Professional Documents
Culture Documents
A Project Report
Submitted in partial fulfilment of the requirement of the
MASTER OF BUSINESS ADMINISTRATION
Submitted By
Vamsi Prava
HT No: - 2011510036
Prof. A Krishna
Sudheer
(Deemed to be University)
AZIZ NAGAR (VIL), NEAR TSPA JUNCTION
Hyderabad (INDIA)
2020-2022
DECLARATION
This is to certify that the Project Report titled “A STUDY ON INVESTOR PREFERENCE
TOWARDS EQUITY SHARES WRT SHRIRAM GROUP” submitted in partial
fulfilment of Masters Business Administration, at KL-H BUSINESS SCHOOL OF
MANAGEMENT, KL UNIVERSITY, Hyderabad was carried out by “Vamsi Prava”
bearing HT. NO: 2011510036 under the guidance of Prof. Dr A Krishna Sudheer. This
work has not been submitted university or institution for the award of Any
Degree/Diploma/Course.
For the development of any country capital markets plays a critical and significant
role. The developed capital markets provide various benefits like high economic growth, high
employment, infrastructural development and developed financial sectors. Developed
markets not only benefit a country but also offer ample opportunities to retail investors for
wealth generation and maximization. Most of the savings in India are in physical assets like
gold, real estate but now the inclination is increasing towards equity and it has grown
substantially. Retail investors' who are investing in small stocks to make a quick gain, are
changing their approach and now placing their money in quality stocks. It is always
interesting to know the most common avenues in which people like to invest. In Ahmedabad
also we tried to find out which is the most popular mode of investment. The objective is to
find out which age groups of investors are actively participating in the stock market, people's
perception and preference towards equity market in Ahmedabad. The investors also differ in
risk taking ability. The objective is to find out in Ahmedabad investors are having aggressive
approach or conservative approach.
In order to get higher returns people, prefer to invest in the equity market. Though
they are risk takers but their major investment is not in Equity.
CHAPTER - 1
INTRODUCTION
INTRODUCTION
An investor is a party that makes an investment into one or more categories of assets
equity, debt securities, real estate, currency, commodity, derivatives such as put and call
options, etc. with the objective of making a profit.
An investor is a party that makes an investment into one or more categories of assets
equity, debt securities, real estate, currency, commodity, derivatives such as put and call
options, etc. With the objective of making a profit. The term “investor protection” defines the
entity of efforts and activities to observe safeguard and enforce the rights and claims of a
person in his role as an investor. This includes advice and legal action. The assumption of a
need of protection is based on the experience that financial investors are usually structurally
inferior to providers of financial services and products due to lack of professional knowledge,
information and/or experience.
A stock trader or a stock investor is an individual or firm who buys and sells stocks in
the financial markets. Many stock traders will trade bonds (and possibly other financial
assets) as well. Individuals or firms trading equity (stock) on the stock markets as their
principal capacity are called stock traders. Stock traders usually try to profit from short-term
price volatility with trades lasting anywhere from several seconds to several weeks.
The stock trader is usually a professional. Persons can call themselves full or part-
time stock traders/investors while maintaining other professions. When a stock trader/investor
has clients, and acts as a money manager or adviser with the intention of adding value to their
clients’ finances, he is also called a financial advisor or manager. In this case, the financial
manager could be an independent professional or a large bank corporation employee. This
may include managers dealing with investment funds, hedge funds, mutual funds, and
pension funds, or other professionals in equity investment, fund management, and wealth
management. Several different types of stock trading exist including day trading, trend
following, market making, scalping (trading), momentum trading, trading the news and
arbitrage.
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1.1 INDUSTRY PROFILE
EVOLUTION:
Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200
years ago. The earliest records of security dealings in India are merger 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 the eighteenth century.
By 1830's business on corporate stocks and shares in Bank and Cotton presses took
place in Bombay. Though the trading list was broader in 1839, there were only half a dozen
brokers recognized by banks and merchants during 1840 and 1850.
In 1860-61 the American Civil War broke out and cotton supply from United States of
Europe was stopped; thus, the 'Share Mania' in India begun. The number of brokers increased
to about 200 to 250. However, at the end of the American Civil War, in 1865, a disastrous
slump began (for example, Bank of Bombay Share which had touched Rs 2850 could only be
sold at Rs. 87).
At the end of the American Civil War, the brokers who thrived out of Civil War in
1874, found a place in a street (now appropriately called as Dalai Street) where they would
conveniently assemble and transact business. In 1887, they formally established in Bombay,
the "Native Share and Stock Brokers' Association" (which is alternatively known as “The
Stock Exchange "). In 1895, the Stock Exchange acquired a premise in the same street and it
was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidated.
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1.2 COMPANY PROFILE
Other Leading Cities in Stock Market Operations
Ahmadabad gained importance next to Bombay with respect to cotton textile industry.
After 1880, many mills originated from Ahmadabad and rapidly forged ahead. As new mills
were floated, the need for a Stock Exchange at Ahmadabad was realized and in 1894 the
brokers formed "The Ahmadabad Share and Stock Brokers' Association".
What the cotton textile industry was to Bombay and Ahmadabad, the jute industry
was to Calcutta. Also, tea and coal industries were the other major industrial groups in
Calcutta. After the Share Mania in 1861-65, in the 1870's there was a sharp boom in jute
shares, which was followed by a boom in tea shares in the 1880's and 1890's; and a coal
boom between 1904 and 1908. On June 1908, some leading brokers formed "The Calcutta
Stock Exchange Association".
In the beginning of the twentieth century, the industrial revolution was on the way in
India with the Swadeshi Movement; and with the inauguration of the Tata Iron and Steel
Company Limited in 1907, an important stage in industrial advancement under Indian
enterprise was reached.
Indian cotton and jute textiles, steel, sugar, paper and flour mills and all companies
generally enjoyed phenomenal prosperity, due to the First World War.
In 1920, the then demure city of Madras had the maiden thrill of a stock exchange
functioning in its midst, under the name and style of "The Madras Stock Exchange" with 100
members. However, when boom faded, the number of members stood reduced from 100 to 3,
by 1923, and so it went out of existence.
In 1935, the stock market activity improved, especially in South India where there
was a rapid increase in the number of textile mills and many plantation companies were
floated. 1937, a stock exchange was once again organized in Madras - Madras Stock
Exchange Association (Pvt) Limited. (In 1957 the name was changed to Madras Stock
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Exchange Limited).
Lahore Stock Exchange was formed in 1934 and it had a brief life. It was merged with
the Punjab Stock Exchange Limited, which was incorporated in 1936.
Indian Stock Exchanges - An Umbrella Growth
The Second World War broke out in 1939. It gave a sharp boom which was followed
by a slump. But, in 1943, the situation changed radically, when India was fully mobilized as a
supply base.
On account of the restrictive controls on cotton, bullion, seeds and other commodities,
those dealing in them found in the stock market as the only outlet for their activities. They
were anxious to join the trade and their number was swelled by numerous others. Many new
associations were constituted for the purpose and Stock Exchanges in all parts of the country
were floated.
The Uttar Pradesh Stock Exchange Limited (1940), Nagpur Stock Exchange Limited
(1940) and Hyderabad Stock Exchange Limited (1944) were incorporated.
In Delhi two stock exchanges - Delhi Stock and Share Brokers' Association Limited
and the Delhi Stocks and Shares Exchange Limited - were floated and later in June 1947,
amalgamated into the Delhi Stock Exchange Association Limited.
Post-independence Scenario
Most of the exchanges suffered almost a total eclipse during depression. Lahore
Exchange was closed during partition of the country and later migrated to Delhi and merged
with Delhi Stock Exchange. Bangalore Stock Exchange Limited was registered in 1957 and
recognized in 1963.
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Most of the other exchanges languished till 1957 when they applied to the Central
Government for recognition under the Securities Contracts (Regulation) Act, 1956. Only
Bombay, Calcutta, Madras, Ahmadabad, Delhi, Hyderabad and Indore, the well-established
exchanges, were recognized under the Act. Some of the members of the other Associations
were required to be admitted by the recognized stock exchanges on a concessional basis, but
acting on the principle of unitary control, all these pseudo stock exchanges were refused
recognition by the Government of India and they thereupon ceased to function.
Thus, during early sixties there were eight recognized stock exchanges in India
(mentioned above). The number virtually remained unchanged, for nearly two decades.
During eighties, however, many stock exchanges were established: Cochin Stock Exchange
(1980), Uttar Pradesh Stock Exchange Association Limited (at Kanpur, 1982), and Pune
Stock Exchange Limited (1982), Ludhiana Stock Exchange Association Limited (1983),
Guwahati Stock Exchange Limited (1984), Kanara Stock Exchange Limited (at Mangalore,
1985), Magadh Stock Exchange Association (at Patna, 1986), Jaipur Stock Exchange Limited
(1989), Bhubaneswar Stock Exchange Association Limited (1989), Saurashtra Kutch Stock
Exchange Limited (at Rajkot, 1989), Vadodara Stock Exchange Limited (at Baroda, 1990)
and recently established exchanges - Coimbatore and Meerut. Thus, at present, there are
totally twenty-one recognized stock exchanges in India excluding the Over-the-Counter
Exchange of India Limited (OTCEI) and the National Stock Exchange of India Limited
(NSEIL).
The Table given below portrays the overall growth pattern of Indian stock markets
since independence. It is quite evident from the Table that Indian stock markets have not only
grown just in number of exchanges, but also in number of listed companies and in capital of
listed companies. The remarkable growth after 1985 can be clearly seen from the Table, and
this was due to the favouring government policies towards security market industry.
Trading in Indian stock exchanges are limited to listed securities of public limited
companies. They are broadly divided into two categories, namely, specified securities
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(forward
8
list) and non-specified securities (cash list). Equity shares of dividend paying, growth-
oriented companies with a paid-up capital of at least Rs.50 million and a market
capitalization of at least Rs.100 million and having more than 20,000 shareholders are,
normally, put in the specified group and the balance in non-specified group.
Two types of transactions can be carried out on the Indian stock exchanges: (a) spot
delivery transactions "for delivery and payment within the time or on the date stipulated when
entering into the contract which shall not be more than 14 days following the date of the
contract”: and (b) forward transactions "delivery and payment can be extended by further
period of 14 days each so that the overall period does not exceed 90 days from the date of the
contract". The latter is permitted only in the case of specified shares. The brokers who carry
over the outstanding’s pay carry over charges (contango or backwardation) which are usually
determined by the rates of interest prevailing.
A member broker in an Indian stock exchange can act as an agent, buy and sell
securities for his clients on a commission basis and also can act as a trader or dealer as a
principal, buy and sell securities on his own account and risk, in contrast with the practice
prevailing on New York and London Stock Exchanges, where a member can act as a jobber
or a broker only.
The nature of trading on Indian Stock Exchanges are that of age-old conventional
style of face-to-face trading with bids and offers being made by open outcry. However, there
is a great amount of effort to modernize the Indian stock exchanges in the very recent times.
The traditional trading mechanism prevailed in the Indian stock markets gave way too
many functional inefficiencies, such as, absence of liquidity, lack of transparency, unduly
long settlement periods and benami transactions, which affected the small investors to a great
extent. To provide improved services to investors, the country's first ringless, scripless,
electronic stock exchange - OTCEI - was created in 1992 by country's premier financial
institutions - Unit Trust of India, Industrial Credit and Investment Corporation of India,
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Industrial Development
10
Bank of India, SBI Capital Markets, Industrial Finance Corporation of India, General
Insurance Corporation and its subsidiaries and Can Bank Financial Services.
Trading at OTCEI is done over the centre’s spread across the country. Securities traded
on the OTCEI are classified into:
Listed Securities - The shares and debentures of the companies listed on the OTC can
be bought or sold at any OTC counter all over the country and they should not be
listed anywhere else
Permitted Securities - Certain shares and debentures listed on other exchanges and
units of mutual funds are allowed to be traded
Initiated debentures - Any equity holding at least one lakh debentures of particular
scrip can offer them for trading on the OTC.
OTC has a unique feature of trading compared to other traditional exchanges. That is,
certificates of listed securities and initiated debentures are not traded at OTC. The original
certificate will be safely with the custodian. But a counter receipt is generated out at the
counter which substitutes the share certificate and is used for all transactions.
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In the case of an OTC issue (new issue), the allotment procedure is completed in a
month and trading commences after a month of the issue closure, whereas it takes a
longer period for the same with respect to other exchanges.
Thus, with the superior trading mechanism coupled with information transparency investors
are gradually becoming aware of the manifold advantages of the OTCEI.
With the liberalization of the Indian economy, it was found inevitable to lift the
Indian stock market trading system on par with the international standards. On the basis of
the recommendations of high-powered Sherwani Committee, the National Stock Exchange
was incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and
Investment Corporation of India, Industrial Finance Corporation of India, all Insurance
Corporations, selected commercial banks and others.
(b) Participants.
Recognized members of NSE are called trading members who trade on behalf of
themselves and their clients. Participants include trading members and large players like
banks who take direct settlement responsibility.
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Trading at NSE takes place through a fully automated screen-based trading
mechanism which adopts the principle of an order-driven market. Trading members can stay
at their offices and execute the trading, since they are linked through a communication
network. The prices at which the buyer and seller are willing to transact will appear on the
screen. When the prices match the transaction will be completed and a confirmation slip will
be printed at the office of the trading member.
NSE has several advantages over the traditional trading exchanges. They are as follows:
NSE brings an integrated stock market trading network across the nation.
Investors can trade at the same price from anywhere in the country since inter-market
operations are streamlined coupled with the countrywide access to the securities.
Delays in communication, late payments and the malpractice’s prevailing in the
traditional trading mechanism can be done away with greater operational efficiency
and informational transparency in the stock market operations, with the support of
total computerized network.
Unless stock markets provide professionalized service, small investors and foreign
investors will not be interested in capital market operations. And capital market being one of
the major sources of long-term finance for industrial projects, India cannot afford to damage
the capital market path. In this regard NSE gains vital importance in the Indian capital market
system.
Preamble
Often, in the economic literature we find the terms ‘development’ and ‘growth’ are
used interchangeably. However, there is a difference. Economic growth refers to the
sustained increase in per capita or total income, while the term economic development
implies sustained structural change, including all the complex effects of economic growth. In
other words, growth is associated with free enterprise, whereas development requires some
sort of control and regulation of the forces affecting development. Thus, economic
development is a process and growth are a phenomenon.
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Economic planning is very critical for a nation, especially a developing country like
India to take the country in the path of economic development to attain economic growth.
One of the major objectives of planning in India is to increase the rate of economic
development, implying that increasing the rate of capital formation by raising the levels of
income, saving and investment. However, increasing the rate of capital formation in India is
beset with a number of difficulties. People are poverty ridden. Their capacity to save is
extremely low due to low levels of income and high propensity to consume. Therefore, the
rate of investment is low which leads to capital deficiency and low productivity. Low
productivity means low income and the vicious circle continues. Thus, to break this vicious
economic circle, planning is inevitable for India.
The market mechanism works imperfectly in developing nations due to the ignorance
and unfamiliarity with it. Therefore, to improve and strengthen market mechanism planning
is very vital. In India, a large portion of the economy is non-monitored; the product, factors of
production, money and capital markets is not organized properly. Thus, the prevailing price
mechanism fails to bring about adjustments between aggregate demand and supply of goods
and services. Thus, to improve the economy, market imperfections have to be removed;
available resources have to be mobilized and utilized efficiently; and structural rigidities has
to be overcome. These can be attained only through planning.
Further, in a country like India where agricultural dependence is very high, one cannot
ignore this segment in the process of economic development. Therefore, an economic
development model has to consider a balanced approach to link both agriculture and industry
and lead for a paralleled growth. Not to mention, both agriculture and industry cannot
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develop
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without adequate infrastructural facilities which only the state can provide and this is possible
only through a well carved out planning strategy. The government’s role in providing
infrastructure is unavoidable due to the fact that the role of private sector in infrastructural
development of India is very minimal since these infrastructure projects are considered as
unprofitable by the private sector.
Further, India is a clear case of income disparity. Thus, it is the duty of the state to
reduce the prevailing income inequalities. This is possible only through planning.
The development of planning in India began prior to the first Five Year Plan of
independent India, long before independence even. The idea of central directions of resources
to overcome persistent poverty gradually, because one of the main policies advocated by
nationalists early in the century. The Congress Party worked out a program for economic
advancement during the 1920’s, and 1930’s and by the 1938 they formed a National Planning
Committee under the chairmanship of future Prime Minister Nehru. The Committee had little
time to do anything but prepare programs and reports before the Second World War which
put an end to it. But it was already more than an academic exercise remote from
administration. Provisional government had been elected in 1938, and the Congress Party
leaders held positions of responsibility. After the war, the Interim government of the pre-
independence years appointed an Advisory Planning Board. The Board produced a number of
somewhat disconnected Plans itself. But, more important in the long run, it recommended the
appointment of a Planning Commission.
The Planning Commission did not start work properly until 1950. During the first
three years of independent India, the state and economy scarcely had a stable structure at all,
while millions of refugees crossed the newly established borders of India and Pakistan, and
while ex- princely states (over 500 of them) were being merged into India or Pakistan. The
Planning Commission as it now exists was not set up until the new India had adopted its
Constitution in January 1950.
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Introduction to Shriram Group company profile:
The Shriram Group is one of the largest and well-respected financial services
conglomerates in India. They group main line of activities in financial services include chit
funds, truck financing, consumer durable financing, stock broking, insurance broking and life
insurance. The Group has customer base of 30 lack chit subscribers and investors and
operates through a network of 630 offices. The group has the largest agency force in the
private sector consisting of more than 75000 loyal and dedicated agents. Shriram Life
insurance Co Ltd was launched in January 2006. Between 2001 and 2006, Indian demography
has changed with the higher income classes constituting about 79%. This presents huge market
for insurance products.
Shriram group Financial Services Ltd is listed on the National Stock Exchange
(NSE), Bombay Stock Exchange (BSE). Consolidated net worth of the Shriram group is
around USD 14 billion (2020). The revenue of Shriram Group is 90,000 Cr (2018). Some of
the large shareholders of Shriram Group are the largest financial institutions of the world such
as Fidelity Funds, Goldman Sachs, Merrill Lynch, Morgan Stanley and Farallon Capital.
The Group has also made investments in manufacturing, Value Added Services,
Project Development, Engineering Services, Pharmaceutical’s, Machined & Auto
Components, Press Dies & Sheet Metal Stamping, Packaging, Information Technology,
Property Development etc.
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Company Overview and Values:
The Shriram Group Company was founded with the objective of reaching out to the
“common man” with products and services that would be helpful to him as he sets out on the
path to “prosperity”.
Operational efficiency, integrity and a strong focus on catering to the needs of the
average Indian, by offering him high quality and cost-effective products and services, are the
core values that drive the organisation. These values have been strongly adhered to over the
decades and are now an integral part of the organisation’s DNA.
The company prides itself on its deep understanding of the customer. Each product or
service is tailor-made to specifically suit the needs of the customer. It is this guiding
philosophy of putting people first that has brought the group company closer to the
grassroots and has made it the preferred choice for all truck financing requirements amongst
the customers.
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MANAGEMENT TEAM
Shriram Group
The Hub at Lower Parel is an intelligently designed business centre in Mumbai. In the
past few years serviced office industry has been maturing in India and today is a main stream
occupancy option for businesses of all sizes. Whether a start-up, SME or a multi-national,
companies are now opting for viable alternative to leasing or the outright purchase of
commercial workspace.
The real advantage of The Hub is not just that it is more cost effective but also it
offers best possible working environment by offering conveniences such as advanced
security, pantry and maintenance services including IT and utility bills for electricity, water
& HVAC.
What’s more, those moving into The Hub serviced offices enjoy the added benefit of
cutting-edge IT and telecom infrastructure, reception and secretarial support, hi-tech meeting
rooms and video conferencing suites as well as business lounge, food courts and state of the
art fitness centre.
Not to forget among various factors that can affect a business and its success and
growth, is the address or the location of the office especially those of newly established
enterprises. The Hub within a world class contemporary business complex located between
Nariman Point and Bandra Kurla Complex and in close proximity to Bandra Worli Sea Link
is undeniably in the finest commercial location in Mumbai’s upcoming central business
district- Lower Parel.
Undeniably, The Hub is a new age business centre that provides a very attractive
proposition to businesses of all sizes to help their own business grow and prosper.
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Businesses:
Shriram Group is one of the country's leading business houses with business
interests in Insurance, Financial Services, Real Estate and Transport. Shriram company
Group companies are listed in Indian and overseas financial markets. The Net worth of the
Group is Rs 1,06,000 by 2020-21.
Shriram City Union Finance is engaged in small and medium enterprise lending and
retail financing including two-wheeler loans.
Shriram Housing Finance is a subsidiary of Shriram City Union Finance and mainly
provides home loan services.
Shriram Capital is the holding company of Shriram Group, which has stakes in a
number of group companies.
Shriram Life Insurance is the life insurance arm of the group, and a joint venture
between Shriram Capital and South African Company Sanlam.
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Shriram Fortune is the financial services distribution arm of the group.
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As corporate citizens, we at Shriram Group are conscious of the opportunities and the
responsibility that this confluence presents.
Investments to increase income levels of our poorest people will expand business
opportunities manifold. Investments to improve education, health and skills training will
improve the efficiency of the economy. Protecting our environment will actually lower our
costs of doing business. Providing our youth with gainful employment and a chance to
improve their lives will ensure societal and political stability- setting a strong foundation for
economic sustainability. All of these investments will help create an inclusive society,
ensuring a sustainable return to our shareholders.
The Shriram Group is keen to help in building an inclusive and prosperous society
and we are beginning our efforts in this direction through Shriram Group Foundation.
One of the first initiatives of the Foundation is to support the development of rural
districts. Our aim is to support development across multiple domains in a district-based
approach. Some of the areas where we want to help are in economic development and skills
training, access to drinking water, school education, public health, agriculture and support to
the local government.
Shriram Group Commercial Vehicle Loans offers commercial auto loans to a variety
of business owners. We are a preferred financer with first time buyers as well as fleet
operators providing commercial vehicle loans with simple documentation and quick results.
The Commercial Vehicle Finance provided by us helps the small and medium
operators to acquire vehicles with minimum hassle and documentation. We provide
customized financing options to suit your needs.
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Our strength lies in the quick completion of transactions, long association with
transporters and the intimate knowledge of the market and its nuances.
Our finance schemes are easy to understand with no hidden costs.
1. Product Offering
2. Proposed
Finance
Tire Funding
Accidental Funding
Engine Funding
Take over loans
Top up loan on existing loan with us
3. Features of Loan Offering
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Organization Structure- Board of Directors:
Regional Manager
Branch Manager
RM/SRM
Back Office Local Compliance
Executive Officer
ARM
Dealer
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Shriram Group Company Pvt Ltd:
Shriram Group Company Pvt Ltd. was incorporated in the year 1974.The Auditors of
Shriram Group Company Pvt Ltd. are Deloitte. The main activity of this company is in
relation to securities and stock brokerage. It was also responsible for setting up one of India’s
first trading platforms.
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CONCEPTS OF EQUITY
Equity:
When you buy a company’s equity, you are in effect financing it, and being
compensated with a stake in the business. You become part-owner of the company, entitled to
dividends and other benefits that the company may announce, but without any guarantee of a
return on your investments
Fundamental Analysis:
The analysis of factual information like financial figures, balance sheet, and other
information publicly available is known as fundamental analysis. This information is used to
derive a fair price of the share of the company. The faithful fundamentalists believe that the
market incorporates all facts relating to the financial performance of the company. But
systematic analysis use tools such as ratio analyses (P/E, MV/BV) and discounted cash flow
analysis in order to arrive at the fair value of a company and hence its share.
A common platform where buyers and sellers come together to transact in stocks and
shares. It may be a physical entity where brokers trade on a physical trading via “open
outcry” system or a virtual environment.
Electronic Trading:
Electronic trading eliminates the need for physical trading floors. Brokers can trade from
their offices, using fully automated screen-based processes. Their workstations are connected
to a Stock exchange’s central computer via satellite using Very Small Aperture Terminus
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(VSATs). The orders placed by brokers reach the Exchange’s central computer and are
matched electronically.
Exchanges in India:
The Stock Exchange, Mumbai (BSE) and National stock Exchange (NSE) are the
country’s two leading Exchanges. There are 20 other regional Exchanges, connected via the
Inter-Connected stock Exchange (ICSE). The BSE and NSE allow nationwide trading via
VSAT systems.
Index:
Executing an Order:
Select broker of your choice and enter into broker-client agreement and fill in the
client registration form. Place your order with your broker preferably in writing. Get a trade
confirmation slip on the day the trade is executed and ask for the contract note at the end of
the trade date.
Need of a Broker:
As per SEBI (Securities and Exchange Board of India) Regulations, only registered
members can operate in the stock market. One can trade by executing deal only other
through registered broker of a recognized Stock Exchange or thorough SEBI-registered sub-
broker.
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Contract Note:
A contract note describes the rate, date, time at which the trade was transacted and the
brokerage rate. Contract note issued in the prescribed format establishes legally enforceable
relationship between the client and the member in respect of trades stated in the contract note.
Those are made in duplicate and the member and the client both keep copy each. Client
should receive the contract note within 24 hours of the executed trade. Corporate
Benefits/Action
Book closure and record date help a company determine exactly the shareholders of a
company as on a given date. Book closure refers to the closing of register of the names or
investors in the records of company. Companies announce book closure dates from time to
time. The benefits of dividends, bonus issues, rights issue accruing to investors whose name
appears on the company’s records as on a given date, is known as the record date. An investor
might purchase a share-cum-dividend, cum rights or cum bonus and may therefore expect to
receive these benefits as the next shareholder. In order to receive this, the share has to be
transferred in the investor’s name, or he would stand deprived of the benefits. The buyer of
such a share purchased at cum benefits prices are transferred before book-closure. It must be
ensured that price paid for the shares is ex-benefit and cum benefit.
In case of a record date, the company does not close its register of security holders.
Record date is the cut-off date for determining the number of registered members who are
eligible for the corporate benefits. In case of book closure, shares cannot be sold on an
Exchange bearing a date on the transfer deed earlier than the book closure. This does not hold
good for the record date.
No-delivery Period:
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Whenever a company announces a book closure or record date, The Exchange sets up
a no-delivery (ND) period for that security. During this period only trading is permitted in
the security. However, these trades are settled only after the no-delivery period is over. This
is done to ensure that investor’s entitlement for the corporate benefits is clearly determined.
Ex-Dividend Date:
The date on or after which a security begins trading without the dividend (cash or
stock) included in the contract price.
Ex-Date:
The first day of the no-delivery period is the ex-date. If there are any corporate
benefits such as rights, the buyer of the shares on or after the ex-date will not be eligible for
the benefits.
Bonus Issue:
While investing in shares motives is not only capital gains but also proportionate
share of surplus generated from the operations once all other stakeholders have been paid.
But the distribution of this surplus to shareholders seldom happens. Instead, this is transferred
to the reserves and surplus account. If the reserves and surplus amount to the share capital
account by mere book entry. This is done by increasing number of shares outstanding and
every shareholder is given bonus shares in a ratio called the bonus ratio and such an issue is
called bonus issue. If the bonus ratio 1:2, it means that for every two shares held, the
shareholder is entitled to one extra share. So, if a shareholder holds two shares, post bonus he
will hold three.
Split:
Split is book entry where in the face value of the share is altered to create greater
number of shares outstanding without calling for fresh capital/altering the share capital
account. For example, if a company announces a two-way split, it means that share of the
face value of Rs. 10 is split into two shares of face value of Rs. 5 each and a person holding
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one share now holds two shares.
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Buy Back:
As the name suggests, it is a process by which company can buy back its shares from
shareholders. Company may buy back shares in various ways: from existing shareholders on
a proportionate basis; through a tender offer from open market; through book-building
process; from the Stock Exchange; or from odd lot holders. Company cannot buy back
through negotiated deals on/off the Stock Exchange, through spot transactions or through any
private arrangement.
Settlement Cycle:
The accounting period for the securities traded on the Exchange. On the NSE, the
cycle begins on Wednesday and ends on the Tuesday, and on the BSE the cycle commences
on Monday and ends on Friday. At the end of this period, the obligations of each broker are
calculated and the brokers settle their respective obligations as per the rules, bye-laws and
regulations of the clearing corporation. If transaction is entered on the first day of the
settlement, the same will be settled on the eighth working day excluding the day of
transaction. However, if the same is done on the last day excluding the day of transaction.
However, if the same is done on the last day of the settlement, it will be settled on the fourth
working day excluding the day of transact
Rolling Settlement:
The rolling settlements ensure that each day’s trade is settled by keeping a fixed gap
of a specified number of working days between a trade and its settlement. At present, this gap
is five working days after the trading day. The waiting period is uniform for all trades.
Deliver the same shares and payment to broker as a seller, in order to ensure smooth
settlement, you should deliver those shares to your broker immediately after getting the
contract note for sale but in any case, before the pay-in day. Similarly, as a buyer, one should
pay immediately on the receipt of the contract note for purchase but in any case, before the
pay-in day.
32
Short Selling:
Short selling is a legitimate trading strategy. It is sale of a security that the seller does
not own, or any sale that is completed by the delivery of security borrowed by the seller.
Sellers take the risk that the price at which they ‘sold short’.
Auction:
An auction is conducted for those securities that members fail to deliver/short deliver
during pay-in. Three factors primarily give rise to an auction: short deliveries, un-rectified
bad deliveries, and un-rectified company objections.
The buy/sell auction for a market security is managed through the auction market. As
opposed to the normal market where trade matching is an on-going process, trade matching
process for auction starts after auction period is over.
If the shares are not bought at the auction i.e., if the shares are not offered for sale,
sale Exchange squares up the transaction as per SEBI guidelines. The transaction is squared
up at the highest price from the relevant trading period till the auction day or at 20% above
the last available closing price whichever is higher. Pay-in and pay-out of funds for auction
square up is held along with the pay-out for the relevant auction.
Bad Delivery:
SEBI has formulated uniform guidelines for good and bad delivery of documents. Bad
delivery may pertain to transfer deed being torn, mutilated, overwritten, defaced, or if there
are spelling mistakes in the name of company on the transfer. Bad delivery exists only when
shares are transferred physically. In “De mat” bad delivery does not exist.
33
Company Objections:
List document reasons by company for not transferring share in the name of investors
are called company objections. Rejection occurs due to a signature difference, or fake shares,
or forgery, or if there is a court injunction preventing the transfer of the shares. The broker
must immediately be notified. Company objection cases should be reported within 12
months from the date the date of issue of the memo for the original quantity of share under
objection.
The member who has sold the shares first on the Exchange is responsible for
replacing the shares within 21 days of the Exchange being informed. Company objection
cases that are not rectified or replaced are normally auctioned.
34
CHAPTER - 2
REVIEW OF LITERATURE
35
REVIEW OF LITERATURE
Massimo Gridelin and Giovanna Nicolao in their research on ‘small caps in
international equity portfolios: The effect of variance risk’, they show that predictable
covariance’s between means and variances of stock returns may have a first order effect on
portfolio composition. In an international asset menu, which includes small capitalization
equity indices, they find that a three-state, heteroskedastic regime switching VAR model is
required to provide a good fit to weekly return data and to accurately predict the dynamics in
the joint density of returns. As a result of the non-linear dynamic features revealed by the
data, small cap portfolios become riskier in bear markets, i.e., display negative co-skew ness
with other stock indices. Because of this property, a power utility investor ought to hold a
well- diversified portfolio, despite the high-risk premium and Sharpe ratios offered by small
capitalization stocks. On the contrary, small caps command large optimal weights when the
investor ignores variance risk, by incorrectly assuming joint normality of returns.
Jamil Baz, Eric Brays and Bart. Cronenberg in their research on ‘Risk Perception
in the short Run and Long Run’ they find that there is an ongoing controversy in financial
economics regarding the role of the time horizon in portfolio selection. This problem is
relevant in a broader context, whatever consumers or managers make decisions that involve
both time and risk. The purpose of this paper is to review recent findings from the decision-
making literature so as to shed new light on how the short run vs. long run contingency may
determine risk taking perception.
Brue Neudorf 1 and Thomas Ottaway 2-June 2021 Individual risk preferences. By
examining the wealth characteristics of agents of different risk preferences, we study the
financial incentive of investors to demonstrate different risk preferences. To accomplish this,
we model the stock market utilizing artificial adaptive agents. If investors have incentive to
very their risk preferences, or if investors of a constant risk preferences vary the way they
participate in the market conditions, this could lead to time variation in market risk premiums
. Use find that agents have significant incentive to demonstrate different risk preferences
under different market conditions.
36
NEED FOR THE STUDY
The study is undertaken to understand Equity market and to find out the new
opportunities to attract the investors towards the Equities according to their risk preferences.
Before investing money in financial assets, investors should thoroughly know about the
Economy, Industry, and Company. Along with measuring company’s financial performance
investors should also need to analyse the stock’s price movements in secondary markets.
Hence the study has been undertaken by the researcher.
37
OBJECTIVES OF THE
STUDY
Group Company.
To examine the various investment options which are available in the market?
38
SCOPE OF THE STUDY
39
LIMITATIONS OF THE
STUDY
Primary data that will be the sample size of 102 investors only.
The time period is only for 45 days to do a project and the study will be done based on
the data available within the time period only.
The study is limited to twin cities investors only.
The study is limited to only one stock broking company so we can’t predict whole
data for analysis.
This study was only done with the help of investors and other officials.
40
RESEARCH
METHODOLOGY
Primary Data:
Secondary Data:
Secondary Data taken by through Internet, Magazines’ Articles and Text Books.
Sample size: 102 Investors of Shriram Group Company. Has been taken time period is
45 days. Pie charts, Bar charts have been used to show the investor preference.
41
CHAPTER - 4
DATA ANALYSIS AND
INTERPRETATION
DATA ANALYSIS AND
INTERPRETATION
1. What is your Age?
Below 25 14 14
25-35 54 54
35-50 22 22
50 and above 12 12
DATA INTERPRETATION:
The chart shows that 54 % of respondents that means the maximum number of
investor’s ages are in between 25 to 35, 22% of investor’s ages in between 35 to 50, 14% of
respondents age is below 25 and 12% of respondent’s age is 50% and above.
39
2. What is your Occupation?
Business 46 46
Salaried 56 56
Honorius basis 0 0
Others 0 0
Graph: 2
40
3. What are your Educational Qualifications?
Type of Respondents No. of Respondents Percentage
Degree 32 32
P. G 64 64
PhD 0 0
DATA INTERPRETAION: The above table shows that 32 investors are post Graduates, 16
investors of them and 3 investors qualification is interred and below.
The table shows the types of educational qualifications of respondents and percentages
of different types of respondents.
Graph: 3
70
60
50
40 No. of respondents
30 Percentage
20
10
0
Inter and Degree P.G PhD
below
INTERPRETATION: The Chart shows that 64% of investors are post graduates, 32% of
them are graduates, 6% of them qualifications are inter and below.
41
4. What is your Monthly Income?
20000 to 30000 40 40
30000 - 40000 28 28
DATA INTERPRETATION: The above table shows that 20 of the respondents’ monthly
income are between 20,000 to 30,000, 14 of them income is between 30,000 to 40,000, 13 of
investors monthly income is 20,000 and below and rest of them income is 4000.
Graph: 4
45
40
35
30
25
20 No. of respondents
15
10 Percentage
5
0
20000and 2b0e0lo0w0 to 3030000000-
4400000and above
This chart shows monthly income of respondents and percentages of different types
of respondents.
INTERPRETATION: The above chart shows that 40% of the respondent’s monthly income
is between 20000 to 30000, 28% of them income is between 30000 to 40000, 26% of
investors monthly income is 20000 and below and rest of them income is above 40000.
42
5. Number of Dependents?
Type of Investment No. of Respondents Percentage
3 and below 22 22
4 24 24
5 and above 30 30
No dependents 26 26
DATA INTERPRETATION:
The above table shows 15 of respondents having five and above dependents, 13 of
them having no dependents, 12 of them having four dependents and rest of them having three
and below dependents. This chart shows no. of dependents of respondents and percentages of
different types of respondents.
Graph: 5
30
25
20
No. of respondents 15
Percentage 10
5
0
3 and 4 5 and No
below above dependents
INTERPRETATION: The above chart shows 30% of respondents having five and above
dependents, 26% of them having no dependences, 24% of them having four dependents and
rest of them having three and below dependents.
43
6. In which investment avenue have you invested?
Type of Respondents No. of Respondents Percentage
Equity 44 44
Debt instruments 14 14
Insurances 24 24
others 20 20
DATA INTERPRETATION: The above table shows denoting those investors are giving
priority to investment in equity funds 22 followed by insurance 12 and debt instruments them
are preferring insurance.
This chart shows no. of dependents of respondents and percentages of different types
of respondents.
Graph: 6
50
45
40
35
30 No. of respondents
25 Percentage
20
15
10
5
0
DATA INTERPRETATION: The above chart denoting those investors giving most
preference to equity i.e., 44%, 14% of them debt instruments apart from these 24% of them
are preferring insurance, 20% of them prefer others.
44
7. Which type of stock have you invested in?
Preferred Stock of Respondents No. of Respondents Percentage
Speculative Stocks 26 26
Growth Stocks 24 24
Income Stocks 22 22
DATA INTERPRETATION: The above table shows that reveal that 13 respondents re
preferring speculative stocks, 15 of the investors preferring blue chip stocks, 12 of them
preferring growth stock and rest them preferring income stocks.
This chart shows preferred stock of respondents and percentages of different types of
respondents.
Graph: 7
30
25
20 No. of respondents
15
10 Percentage
5
0
INTERPRETATION: The above chart reveals that 26% of them preferring speculative
stocks,30% of the investors preferring blue chip stocks, 24% of them preferring growth
stocks and 22% of them preferring income stocks.
45
8. Which statement best describes you approach as an investor?
TABLE 8
This table shows preferred rate of risk of respondents and percentages of different types of
a 14 14
b 26 26
c 40 40
d 18 18
e 4 4
DATA INTERPRETATION: The above table revealing that 16%of the investors are taking
moderate risk and they are also not ready to face short term losses and rest of them are
expecting either short term or long-term returns.
This chart shows preferred rate of risk of respondents and percentages of different types of
respondents.
Graph: 8
40
35
30
a
25
b
20
c
15 d
10 e
INTERPRETATION: The above table revealing that 16% of the investors are taking
moderate risk and they are also not ready to face short term losses and rest of them are
expecting either short term or long-term returns.
46
9. When is your next big spending due/ expected?
Type of Respondents No. of Respondents Percentage
1-3 years 32 32
3-5 years 10 10
DATA INTERPRETAION: The above table shows 23 of the respondents are expecting
their next big spending due/expected will be less than one year, 16 of them expecting it will
be between 1-3 years, 05 of them expecting between 2-3 years and 07 of them are expecting
more than 5 years expenditure.
This chart shows next big spending due/ expected of respondents and percentages of
different types of respondents.
Graph: 9
50
40
30
20
10
0
Less than 1 1-3 years 3-5 years More than 5
year years
INTERPRETATION: The 46% of the respondents are expecting their next big spending
due/expected will be less than one year, 32% of them expecting it will be between 1-3 years,
10% of them expecting between 3-5 years and 14% of them are expecting more than 5 years
expenditure.
47
10. Do you have an emergency fund set aside to meet any unexpected requirement?
Type of Respondents No. of Dependents Percentage
No 14 14
1 month’s Expenses 20 20
DATA INTERPRETATION: The above table shows that 18 of the respondents are having
emergency fund to meet above six months expenses, 16 of them having emergency fund to
meet 2-3 moths 10 expenses of them having one-month expenses and remaining of them are
not having any emergency fund.
This chart shows an emergency fund set of respondents and percentages of
different types of respondents.
Graph: 10
40
35
No
30
25 1 month’s
20 expenses
15 2-3 month’s
expenses
10
More than 6
5
months
0
No. of Percentage
dependents
INTERPRETATION: The above chart showing that 36% of the respondents are having
emergency fund to meet above 6 months expenses, 32% of them having emergency fund to
meet 3-5 years, 20% of them having 1 month’s expenses and remaining of them are not
having any emergency fund.
48
11. If you receive an unexpected bonus equalling to 3 months’ salary,
will you ?
Type of Respondents No. of Respondents Percentage
Bank Deposit 40 40
Instruments 24 24
Shares 20 20
Personal Use 18 18
DATA INTERPRETATION: The above table denoting that 20 of respondents prefer a bank
deposit at 5% of guaranteed returns, 12 of them are preferring instruments and 10 of them are
interested to invest in shares.
Graph: 11
45
40
35 No. of
30 respondents
25
20 Percentage
15
10
5
0
INTERPRETATION: The chart denoting that 40% of respondents prefer a bank deposit at
5% of guaranteed return, 24% of them are preferring instruments and 20% of them are
interested to invest in shares.
49
12. How often do you monitor your investments?
Daily or weekly 28 28
Monthly 32 32
Yearly 12 12
Occasionally 30 30
DATA INTERPRETATION: The above table shows that 16 of them monitor their
investment monthly, 15 of the respondents monitor their investments occasionally and 14 of
them monitor daily or weekly and 6 of them monitor their investments yearly.
This table shows how often respondents monitor their investments and their
percentages.
Graph: 12
35
30
25 No. of
20 respondents
15 Percentage
10
5
0
INTERPRETATION: The 32% of them monitor their investments monthly, 30% of the
respondents monitor their investments occasionally and 28% of them monitor daily or weekly
& 1 2% of them monitor their investments yearly.
50
13. When you made an investment decision, you ?
Type of Respondents No. of Respondents Percentage
DATA INTERPRETATION: The above table shows that 08 of the respondents are taking
decision by analysing all the option thoroughly, 29 of them are taking the advises from the
investment adviser, 9 of them taking advise from well-wishers and 05 of them are taking
decision on gut feel.
This chart shows how the respondents made investment decision and percentages of
different types of respondents.
Graph: 13
70
60
50
No. of respondents
40
30 Percentage
20
10
0
investment
Advice from
well wishers
Decide on
Analyses all
thoroughly.
Rely on
gut feel
advisor
options
INTERPRETATION: The above chart showing that 16% of the respondents are taking
decision by analysing all the options thoroughly, 58% of them are taking the advices from the
investment advisor, 18% of them taking advice from well-wishers and 10% of them are
taking decision on gut feel.
51
14. Investments with higher short-term volatility are more likely to have a
greater chance are more likely to have a greater chance of meeting long term
goals. Conversely, investments likely to provide stable returns and minimum
short-term losses are likely to meet long term investment goals with this
mind, which of the following is most consistent with your investments
attitude?
Type of Respondents No. of Respondents Percentage
Both 46 46
No one 12 12
DATA INTERPRETATION: The above table shows that 9 of respondent are equally
concerned about avoiding short term losses as well as meeting long term goals and rest of
them are expecting long term profits by either avoiding short term losses or bearing losses.
This chart shows type of goals of respondents and percentages of different types of
respondents.
Graph: 14
50
45
40
35 No. of respondents
30
25 Percentage
20
15
10
5
0 Short termBothLong termNo one goalsgoals
INTERPRETATION: The 18% of respondents are equally concerned about avoiding short
term losses as well as meeting long term goals and rest of them are expecting long term
profits by either avoiding short term losses or bearing losses.
52
15. The chart below shows possible growth of Rs 100 over a five-year period for
a series of different investment strategies which of the five scenarios are you
most comfortable with as investor?
Type of Respondents No. of Respondents Percentage
130 to 160 22 22
110 to 176 36 36
90 to 200 28 28
77 to 250 16 16
DATA INTERPRETATION: The above table shows that 18 of the respondents are
comfortable with 110 to 176, 14 of them are comfortable with 90 to 200, 11 of them are
comfortable with 130 to 160 and rest of them comfortable with 77 to 250.
This chart shows risk preferences of respondents and percentages of different types of
respondents.
Graph: 15
40
35
30
25 No. of respondents
20 Percentage
15
10
5
0
130 to 160 110 to 176 90 to 20077 to 250
DATA INTERPRETATION: The 36% of the respondents are comfortable with 110 to 176,
28% of them are comfortable with90 to 200, 22% of them are comfortable with 130 to 160
and rests of them are comfortable with 77 to 250.
53
16. What percentage your portfolio is allocated to equity currently?
No investment in equity 6 6
Up to 10% 40 40
Between 10-30% 36 36
Between 30-60% 20 20
DATA INTERPRETATION: The above table denoting that 20 of the respondents allocated
up to 18 of them are allocates
Graph: 16
45
40
35
30 No. of respondents
25 Percentage
20
15
10
5
0
investment
Between 10-
in equity
No
30%
DATA INTERPRETATION: The chart denoting that 40% of the respondents are allocated
up to 10% of their portfolio to equity, 36% of them are allocated up to 10 to 30% of their
portfolio, 20% of them are allocated to equity between 30 to 60% of their portfolio and rest
of them not invested in equity
54
CHAPTER – 5
FINDINGS, SUGGESTIONS
AND CONCLUTIONS
FINDINGS
The study shows that most of the investor’s lies in moderate risk preferred.
The highest number of investors who operate stock market preferred to invest in
Equities because of early profits.
Investors utilizing the company brokers report & financial reports as their data source to
invest in Equities.
Investors are investing in booming sectors like I.T.
The greater number of investors who operate stock market preferred to invest in equity
because of more risk and simultaneously returns also there.
56
SUGGESTIONS
This is strongly recommended that the investor should have a proper guidance of well
experienced Broker.
The investor also should have the knowledge of analysing financial position of
company in which he wants to invest.
The SEBI has to provide some tax benefits in order to attract investments in Equities.
The investor also must be getting some knowledge for other sources.
57
CONCLUSION
The study and analysis of the report deals with the different investment decisions
made by different people. It explains about the investor preference towards Equities and their
risk preferences. It explains the trading mode utilized by the people, preferable investment
time, preferable data source and category of investment to invest in different market of the
equities.
58
CHAPTER – 6
APPENDIX
59
QUESTIONNAIRE
NAME: .
3. Educational qualifications? [ ]
4. Monthly income ? [ ]
5. Number of dependents ? [ ]
b) I am somewhat caution about taking risks, and I can handle relatively can handle
relatively small losses.
c) I can take some risk that is generally associated with greater account growth potential
but I wish to minimize short term losses in my account.
60
d) I am open to taking risk for growth potential. I am less concerned about short term
(less than one year) losses or gains; I am more invested in long term growth.
10. Do you have an emergency fund set aside to meet any unexpected requirement? [ ]
11. You receive an unexpected bonus equalling to 3 month’s salary, will you []
61
14. Investments with higher short-term volatility are more likely to have a greater chance are
more likely to have a greater chance of meeting long term goals. Conversely, investments
likely to provides stable returns and minimum short-term losses are likely to meet long term
investment goals with this is mind, which of the following is most consistent with your
investments attitude. []
a) Avoiding short-term losses is more important to me than meeting long term goals.
b) I am equally concerned about avoiding short term losses as well as meeting long term goals.
c) I am willing to bear short term fluctuations to maximize the chance of meeting my long-
term goals.
d) I am equally concerned about maximizing the short-term profits and long-term goals.
15. the chart below shows possible growth of Rs 100 over a five-year period for a series of
different investment strategies which of the five scenarios are you most comfortable with as
investor? []
62
CHAPTER – 7
BIBLIOGRAPHY
63
BIBLIOGRAPHY
Books Referred:
Financial Services
_ M.Y. KHAN
Search Engines:
www.google.com
www.sagejournal.com
Web Sites:
www.shriraminsight.com
www.moneypore.com
www.forex.com
www.nsbl.com
Newspapers
Magazines
64