further, funds can also be categorized based on risk.

1. Structure of Mutual Funds

Based on the ease of investment, mutual funds can be:

• Open-ended funds:

These funds do not limit when or how many units can be purchased. Investors can enter or exit
throughout the year at the current net asset value. Open-ended funds are ideal for investors
seeking liquidity. These are funds in which units are open for purchase or redemption through
the year. All purchases/redemption of these fund units are done at prevailing NAVs. Basically
these funds will allow investors to keep invest as long as they want. There are no limits on how

30
much can be invested in the fund. They also tend to be actively managed which means that
there is a fund manager who picks the places where investments will be made. These funds also
charge a fee which can be higher than passively managed funds because of the active
management. They are an ideal investment for those who want investment along with liquidity
because they are not bound to any specific maturity periods. Which means that investors can
withdraw their funds at any time they want thus giving them the liquidity they need.

• Close-ended funds:

Close-ended funds have a pre-decided unit capital amount and also allow purchase only during
a specified period. Here, redemption is bound by the maturity date. However, to facilitate
liquidity, schemes trade on stock exchanges. These are funds in which units can be purchased
only during the initial offer period. Units can be redeemed at a specified maturity date. To
provide for liquidity, these schemes are often listed for trade on a stock exchange. Unlike open
ended mutual funds, once the units or stocks are bought, they cannot be sold back to the mutual
fund, instead they need to be sold through the stock market at the prevailing price of the shares.

• Interval funds:

A cross between open-ended and close-ended funds, interval mutual funds permit transactions
at specific periods. Investors can choose to purchase or redeem their units when the trading
window opens up. These are funds that have the features of open-ended and close-ended funds
in that they are opened for repurchase of shares at different intervals during the fund tenure.
The fund management company offers to repurchase units from existing unitholders during
these intervals. If unitholders wish to they can offload shares in favour of the fund.

2. Mutual Fund Asset Class

Depending on the assets they invest in, mutual funds are categorized under:

• Equity funds:

Equity funds invest money in company shares, and their returns depend on how the stock market
performs. Though these funds can give high returns, they are also considered risky. They can
be categorized further based on their features, like Large-Cap Funds, Mid-Cap Funds, Small-
Cap Funds, Focused Funds, or ELSS, among others. Invest in equity funds if you have a long-
term horizon and a high-risk appetite.

31
 • Debt funds:

Debt funds invest money into fixed-income securities such as corporate bonds, government
securities, and treasury bills. Debt funds can offer stability and a regular income with relatively
minimum risk. These schemes can be split further into categories based on duration, like low-
duration funds, liquid funds, overnight funds, credit risk funds, gilt funds, among others.

• Hybrid funds:

Hybrid funds invest in both debt and equity instruments so as to balance out debt and equity.
The ratio of investment can be fixed or varied, depending on the fund house. The broad types
of hybrid funds are balanced or aggressive funds. There are multi asset allocation funds which
invest in at least 3 asset classes.

• Solution-oriented funds:

These mutual fund schemes are for specific goals like building funds for children’s education
or marriage, or for your own retirement. They come with a lock-in period of at least five years.

• Other funds:

Index funds invest based on certain stock indices and fund of funds are categorized under this
head.

3. Mutual Funds based on Investment Goals

You can also choose a fund based on your financial objective:

• Growth funds:

Funds that invest primarily in high-performing stocks with the aim of capital appreciation are
considered growth funds. These funds can be an attractive option for investors seeking high
returns over a long period.

• Tax-saving Funds (ELSS):

Equity-linked saving schemes are mutual funds that invest mostly in company securities.
However, they qualify for tax deductions under Section 80C of the Income Tax Act. They have
a minimum investment horizon of three years.

32
Liquidity-based funds:

Some funds can be categorized based on how liquid the investments are. Ultra-short-term
and liquid funds, are ideal for short-term goals, while schemes like retirement funds have longer
lock-in periods.

• Capital protection funds:

These funds invest partially in fixed income instruments and the rest into equities. This could
ensure capital protection, i.e., minimal loss, if any. However, returns are taxable.

• Fixed-maturity funds (FMF):

These funds route money into debt market instruments, which have either the same or a similar
maturity period as the fund itself. For instance, a three-year FMF will invest in securities with
a maturity of three years or lower.

• Pension Funds:

Pension funds invest with the idea of providing regular returns after a long period of investment.
They are usually hybrid funds that give low but have potential to provide steady returns in
future.

4. Risk appetite

Investors may also choose to invest in mutual funds depending on their individual risk appetite.
Very-low-risk and low-risk funds are usually short-term investments (liquid or ultra-liquid
funds) that attempt to hedge market risk. However, the returns they generate are also low.
Medium-risk funds, like hybrid funds, invest a portion in debt instruments to balance risk while
high-risk funds have large equity exposure. Usually, the higher the risk, more the possibility of
high returns. Every mutual fund must disclose its risk exposure via a risk-o-meter that investors
can check to decide if it lines up with their risk capacity.

33
1.7 BONDS

A bond is a fixed-income instrument that represents a loan made by an investor to a borrower

(typically corporate or governmental). A bond could be thought of as an I.O.U. between
the lender and borrower that includes the details of the loan and its payments. Bonds are used
by companies, municipalities, states, and sovereign governments to finance projects and
operations. Owners of bonds are debtholders, or creditors, of the issuer. Bond details include
the end date when the principal of the loan is due to be paid to the bond owner and usually
include the terms for variable or fixed interest payments made by the borrower. Bonds are
units of corporate debt issued by companies and securitized as tradeable assets. A bond is
referred to as a fixed-income instrument since bonds traditionally paid a fixed interest rate
(coupon) to debtholders. Variable or floating interest rates are also now quite common. Bond
prices are inversely correlated with interest rates: when rates go up, bond prices fall and vice-
versa. Bonds have maturity dates at which point the principal amount must be paid back in
full or risk default. The Issuers of Bonds Governments (at all levels) and corporations
commonly use bonds in order to borrow money. Governments need to fund roads, schools,
dams, or other infrastructure. The sudden expense of war may also demand the need to raise
funds. n finance, a bond is an instrument of indebtedness of the bond issuer to the holders. The
most common types of bonds include municipal bonds and corporate bonds. Bonds can be
in mutual funds or can be in private investing where a person would give a loan to a company
or the government. The bond is a debt security, under which the issuer owes the holders a debt
and (depending on the terms of the bond) is obliged to pay them interest (the coupon) and to
repay the principal at a later date, termed the maturity date.[1] Interest is usually payable at fixed
intervals (semi-annual, annual, sometimes monthly). Very often the bond is negotiable, that is,
the ownership of the instrument can be transferred in the secondary market. This means that
once the transfer agents at the bank medallion-stamp the bond, it is highly liquid on the
secondary market. Thus a bond is a form of loan or IOU: the holder of the bond is the lender
(creditor), the issuer of the bond is the borrower (debtor), and the coupon is the interest. Bonds
provide the borrower with external funds to finance long-term investments, or, in the case
of government bonds, to finance current expenditure. Certificates of deposit (CDs) or short-
term commercial paper are classified as money market instruments and not bonds: the main
difference is the length of the term of the instrument. Bonds and stocks are both securities, but
the major difference between the two is that (capital) stockholders have an equity stake in a
company (that is, they are owners), whereas bondholders have a creditor stake in the company

34
(that is, they are lenders). Being a creditor, bondholders have priority over stockholders. This
means they will be repaid in advance of stockholders, but will rank behind secured creditors, in
the event of bankruptcy. Another difference is that bonds usually have a defined term, or
maturity, after which the bond is redeemed, whereas stocks typically remain outstanding
indefinitely. An exception is an irredeemable bond, which is a perpetuity, that is, a bond with
no maturity. Similarly, corporations will often borrow to grow their business, to buy property
and equipment, to undertake profitable projects, for research and development, or to hire
employees. The problem that large organizations run into is that they typically need far more
money than the average bank can provide.

Bonds provide a solution by allowing many individual investors to assume the role of the
lender. Indeed, public debt markets let thousands of investors each lend a portion of the capital
needed. Moreover, markets allow lenders to sell their bonds to other investors or to buy
bonds from other individuals—long after the original issuing organization raised capital.

How Bonds Work

Bonds are commonly referred to as fixed-income securities and are one of the main asset
classes that individual investors are usually familiar with, along with stocks (equities) and cash
equivalents. Many corporate and government bonds are publicly traded; others are traded
only over-the-counter (OTC) or privately between the borrower and lender. When companies
or other entities need to raise money to finance new projects, maintain ongoing operations, or
refinance existing debts, they may issue bonds directly to investors. The borrower (issuer)
issues a bond that includes the terms of the loan, interest payments that will be made, and the
time at which the loaned funds (bond principal) must be paid back (maturity date). The interest
payment (the coupon) is part of the return that bondholders earn for loaning their funds to the
issuer. The interest rate that determines the payment is called the coupon rate. Most bonds can
be sold by the initial bondholder to other investors after they have been issued. In other words,
a bond investor does not have to hold a bond all the way through to its maturity date. It is also
common for bonds to be repurchased by the borrower if interest rates decline, or if the
borrower’s credit has improved, and it can reissue new bonds at a lower cost.

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 Characteristics of Bonds

Most bonds share some common basic characteristics including:

• Face value is the money amount the bond will be worth at maturity; it is also the reference
amount the bond issuer uses when calculating interest payments. For example, say an investor
purchases a bond at a premium of $1,090, and another investor buys the same bond later when
it is trading at a discount for $980. When the bond matures, both investors will receive the
$1,000 face value of the bond.
• The coupon rate is the rate of interest the bond issuer will pay on the face value of the bond,
expressed as a percentage. For example, a 5% coupon rate means that bondholders will receive
5% x $1000 face value = $50 every year.
• Coupon dates are the dates on which the bond issuer will make interest payments. Payments
can be made in any interval, but the standard is semi annual payments.
• The maturity date is the date on which the bond will mature and the bond issuer will pay the
bondholder the face value of the bond.
• The issue price is the price at which the bond issuer originally sells the bonds.

Categories of Bonds
There are four primary categories of bonds sold in the markets. However, you may also
see foreign bonds issued by corporations and governments on some platforms.

• Corporate bonds are issued by companies. Companies issue bonds rather than seek bank loans
for debt financing in many cases because bond markets offer more favourable terms and lower
interest rates.
• Municipal bonds are issued by states and municipalities. Some municipal bonds offer tax-free
coupon income for investors.
• Government bonds such as those issued by the U.S. Treasury. Bonds issued by the Treasury
with a year or less to maturity are called “Bills”; bonds issued with 1–10 years to maturity are
called “notes”; and bonds issued with more than 10 years to maturity are called “bonds.” The
entire category of bonds issued by a government treasury is often collectively referred to as
"treasuries." Government bonds issued by national governments may be referred to as
sovereign debt.
• Agency bonds are those issued by government-affiliated organizations such as Fannie Mae or
Freddie Mac.

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 Varieties of Bonds
• The bonds available for investors come in many different varieties. They can be separated by
the rate or type of interest or coupon payment, by being recalled by the issuer, or because they
have other attributes.

Zero-Coupon Bonds
• Zero-coupon bonds do not pay coupon payments and instead are issued at a discount to their
par value that will generate a return once the bondholder is paid the full-face value when the
bond matures. U.S. Treasury bills are a zero-coupon bond.

Convertible Bonds
• Convertible bonds are debt instruments with an embedded option that allows bondholders to
convert their debt into stock (equity) at some point, depending on certain conditions like the
share price. For example, imagine a company that needs to borrow $1 million to fund a new
project. They could borrow by issuing bonds with a 12% coupon that matures in 10 years.
However, if they knew that there were some investors willing to buy bonds with an 8% coupon
that allowed them to convert the bond into stock if the stock’s price rose above a certain value,
they might prefer to issue those.
• The convertible bond may be the best solution for the company because they would have lower
interest payments while the project was in its early stages. If the investors converted their
bonds, the other shareholders would be diluted, but the company would not have to pay any
more interest or the principal of the bond.
• The investors who purchased a convertible bond may think this is a great solution because they
can profit from the upside in the stock if the project is successful. They are taking more risk
by accepting a lower coupon payment, but the potential reward if the bonds are converted
could make that trade-off acceptable.

Callable Bonds
• Callable bonds also have an embedded option but it is different than what is found in a
convertible bond. A callable bond is one that can be “called” back by the company before it
matures. Assume that a company has borrowed $1 million by issuing bonds with a 10% coupon
that mature in 10 years. If interest rates decline (or the company’s credit rating improves) in
year 5 when the company could borrow for 8%, they will call or buy the bonds back from the
bondholders for the principal amount and reissue new bonds at a lower coupon rate.
• A callable bond is riskier for the bond buyer because the bond is more likely to be called when
it is rising in value. Remember, when interest rates are falling, bond prices rise. Because of
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• this, callable bonds are not as valuable as bonds that aren’t callable with the same maturity,
credit rating, and coupon rate.

Puttable Bond
• A puttable bond allows the bondholders to put or sell the bond back to the company before it
has matured. This is valuable for investors who are worried that a bond may fall in value, or if
they think interest rates will rise and they want to get their principal back before the bond falls
in value.
• The bond issuer may include a put option in the bond that benefits the bondholders in return for
a lower coupon rate or just to induce the bond sellers to make the initial loan. A puttable bond
usually trades at a higher value than a bond without a put option but with the same credit rating,
maturity, and coupon rate because it is more valuable to the bondholders.
• The possible combinations of embedded puts, calls, and convertibility rights in a bond are
endless and each one is unique. There isn’t a strict standard for each of these rights and some
bonds will contain more than one kind of “option” which can make comparisons difficult.
Generally, individual investors rely on bond professionals to select individual bonds or bond
funds that meet their investing goals.

Pricing Bonds

• The market prices bonds based on their particular characteristics. A bond's price changes on a
daily basis, just like that of any other publicly traded security, where supply and demand in
any given moment determine that observed price.
• But there is a logic to how bonds are valued. Up to this point, we've talked about bonds as if
every investor holds them to maturity. It's true that if you do this, you're guaranteed to get
your principal back plus interest; however, a bond does not have to be held to maturity. At any
time, a bondholder can sell their bonds in the open market, where the price can fluctuate,
sometimes dramatically.

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1.8 Debentures

A debenture is a type of bond or other debt instrument that is unsecured by collateral. Since
debentures have no collateral backing, they must rely on the creditworthiness and reputation
of the issuer for support. Both corporations and governments frequently issue debentures to
raise capital or funds. A debenture is a type of debt instrument that is not backed by any
collateral and usually has a term greater than 10 years. Debentures are backed only by the
creditworthiness and reputation of the issuer. Both corporations and governments frequently
issue debentures to raise capital or funds. Some debentures can convert to equity shares while
others cannot.

Understanding Debentures

Similar to most bonds, debentures may pay periodic interest payments called coupon
payments. Like other types of bonds, debentures are documented in an indenture. An indenture
is a legal and binding contract between bond issuers and bondholders. The contract specifies
features of a debt offering, such as the maturity date, the timing of interest or coupon payments,
the method of interest calculation, and other features. Corporations and governments can issue
debentures. Governments typically issue long-term bonds—those with maturities of longer
than 10 years. Considered low-risk investments, these government bonds have the backing of
the government issuer. Corporations also use debentures as long-term loans.

Convertible vs. Nonconvertible

Convertible debentures are bonds that can convert into equity shares of the issuing corporation
after a specific period. Convertible debentures are hybrid financial products with the benefits
of both debt and equity. Companies use debentures as fixed-rate loans and pay fixed interest
payments. However, the holders of the debenture have the option of holding the loan until
maturity and receive the interest payments or convert the loan into equity shares. Convertible
debentures are attractive to investors that want to convert to equity if they believe the
company's stock will rise in the long term. However, the ability to convert to equity comes at
a price since convertible debentures pay a lower interest rate compared to other fixed-rate
investments.

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Nonconvertible debentures are traditional debentures that cannot be converted into equity of
the issuing corporation. To compensate for the lack of convertibility investors are rewarded
with a higher interest rate when compared to convertible debentures.

Features of a Debenture

When issuing a debenture, first a trust indenture must be drafted. The first trust is an agreement
between the issuing corporation and the trustee that manages the interest of the investors.

Interest Rate

The coupon rate is determined, which is the rate of interest that the company will pay the
debenture holder or investor. This coupon rate can be either fixed or floating. A floating rate
might be tied to a benchmark such as the yield of the 10-year Treasury bond and will change
as the benchmark changes.

Credit Rating

The company's credit rating and ultimately the debenture's credit rating impacts the interest
rate that investors will receive. Credit-rating agencies measure the creditworthiness of
corporate and government issues. These entities provide investors with an overview of the
risks involved in investing in debt. Credit rating agencies, such as Standard and Poor's,
typically assign letter grades indicating the underlying creditworthiness. The Standard &
Poor’s system uses a scale that ranges from AAA for excellent rating to the lowest rating of C
and D. Any debt instrument receiving a rating of lower than a BB is said to be of speculative
grade.3 You may also hear these called junk bonds. It boils down to the underlying issuer being
more likely to default on the debt.

Maturity Date

For nonconvertible debentures, mentioned above, the date of maturity is also an important
feature. This date dictates when the company must pay back the debenture holders. The
company has options on the form the repayment will take. Most often, it is as redemption from
the capital, where the issuer pays a lump sum amount on the maturity of the debt. Alternatively,
the payment may use a redemption reserve, where the company pays specific amounts each
year until full repayment at the date of maturity.

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 Pros and Cons of Debentures

Pros
• A debenture pays a regular interest rate or coupon rate return to investors.
• Convertible debentures can be converted to equity shares after a specified period, making them
more appealing to investors.
• In the event of a corporation's bankruptcy, the debenture is paid before common stock
shareholders.

Cons

• Fixed-rate debentures may have interest rate risk exposure in environments where the market
interest rate is rising.

• Creditworthiness is important when considering the chance of default risk from the underlying
issuer's financial viability.

• Debentures may have inflationary risk if the coupon paid does not keep up with the rate of
inflation.

Types of Debentures

A company can issue different types of debentures based on their objectives and requirements.
And, the debenture categorization depends on redemption mode, tenure, convertibility, security,
tenure, coupon rate, etc. Let us look at some of the most common types of debentures issued by
companies.

• Convertible debenture
These are a type of debentures where the investors have the right to convert their debenture
holdings into equity shares of the company. Generally, the rights of the debenture holders, the
conversion rate, and the trigger date for conversion are defined at the time of issuing the
debentures.

• Non-convertible debenture
The debentures which do not have the option to be converted into equity shares are non-
convertible debentures.

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 • Registered debenture
In the case of registered debenture, the company that issues the debenture enters the holding
details, including the number of debentures issued, name and address of the investor, in the
register of debentures. In such cases, if the debenture holder transfers their holdings to other
investors, the details are recorded in the register of debenture holders and the register of
transfer.

• Unregistered debenture
The unregistered debentures are also commonly referred to as bearer debentures. In these cases,
the company does not maintain any records. The company pays the principal amount and the
interest to the bearer of the instrument irrespective of whose name is written on it. Another
significant feature of this type of debenture is that it is easily transferable in the market.

• Redeemable debenture
These are a type of debentures where the redemption date is explicitly mentioned on the
company's debenture certificate. On the redemption date, the company is legally obliged to
return the principal amount to the debenture holder.

• Irredeemable debenture
Unlike the redeemable debenture, which has a specific redemption date, these debentures
continue for infinity, and there is no fixed date when the company needs to pay the debenture
holder. It is redeemable only when the company goes into liquidation.

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 1.9 Pros and cons of investing in stock market

There are plenty of investment options available today from shares, mutual funds to PPF,
FDs/RDs etc but the investment option which has provided the highest returns in the long term
are Shares. But high returns come with high risk. Hence before you invest your hard earned
money in the share market, you should be aware of the advantages and disadvantages of share
market investing. Typically, investors prefer to stay away from uncertainty and tend to panic
when such situations arise. This panic then breeds mistakes and in a volatile market, mistakes
can be easily translated to losses. Therefore, investors need to understand how to overcome the
disadvantages of share market investing. Today, we will discuss the advantages and
disadvantages of investing in the share market and how you can create wealth using the stock
market. Historically, the stock market has delivered generous returns to investors over time, but
it also goes down, presenting investors with the possibility for both profits and loss, for risk and
return. Investing in the stock market can offer several benefits, including the potential to earn
dividends or an average annualized return of 10%. The stock market can be volatile, so returns
are never guaranteed. You can decrease your investment risk by diversifying your portfolio
based on your financial goals. If you want to make a lot of money, you should be investing in
stocks." That's actually true, but there's more to it than that. There are both upsides and
downsides to investing in stocks, and depending on your information sources, you may be
hearing too much of one side and not enough of the other.

PROS

Stock investment offers plenty of benefits:

1. Takes advantage of a growing economy: As the economy grows, so do corporate earnings.

That's because economic growth creates jobs, which creates income, which creates sales. The
fatter the pay check, the greater the boost to consumer demand, which drives more revenues
into companies' cash registers. It helps to understand the phases of the business cycle—
expansion, peak, contraction, and trough.
2. Best way to stay ahead of inflation: Historically, stocks have averaged an annualized return of
10%.1 That's better than the average annualized inflation rate. It does mean you must have a
longer time horizon, however. That way, you can buy and hold even if the value temporarily
drops.

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3. Easy to buy: The stock market makes it easy to buy shares of companies. You can purchase
them through a broker or a financial planner, or online. Once you've set up an account, you can
buy stocks in minutes. Some online brokers, such as Robinhood, let you buy and sell stocks
commission-free.

4. Make money in two ways: Most investors intend to buy low then sell high. They invest in fast-
growing companies that appreciate in value. That's attractive to both day traders and buy-and-
hold investors. The first group hopes to take advantage of short-term trends, while the
latter expect to see the company's earnings and stock price grow over time. They both believe
their stock-picking skills allow them to outperform the market. Other investors prefer a regular
stream of cash. They purchase stocks of companies that pay dividends. Those companies grow
at a moderate rate.

5. Easy to sell: The stock market allows you to sell your stock at any time. Economists use the
term "liquid" to mean that you can turn your shares into cash quickly and with low transaction
costs. That's important if you suddenly need your money. Since prices are volatile, you run the
risk of being forced to take a loss.
6. Probability of high returns over the short-term - The biggest advantage of share market
investment is that it has the potential to generate inflation-beating returns within a short period
of time as compared to other investment avenues like bank FDs, saving accounts etc.
7. Ownership stake in the company - When you buy shares of a public listed company, no matter
how small your share size is, it gives you proportionate control over the company. This
ownership of shares will in turn grant you the voting rights and you will receive dividends,
bonus, etc.
8. High liquidity - Unlike other investment avenues, shares do not have any lock-in period.
Investors can buy and sell shares through the stock exchanges within seconds.
9. Your rights are well protected by SEBI - The stock market is regulated by the Securities and
Exchange Board of India (SEBI). SEBI strictly monitors market participants like brokers, sub-
brokers, advisors and stock exchanges to safeguard the interest of the shareholders.
10. Tax benefits - Long-term capital gains i.e., investments held for more than 12 months are taxed
at 10% over Rs 1 Lakh only. Short-term capital gains i.e., investments held for less than 12
months are taxed at 15% + 3% cess. Any capital loss can be offset or carried forward for up to
eight financial years.

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 CONS

Here are disadvantages to owning stocks:

1. Risk: You could lose your entire investment. If a company does poorly, investors will sell,
sending the stock price plummeting. When you sell, you will lose your initial investment. If
you can't afford to lose your initial investment, then you should buy bonds. You get an income
tax break if you lose money on your stock loss. You also have to pay capital gains taxes if you
make money.
2. Stockholders paid last: Preferred stockholders and bondholders or creditors get paid first if a
company goes broke.5 But that happens only if a company goes bankrupt. A well-diversified
portfolio should keep you safe if any company goes under.
3. Time: If you are buying stocks on your own, you must research each company to determine how
profitable you think it will be before you buy its stock. You must learn how to read financial
statements and annual reports and follow your company's developments in the news. You also
have to monitor the stock market itself, as even the best company's price will fall in a market
correction, a market crash, or bear market.
4. Emotional roller coaster: Stock prices rise and fall second by second. Individuals tend to buy
high out of greed, and sell low out of fear. The best thing to do is not constantly look at the
price fluctuations of stocks, and just check in on a regular basis.
5. Professional competition: Institutional investors and professional traders have more time and
knowledge to invest. They also have sophisticated trading tools, financial models, and computer
systems at their disposal. Find out how to gain an advantage as an individual investor.
6. Market fluctuations - your business may become vulnerable to market fluctuations beyond your
control - including market sentiment, economic conditions or developments in your sector.
7. Cost - the costs of flotation can be substantial and there are also ongoing costs of being a public
company, such as higher professional fees.
8. Responsibilities to shareholders - in return for their capital, you will have to consider
shareholders' interests when running the company - which may differ from your own objectives.
9. The need for transparency - public companies must comply with a wide range of additional
regulatory requirements and meet accepted standards of corporate governance including
transparency, and needing to make announcements about new developments.

10.Demands on the management team - managers could be distracted from running the business
during the flotation process and through needing to deal with investors afterwards.

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1.10 IMPORTANCE OF BALANCE SHEET IN FUNDAMENTAL
ANALYSIS
When valuing a company or considering an investment opportunity, normally start by
examining the balance sheet. This is because the balance sheet is a snapshot of a
company's assets and liabilities at a single point in time, not spread over the course of a year
such as with the income statement. The balance sheet contains a lot of important information,
some of which are more important to focus on the company's balance sheet is a snapshot of
assets and liabilities at a single point in time. Fundamental analysts focus on the balance sheet
when considering an investment opportunity or evaluating a company. The primary reasons
balance sheets are important to analyse are for mergers, asset liquidations, a potential
investment in the company, or whether a company is stable enough to expand or pay down
debt. Many experts believe that the most important areas on a balance sheet are cash, accounts
receivable, short-term investments, property, plant, and equipment, and other major liabilities.
To get a general understanding of the solvency and business dealings of a company.

They say that "the numbers don't lie," and that is true more for financial analysis than anything
else. Balance sheets are important for many reasons, but the most common ones are: when a
merger is being considered, when a company needs to consider asset liquidation to prop up
debt, when an investor is considering a position in a company, and when a company looks
inward to determine if they are in a stable enough financial situation to expand or begin paying
back debts.

Many experts consider the top line, or cash, the most important item on a company's balance
sheet. Other critical items include accounts receivable, short-term investments, property,
plant, and equipment, and major liability items. The big three categories on any balance sheet
are assets, liability.

How Balance Sheets Work

The balance sheet provides an overview of the state of a company's finances at a moment in
time. It cannot give a sense of the trends playing out over a longer period on its own. For this
reason, the balance sheet should be compared with those of previous periods. 2

Investors can get a sense of a company's financial wellbeing by using a number of ratios that
can be derived from a balance sheet, including the debt-to-equity ratio and the acid-test ratio,
46
along with many others. The income statement and statement of cash flows also provide
valuable context for assessing a company's finances, as do any notes or addenda in an earnings
report that might refer back to the balance sheet.

Important Assets
All assets should be divided into current and noncurrent assets. An asset is considered current
if it can reasonably be converted into cash within one year. Cash, inventories, and net
receivables are all important current assets because they offer flexibility and solvency.

Cash is the headliner. Companies that generate a lot of cash are often doing a good job
satisfying customers and getting paid. While too much cash can be worrisome, too little can
raise a lot of red flags. However, some companies require little to no cash to operate, choosing
instead to invest that cash back into the business to enhance their future profit potential.

Important Liabilities

Like assets, liabilities are either current or noncurrent. Current liabilities are obligations due
within a year. Fundamental investors look for companies with fewer liabilities than assets,
particularly when compared against cash flow. Companies that owe more money than they
bring in are usually in trouble.

Common liabilities include accounts payable, deferred income, long-term debt, and customer
deposits if the business is large enough. Although assets are usually tangible and immediate,
liabilities are usually considered equally as important, as debts and other types of liabilities
must be settled before booking a profit.

Equity is equal to assets minus liabilities, and it represents how much the company's
shareholders actually have a claim to. Investors should pay particular attention to retained
earnings and paid-in capital under the equity section.

Paid-in capital represents the initial investment amount paid by shareholders for their
ownership interest. Compare this to additional paid-in capital to show the equity premium
investors paid above par value. Equity considerations, for these reasons, are among the top
concerns when institutional investors and private funding groups consider a business purchase
or merger.

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Retained earnings show the amount of profit the firm reinvested or used to pay down debt,
rather than distributed to shareholders as dividends.

The Bottom Line

A company's balance sheet provides a tremendous amount of insight into its solvency and
business dealings.1 A balance sheet consists of three primary sections: assets, liabilities, and
equity. Depending on what an analyst or investor is trying to glean, different parts of a balance
sheet will provide a different insight. That being said, some of the most important areas to pay
attention to are cash, accounts receivables, marketable securities, and short-term and long-term
debt obligations.

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1.11 IMPORTANCE OF PROFIT AND LOSS IN FUNDAMENTAL
ANALYSIS

Profit and loss accounting can be defined as a statement prepared at the end of an accounting
period, usually a year or quarter which summarizes all revenue nature transactions like revenue
earned, various costs and expenses incurred, providing insights into the company’s ability or
inability to earn profits, revenue and cost trends during that period and is also known by various
other terminologies like profit and loss statement, income statement, statement of operations or
statement of financial results. Profit and loss accounting is a financial statement that
summarizes all costs, revenue and expenses incurred during the financial period. It is one of the
major components of financial statements which every public company issues quarterly or
yearly along with other two statements like balance sheet and cash flow statements. This
statement calculates and quantifies the value of profit or loss earned by the business during a
period and hence is the most commonly used financial statement. Profit and loss statements
provide user information regarding the top and bottom line of the organisation. It starts with the
entry of revenue which is known as the top line, and subtracts the expenses like the cost of
goods sold, tax expenses, operating expenses, interest expenses and other extraordinary
expenses. The difference between both is known as the bottom line or the net income of the
organisation.

It is quite important to have a comparison between income statements of different accounting

periods as the change in operating cost, research and development expenses, revenues and net
earnings over time is more useful instead of studying and analysing single year figures. Profit
and loss accounting is said to be one of the most important tools for monitoring the
organisation’s financial health. It depicts the organisation’s realized profits and losses for an
accounting period by comparing the company’s total revenue with the total cost and expenses.
Intra and inter-firm comparison can help stakeholders monitor the company’s ability to increase
profits by increasing the revenue or decreasing costs. Investors, accountants, and analysts study
the profit and loss accounts to scrutinise the company’s debt financing and cash flow.
Depending upon the applicable GAAP, companies are required to prepare and presents their
Profit and Loss Accounting statement.

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 The main components of a profit and loss account are –

• Revenue
• Cost of goods sold
• Selling administrative and general expenses
• Marketing and advertising expense
• Technology, research and development expenses
• Interest expenses
• Tax expenses
• Net income

Importance of Profit and Loss Accounting

Every Businessman and concerned stakeholders are interested in knowing the results of
operations, i.e., whether business operations have earned profits or is incurring losses.
Businesses measure and present their income performance with the help of a financial statement
known as a profit and loss account. This account lists all the revenue sales, cost of goods sold,
expenses and any other expense generated by the company for the given period. The profit and
loss account provides knowledge about the business income and expenses net, showing profit
or loss. It helps the owner or management evaluate the business’s performance and provides a
base for future performance forecast and growth analysis. It also presents important information
required by the banks in order to sanction loans. Profit and loss account elaborate various
business activities such as expenses and revenues, which are the most useful risk assessment,
cost trend analysis, future income analysis.

Advantages of Profit and Loss Accounting

Some of the advantages are given below:

• Tracks the Net Profit or Net Loss – The Most important benefit of preparing a profit and loss
account is to track business performance in terms of net profit or a net loss.
• Tracks Indirect Expenses – Indirect expenses of a particular period can be easily tracked and
monitored with the help of data provided in a profit and loss account and thus can help in
lowering or minimising the excess expenses, thereby increasing profitability.

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• Helps in Ascertaining the Net Profit Ratios – This statement helps in conducting financial
statement analysis as with the help of net profit, a company may easily determine the net profit
linked ratios.
• Helps in Decision Making – With the help of profit and loss statements, comparison can be
done between the current year’s data with previous year data and then forecasting the future
performance and thus helps in making future plans and decision-making.

Disadvantages of Profit and Loss Accounting

Some of the disadvantages are given below:

• Not a Complete Picture: Financial decisions based solely on profitability analysis may not be
appropriate as one also needs to understand its financial position, the value of risk undertaken
etc.
• No Insights of Cash Generated Neither of any item presented in P&L a/c depicts actual cash
inflows/ outflows. management also needs to know the organization’s cash position. P&L a/c
cannot serve this management’s need. Accordingly, they need to prepare a cash flow statement.
• Period of Reporting: P&l A/c is based on historical data. Sometimes it might be late for
stakeholders for decision making and may result in an incorrect decision.

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 1.12 IMPORTANCE OF CASH FLOW STATEMENTS FOR INVESTORS

Cash flow statements refers to a financial statement that provides details about the amount of
cash and cash equivalents of a business. It is a key report that highlights the changes in a
company’s cash flow over a specified period of time. It helps to understand how much money
an enterprise is making and spending, where the money is coming from and also how it is being
spent. Generally, all investors and shareholders of a company want to get cash out of their
investment. Hence, information about a company’s receivables and payables is of key
importance to the users of financial statements. Like the other financial statements, the Cash
Flow Statement is also usually drawn up annually, but it can be drawn up more often, if
required. Analysing the cash flow statement and finding out trends is called cash flow analysis.
This even helps you in cash flow forecasting. To know more about it, click here

The statement includes the cash flow from operating, investing and financing activities.

When an investor/shareholder is conducting due diligence and projections for a particular

company, it as the most important statement.

• Enables investors to use the information about historic cash flows of a company for projections
of future cash flows on which to base their investment decisions.

• Shows the changes in the balance sheet, and helps in analysing the operating, investing and
financing activities.

• Provides insights about the liquidity and solvency of a firm, which is vital for the survival and
growth of any organization.

• Shows the financial position of an entity during a period of time.

• Helps in providing information regarding the cash-generating abilities of the entity’s core
activities.

• Shareholders and investors tend to compare the Cash Flow Statements of different companies as
it helps them to reveal the quality of their earnings. This helps in making them the right decision.

• Assuming the company has some long-term debt obligations, a Cash Flow Statement helps the
investors and shareholders to determine the possibility of repayment. It can be used to easily
predict the timing, amounts, and uncertainty of future cash flows.

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• IMPORTANT RATIOS FOR ANALYSIS

• Cash flow analysis uses certain ratios that focus on the firm’s cash flow and how solvent, liquid,
and viable the firm is. Here are some of the most important ratios-

1. Operating Cash Flow Ratio:

This is one of the important cash flow ratios. Operating cash flow considers cash flows that an
entity accrues from operations as related to its current debt. It measures how liquid a company
is in the short run. It shows whether cash flows from operations can cover its liabilities or not.
Operating Cash Flow Ratio = Cash Flows From Operations/Current Liabilities
• Here, the cash flow from operation comes from the statement of cash and cash flow from current
liabilities comes off the balance sheet.

• If suppose, the operating cash flow ratio of an entity is less than 1.0, the entity is not generating
enough money to pay off its short-term debt.

2. Cash Flow Margin Ratio

The cash flow margin ratio expresses the relationship between the cash generated from
operations and sales. The firm needs cash to pay dividends, debt, suppliers, and invest in new
capital assets. This ratio measures the ability of a company to translate sales into cash.

Cash flow from operating cash flows/Net sales = _____%

3. Current Ratio
The current ratio tells if current assets are sufficient to meet the company's current debt. The
formula to calculate this ratio is as follows:
Current Ratio = Current Assets/Current Liabilities
The ratio indicates how many times a company can meet its short-term debt and is a measure
of the firm's liquidity.

4. Quick Ratio
The quick ratio, also known as or acid test, is a more specific test of liquidity than the current
ratio. It takes inventory out of the equation and measures the company’s liquidity if it doesn't
have inventory to sell to meet its short-term debt obligations.

Quick Ratio = Current Assets - Inventory/Current Liabilities

If the quick ratio is less than 1.0, then the company has to sell inventory to meet the short-term
debt. This is not considered to be a good position for the firm to be in.
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 CHAPTER 2

RESEARCH METHEDOLOGY

2.1 SCOPE OF THE STUDY

The Stock market is an emerging place to start your career with. Day by day it is getting bigger,
and many start-ups are setting up every day in the country. The opportunity to become an
entrepreneur is also straightforward in the stock market. In India, young people are often
reluctant to make the Stock market their Career choice as they get scared by any kind of
financial investment required in the process. But the growth of this industry in the last few
decades is phenomenal and one who is passionate can seriously turn their dreams into reality
by choosing the right path Investing in developing economy is always better because if the
country is growing then the same thing applies to your invested money. We all know that market
is reached its all time high. But if you are systematic investor in Indian stock market then
congrats you are at right place to grow your money. Now, even I think will it is worth investing
money in markets. But we can do some stock sip in our favourite stocks as systematic money
goes to that company which is earning and growing. At present, We had started our vaccination
drives and may be government is planning to give vaccinations to all people in large scale. But
we see that in Indian stock market many investors are investing money to get good returns in
future. Don't think of present think for future-will give to success in Investing. Play safe games
by investing a small amount in market. Invest in big sums only if you think that market is doing
ok. Its upon you don’t see for present look for future. Indian companies are developing at
greatest scale its business in world wide. Investment in growing country like India will give
you solid returns.

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2.2 STATEMENT OF THE PROBLEM

Technological enablement and rapid growth of Stock Exchanges since the new economic
policy of 1991 has given more importance to investors. Investor behaviour also tend o move
into savings to investment, short – term trading of shares. More number of brokers also entered
into market due to the liberalized regulation. Brokers are providing number of products and
services under single umbrella to the investors based on their need. So, This study aims to
discover that how these services by the investors, how these services are utilized and how
satisfied are the investors with these services.

2.3 LIMITATIONS

1. As the data was collected through questionnaire, there might be chances of biased
information being provided by the respondents.

2. Small sample size of the study could not have been able to decipher some important
dimensions of the study due to time constraints.

3. Study was limited mostly with investments in Stocks, Mutual funds, Bonds and Debentures.

4. The survey was mostly answered by people of age group below 25 years.

5. Stock Market has two major ways one is trading and other is investing, in this project
information about investments is only provided.

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2.4 HYPOTHESIS

H0 – Stock Market has less fluctuations.

H1 – Stock Market has more fluctuations.

H0 – Stock Market requires no patience.

H2 – Stock Market requires lot of patience.

2.5 Objectives of the Study

1. To study the investors preferences towards various investments related to stock market.
2. To find out awareness of investors about investments in stock exchange.
3. To understand importance of Balance Sheet, Profit and loss account and Cash flow
statements.

4. To know for how much period do people invest.

5. The preference of people for investment in a particular sector.

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 CHAPTER 3
LITERATURE REVIEW

3.1 Literature review

Literature survey is generally conducted to review the present status of a particular
research topic. It helps the researcher to know the quantum of work already done
on a particular topic and the area not yet touched. Relevant literature is accessed
through research reports, articles, books, journals, magazines and other relevant
materials.

Parag Parikh – In his book ‘Stocks to Riches’ He explains the fundamental concepts one needs
to understand, to achieve success in the stock markets. Concepts like investing, differences
between trading and speculation, loss aversion, sunk cost fallacy (and how to avoid falling into
it), decision paralysis, mental accounting, and herd mentality. Every investor has dealt with and
will have to deal with these situations in their investment journey. So having all these concepts
neatly compiled and explained in one book certainly helps.

Santosh Nair – In his book ‘bulls, bears and other beasts’ The story is narrated by a fictional
character named ‘Lalchand Gupta’. Though the character is fictional (purposely), the stories
mentioned are quite realistic. Lala as he is known in his friend circle takes you through his
experience of the events which panned out at the Dalal Street from 1988 till the recent times.
Lala starts the journey with his troubled childhood at school to his boring accounting job and
how his curiosity landed him to the world of stock market. Back in those days, when awareness
about investing was at a nascent stage, money making was a different ball game altogether.
From easy IPO money to dubious operators selling fake shares to insider trading, Lala takes
through the journey in a most lucid and simplistic manner which makes it all the more
interesting to read.

Rahul Sarogi – In his book ‘Investing in India’ he says, India has more than 6,000 listed
companies, but formal research is available only for some hundred-odd companies. Therefore,
the Indian market is rife with mis-pricing which value investors can take advantage of. At the
same time, investors need to be careful and not fall into a value trap. A value investor, Rahul

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Saraogi, managing director at Atyant Capital Advisors, in his book titled Investing in India: A
Value Investor’s Guide to the Biggest Untapped Opportunity in the World guides investors
through case studies about how Indian companies are run and what investors should look for.
Saraogi explains how the Indian market is awash in amazing investment opportunities.
However, he warns investors that they need to have an understanding of India’s history and
culture before choosing to invest. Financial analysis should have weightage, but two critical
factors that determine whether an investment will do well or not are: corporate governance and
capital allocation.

Benjamin Graham – In his book ‘The Intelligent Investor’ , One of Graham's key
contributions was to point out the irrationality and group-think that was often rampant in the
stock market. Thus, according to Graham, investors should always aim to profit from the
whims of the stock market, rather than participate in it. His principles of investing safely and
successfully continue to influence investors today. This article will examine Graham's early
career work, some key concepts related to value investing from The Intelligent Investor, and
how Graham's ideas helped inform the successful investing principles of later investors,
namely Warren Buffett.

Burton Gordon Malkiel – He writes a book ‘A Random Walk Down Wall Street’ is a book on
the subject of stock markets which popularized the random walk hypothesis. Malkiel argues
that asset prices typically exhibit signs of a random walk and that one cannot
consistently outperform market averages. The book is frequently cited by those in favour of
the efficient-market hypothesis. As of 2020, there have been twelve editions and over 1.5
million copies sold. A practical popularization is The Random Walk Guide to Investing: Ten
Rules for Financial Success.

Peter lynch - In his book ‘One Up on the Wall Street’ Peter highlights that the stock markets
demand conviction on part of the investor as markets victimize the unconvinced. The lack of
conviction forces amateur investors to shun stocks at precisely wrong times and think of them
as prudent investment at the times when they are not. Peter advises the investors, that predicting
stock market movements is futile. I agree with Peter when he says that investors should never
try to time the markets. The best time to invest is whenever an investor finds a good opportunity
to invest. Markets are overvalued when an investor cannot find even a single stock meeting her

58
criteria. Therefore, Peter says, an investor should focus on picking good stocks, selling at cheap
valuation and let the market go on managing itself.

Here is the Berkshire Hathaway letter to Shareholders. This is by Warren Buffet to

investors.

“Students need only two well-taught courses—How to Value a Business, and How to Think
About Market Prices. Your goal as an investor should simply be to purchase, at a rational price,
a part interest in an easily-understandable business whose earnings are virtually certain to be
materially higher five, ten and twenty years from now. Over time, you will find only a few
companies that meet these standards—so when you see one that qualifies, you should buy a
meaningful amount of stock. You must also resist the temptation to stray from your guidelines:
If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten
minutes. Put together a portfolio of companies whose aggregate earnings march upward over
the years, and so also will the portfolio’s market value. Though it’s seldom recognized, this is
the exact approach”

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 CHAPTER 4

DATA ANAYLSIS, INTERPRETATION AND PRESENTATION

4.1 POSITIVE GROWTH OF NESTLE COMPANY

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This is line graph of Nestle Company ranging from year 1990 to 2020. It shows results of
invested value in 30 years. Nestlé India Limited is the Indian subsidiary of Nestlé which is a
Swiss multinational company. The company is headquartered in Gurgaon, Haryana. The
company's products include food, beverages, chocolate, and confectioneries. The company
was incorporated on 28 March 1959 and was promoted by Nestle S.A. via a subsidiary, Nestle
Holdings Ltd. As of 2020, the parent company Nestlé owns 62.76% of Nestlé India. The
company has 9 production facilities in various locations across India.

According to the graph, a person who has invested amount less than Rupees 2000 in 1990 in
shares of nestle is now getting returns more than Rs. 18000. 282 times in 30 years, which
indicates tremendous growth. Companies like this are safe to invest as they have less risk of
making losses. The company faced many challenges in between because of their one of the
most leading products which is Maggie, still they managed to give better returns to
shareholders, this also shows company was having good surplus and retained earnings. This
chart was added just to show why investing is stocks in a better decision! Like this we have
many other companies to invest in.

4.2 SURVEY

Question 1 – Age Group

As today’s generation have more knowledge of these securities, they prefer to invest more in
this. The survey shows people below age of 25 invest more. 17.5% of respondents are of age

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group 25-40 years. As per the survey conducted investors from age group above 40 are
comparatively less only 9.5% of people belong here.

Question 2 – Do you invest in Stock Market?

According to the survey, 60.3% people invest in stock and 39.7% people don’t invest here.

Question 3 – Where will you like to invest?

For this question three options were presented in front of people. These options were related
to investments like Shares, Mutual funds, Bonds & Debts, to know their preference. Mostly

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people preferred to invest in Shares and mutual funds as they provide higher returns where as
bonds and debentures have fixed returns.

76.2% people invest in shares, 68.3% invest in mutual funds, 7.9% invest in bonds.

Question 4 – How long will you plan to invest for?

There are three terms for investment Short term, Medium term, Long term. 44.4% people invest
for long term, 38.1% people invest for medium term, 17.5% people invest for short term. While
investing its always advisable to invest for long term. If we invest for longer term we can enjoy
higher returns..

Question 5 – In which sector will you invest?

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Investing is not concerned with one company, one can invest in various companies. Every
company belongs to a particular sector. There are five major sectors across the globe they are
IT, Banking, Health care, Telecommunication and Food industry. There are n number of
organisations and companies working under these sectors and all these are leading ones. As
shown in the chart IT sector has lot of investments 77.8% people invest here. As there is
advancement in technology IT companies manage to provide high returns therefore people
invest more following comes Banking sector, today we have Nationalized banks, Commercial
banks and foreign banks. Banks provide us many facilities also keep our money safe with them
and provide interest on it. 54% of people invest in banking sector. Impact of Covid-19 is huge
around the world and this gave demand for pharma products, so people also invest in Health
care companies 41.3% people invest here. Next comes, Telecommunications. The companies
like Bharti airtel, Vi, Reliance Jio are leading in telecom industry. 20.6% people invest here.
25.4% people invest in Food industry companies. Food is our basic need people are obviously
going to buy food products and this gives rise to its share prices. Also there are many other
industries like infrastructure, real estate, gold, cement etc.

Question 6 – Factors you consider while investing?

One always invest money for some positive returns and to earn more. There are many reasons
to invest like returns on investment, tax benefits, capital appreciation, liquidity etc. Mostly
people invest for good returns 73% people invest for returns. 57.1% people invest for tax
benefits. 31.7% people invest for liquidity if we release money from demat account after selling

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 shares it can be quickly converted into cash. Shares in a investment and investment is an asset
and as we know prices of assets mostly increases over a period of time. Increase in value of
money is capital appreciation. 28.6% people invest for this reason.

Question 7 – Your preference to invest in company’s share having…

There are two ways to analyse the company one is technical analysis and other is fundamental
analysis. Fundamental analysis is viewed by people who have deep knowledge of share market,
for investing long-term investors prefer to study fundamental analysis where as some people
use technical analysis mostly traders use this method. It is based on charts, graphs, candle sticks
etc. fluctuations are seen in technical analysis risk can be seen in this technique. 52.4% people
prefer to invest in companies having less fluctuations and 47.6% people invest in companies
having more fluctuations.

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Question -8 Will you invest in a loss making company which is going to merge
with company paying higher dividends?

We have many companies who have merged with good companies and are making huge profits.
Example – Vodafone idea merger, Walmart acquisition of Flipkart, Zee entertainment and Sony
India merger, Google and android, Disney and Marvel etc. so question was asked related to this
and 31.7% people answered ‘yes’. 23.8% people answered ‘No’. 44.4% people responded
maybe.

Question 9 – From where do you Gather information about Company's

Financials?

Before investing in stock market it’s obvious that we do research about company. There are
many modes through which we can collect company details they are Company’s website,

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Newspaper, Magazines, Business TV channels, Internet, Wikipedia, Experts, Brokers,
Financial Advisors, Consultants etc. 60.3% people gather information from newspaper, 19%
people read magazines for information. 25.4% people watch TV channels. Internet is the most
used medium to get details 74.6% people use internet.

Question 10 – People’s prefer – Dividend, Interest, Bonus shares?

Returns we earn from shares are known as dividends, from bonds and debentures are known as
interest. The company who wants to grow more and has assurance to earn more in future issues
Bonus Shares instead of Dividend. Companies like Indian metals, Wipro, Google, ICICI Bank,
Larsen & Toubro etc have given bonus shares to its shareholders. 50.8% people prefer dividend
where as 63.5% people prefer interest, interest is a fixed percent of amount which is decided
before itself and after certain period or after maturity it is redeemed to the investor. 42.9%
people choose to get bonus shares over dividend.

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Question 11– Your action if share market drops?

As we know share market is the most fluctuating market. Any crisis in the world affects stock
market because of this market fluctuates. There comes a time when market is bearish and
investors have to bear loss. 47.6% people said if market drops they would transfer their funds
into some secure investments like Real estate, Gold etc. As investors need to have patience
some people wait to see if market improves and gets back atleast to the price in which they had
purchased the stock. 49.2% people selected the second option. 31.7% chose to invest more.
9.5% people would choose to withdraw funds and stop investing.

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 CHAPTER 5

CONCLUSION AND SUGGESTION

5.1 CONCLUSION

Indian Stock Market is one of the oldest in Asia. Its history dates back to nearly 200 years ago.
The earliest records of security dealings in India are major and obscure. The East India
Company was the dominant institution in those days and business in its loan securities used to
be transacted towards the close of eighteenth century. The nature of the investment differs from
individual to individual and is unique to each one because it depends on various parameters like
future financial goals, the present and the future income model, capacity to bear the risk, the
present requirements and lot more. As an investor progresses on his/her life stage and as his/her
financial goals change, so does the unique investor profile. Maximum investors are aware of all
the investment options. Investors do not invest in a single avenue. They prefer different avenues
and maximum investors prefer to invest in shares, mutual funds and debentures. According to
the survey mostly youngsters invest in stocks as they have more knowledge about it. It depends
on every individual to invest for how long it can be for short term, medium term or long term.
But people mostly invest for medium term which lies in between the period of 1-5 years. IT and
Banking sector are the most leading sectors to invest they give high dividends to investors as
they have huge company growth. People have different motives for invest one of the main t is
to get returns on investments. At present share market gives more interest than investing in bank
FD’s, Recurring deposits, gold etc. Today many sources are available to collect information
about companies’ financials like internet, newspaper, magazines, TV channels etc, company
website etc. Here I conclude by saying equity shares are one of the profit-making investments
if you have good and enough knowledge of it you should go ahead to invest in it. At the same
time it requires a lot of patience and investing skills as it fluctuates a lot.

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 5.2 SUGGESTIONS

✓ Start with small capital in the initial days.

✓ Understand fundamental analysis if you want to be a investor.
✓ Diversify your investment if you have long term investing goals.
✓ Investments requires lots of patience.
✓ Before investing investor should make sure he/she has proper knowledge of market.
✓ Understand different types of sectors.
✓ Try to understand the financial reports of companies.
✓ Do your own analysis don’t take advice from friends & relatives etc.
✓ Always invest excess money which is not needed in short-term.
✓ Do not get emotionally attached to the market.
✓ Pick companies, not stocks.
✓ Avoid trading.
✓ The bigger the potential returns, the higher is the risk.
✓ Don’t put all your eggs in one basket.

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 CHAPTER - 6

BIBLIOGRAPHY

❖ https://www.5paisa.com
❖ https://www.investopedia.com
❖ http://en.wikipedia.org
❖ http://www.yourarticlelibrary.com
❖ http://www.adityabirlacapital.com
❖ http://grow.in
❖ http://byjus.com

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 APPENDIX

Name
Age
• Below 25
• 25 – 40 years
• Above 40 years

Do you invest in Stock Market?

• Yes
• No

Where will you like to invest?

• Shares
• Mutual Funds
• Bonds & Debt
• Others

How long will you plan to invest for?

• Short term (0-1 year)
• Medium term (1-5 years)
• Long term (More than 5 years)

In which sector will you invest?

• IT sector
• Banking sector
• Pharma
• Telecom
• Food Industry
• Others

Factors you would consider while investing

• Returns on investment
• Tax benefits

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• Liquidity
• Capital Appreciation
• Other

Your Preference to invest in Company’s share having..,

• More fluctuations
• Less fluctuations

Will you invest in a loss making company which is going to merge with company paying higher
dividends?
• Yes
• No
• Maybe

From where do you gather information about Company’s Financials?

• Newspaper
• Business Magazines
• Business Channels
• Internet
• Other

What do you prefer?

• Dividend
• Interest
• Bonus Shares

Your action if Share Market drops

• Transfer funds into secure investments
• Wait to see if market improves
• Invest more
• Withdraw funds and stop investing

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