A Study of The Risk and Reward of Stock Market Investors: M.B.A. Programme (2019-2021)

A Study of the Risk and Reward of Stock Market Investors
A Dissertation Submitted By
Monika S. Apale
M.B.A. Programme
(2019–2021)
Under the guidance of

Prof. A. S. Lasankar
To
SANT GADGE BABA AMRAVATI UNIVERSITY
AMRAVATI
In partial fulfillment of the requirements

For the Award of Degree of
MASTER OF BUSINESS ADMINISTRATION
-Through-
The Head
Post Graduate Teaching Department of
Business Administration and Management

AMRAVATI
2020 - 2021
A Study of the Risk and Reward of Stock Market
Investors
A Dissertation Submitted by
Monika S. Apale
(MBA Program 2019-21)
Under the Guidance of

Prof. A. S. Lasankar
To
AMRAVATI
In partial fulfillment of the requirements For

the Award of Degree of
MASTER OF BUSINESS ADMINISTRATION
-Through-
The Head
Post Graduate Teaching Department of
Business Administration & Management,
Sant Gadge Baba Amravati University,
Amravati
2020-21
DEPARTMENT OF BUSINESS ADMINISTRATION & MANAGEMENT
SANT GADGEBABA AMRAVATI UNIVERSITY, UNIVERSITY CAMPUS, AMRAVATI - 444 602
Certificate
This is to certify that the research entitled,
Submitted by
Monika S. Apale
In partial fulfillment of the conditions for the award of degree of Master of

Business Administration to the Sant Gadge Baba Amravati University, Amravati
has been prepared under my supervision and guidance. It is also certified that:
i) The candidate has satisfactorily conducted this research for not less than
one academic year.
ii) The dissertation is of sufficiently high standard to warrant its
presentation for examination.
Date: Prof. A. S. Lasankar

Place: Amravati (Research Supervisor)
Head
Department of
Business Administration and Management
Sant Gadge Baba Amravati University
Tel : 091-721-2662206, 2662207, 2662208 Fax : 091-721-2660949, 2661213 (D) E-mail : amba@rediffmail.com
2021
MBA Programmed
2019 - 2021
Dissertation Report
Declaration
I , Monika S. Apale s t u d e n t o f t h e
Department of Business Administration &
Ma nage me nt her eby dec lar e t hat t he
dissertation entitled, is the result of my own
research work and that the same has
not been previously submitted A Study of the
Risk and Reward of Stock Market Investors
to any examination of the University or any other
University.
Date:
Place: Amravati Monika S. Apale
2021
Acknowledgement
It is my pleasure to place on record my sincere

gratitude towards my guide Prof. A. S. Lasankar
whose guidance I received. It was his direction
and encouragement at every moment and step
that motivated me to steer the research work
confidently and successfully.
I deem it a great pleasure and privilege to offer

my sincere and cordial thanks to our venerable
Head of the Department and other faculty
members who spent their precious time
providing continuous ideas and expert guidance
and constant encouragement throughout the
course of this research.
Date:
Place: Amravati Monika S. Apale
INDEX
SR NO CHAPTER NO CONTENTS PAGE NO

1 Contents
2 List of Tables
3 List of Graphs
4 Abstract
5 I Introduction 1
6 II Literature Review 26
7 III Research Methodology 43
8 IV Data Interpretation & Data Analysis 50
9 V Finding, Conclusion & Suggestions 83
10 A Bibliography 89
B Questionnaire
TABLE OF CONTENTS
Sr No Chapter No Contents Page No
1 I INTRODUCTION 1 - 26
2 1.1 What is Risk 3
3 1.2 what is Reward 5
4 1.3 Risk and Reward Ratio 6
5 1.4 How does risk reward work. 6
6 1.5 Important of Risk Reward Ratio 7
7 1.6 How is Risk Reward Ratio calculate 7
8 1.7 Limitations of Risk reward ratio 10
9 1.8 Relationships between Risk and Reward stock 10

market
10 1.9 Concept of Stock market 18
11 1.10 Historical Evolution of Indian stock market 20
12 1.11 Objective of study 26
13 II LITERATURE REVIEW 27 - 42
14 2.1 Introduction 27
15 2.2 why do we write literature reviews 27
16 2.3 Definition 27
17 2.4 literature review 28
18 III RESEARCH METHODOLOGY 43 – 49
19 3.1 Introduction 43
20 3.2Research problem Definition 44

21 3.3 Research Objective 44
22 3.4 objective of Research 45
23 3.5 Hypothesis of Research 45
24 3.6 Research Methodology 46
25 3.7 sampling 47
26 3.8 Scope and Limitations 49
27 3.9 limitations of Research study 49
28 IV DATA INTERPRETATION AND DATA 50 - 82

ANALYSIS
29 4.1 Refer List of Tables and Graphs 50
30 V FINDINGS, CONCLUSIONS AND 83 - 88

SUGGESTION,
31 5.1 Finding 83
32 5.2 Conclusion 86
33 5.3 Suggestion 88
34 APPENDICES 89 - 96
35 BIBLIOGRAPHY 89
36 QUESTIONNAIRE 91
LIST OF TABLES
Sr No Table No Title of Table Page No
1 4.1 Age 50
2 4.2 Gender 51
3 4.3 Marital Status 52
4 4.4 Educational Qualification 53
5 4.5 Monthly Salary 54
6 4.6 Respondents Prefer In Risk And Return 55
Point
7 4.7 Options Risk And Return Ratio 57
8 4.8 Stock Market App For Collecting 58
Information
9 4.9 Time Duration 59
10 4.10 Amount Investment in Stock Market 60
11 4.11 Most Preferred Shares 61
12 4.12 Factors Attract Towards Share Market 62
13 4.13 Motive To Invest In Stock Market 64
14 4.14 Share Market Is Best Income Source 65

15 4.15 Points Consider While Investing 66
16 4.16 Risk Respondents Can Take 68
17 4.17 Stock Respondents Mostly Invest 69
18 4.18 Type Of Investor 70
19 4.19 Suggestions For New Investors 71
20 4.20 Risk And Return Ratio 73
21 4.21 Risk Reward Analysis 74
22 4.22 Risk And Reward Ratio To Manage 75
Their Risk Of Losing Money
23 4.23 Face Of Risk Reward Dilemma 76
24 4.24 Analyze Risk And Reward Component 78
25 4.25 Basis Thing That Investor Should 79
Know
26 4.26 Suggestion For Beginners 81
LIST OF GRAPHS
Sr No Graph No Title of Graph Page No
1 4.1 Age 50
2 4.2 Gender 51
3 4.3 Marital Status 52
4 4.4 Educational Qualification 53
5 4.5 Monthly Salary 55
6 4.6 Respondents Prefer In Risk And Return 56
Point
7 4.7 Options Risk And Return Ratio 57
8 4.8 Stock Market App For Collecting 58
Information
9 4.9 Time Duration 59
10 4.10 Amount Investment in Stock Market 60
11 4.11 Most Preferred Shares 62
12 4.12 Factors Attract Towards Share 63
Market
13 4.13 Motive To Invest In Stock Market 64
14 4.14 Share Market Is Best Income Source 66

15 4.15 Points Consider While Investing 67
16 4.16 Risk Respondents Can Take 68
17 4.17 Stock Respondents Mostly Invest 69
18 4.18 Type Of Investor 71
19 4.19 Suggestions For New Investors 72
20 4.20 Risk And Return Ratio 73
21 4.21 Risk Reward Analysis 74
22 4.22 Risk And Reward Ratio To Manage 76
Their Risk Of Losing Money
23 4.23 Face Of Risk Reward Dilemma 77
24 4.24 AnalyzeRiskAnd Reward Component 78
25 4.25 Basis Thing That Investor Should 80
Know
26 4.26 Suggestion For Beginners 81
ABSTRACT
INTRODUCTION :
A stock market is also called as equity market or share market is the aggregation
of buyer and seller of stocks which represents ownership claims on business , these may
include securities listed on public stock exchange, as well as stock that is only trade
privately , such as share of private companies which are sold to investors through equity
crowdfunding platforms. The concept of stock markets came to India in 1875, when
Bombay Stock Exchange (BSE) was established as the Native Share and Stockbrokers
Association , a voluntary non-profit making association. a stock market as a place where
stocks are bought and sold. The stock market determines the day's price for a stock
through a process of bid and offer . You bid to buy a stock and offer to sell the stock at a
price. Buyers compete with each other for the best bid, i.e. the highest price quoted to
purchase a particular stock. Similarly, sellers compete with each other for the lowest
price quoted to sell the stock. When a match is made between the best bid and the best
offer a trade is executed. In automated exchanges high-speed computers do this entire
job. Investment in stock market is most often done via stock brokerages and electronic
trading platforms.
A Risk Reward Ratio is the measure of return generated from the perspective of a
risk taken over a specified period of time which generally takes a starting period or point
of time and ending period or point of time and compares how the reward on investment
has been i.e. in terms of trade it can mean the difference between trade entry point and
the profit booking/ sell order point. It is defined as the percentage return obtained on the
basis of taking a risk in the field of trade or investment.
Research Problem :
The Statement of the problem under the study is to analyse the risk and reward in
investment. This study is attempted assess the risk perception of investors towards
investing in a stock market and also to identify the relationship of risk and reward
pattern.
Department of Business Administration and Management, Sant Gadge Baba Amravati University
Objective of Research :
1) To identify the risk and reward in investing.
2) To study relationship between the risk and reward ratio.
3) To analyse and identify the factors influencing the individuals investors while
choosing a stock for investment.
Research Methodology :
The completion of research involved three phases :
1. First Phase : collection of secondary and primary dada. Secondary were

collected from books, magazines, journals and websites etc. and primary dada
were collected from the structured questionnaire.
2. Second Phase : Pilot study, Actual primary dada collection, Editing and
tabulation of data.
3. Third Phase : Data analysis using statistical tools, Inference, Conclusion, and
Suggestions based on dada collected.
Scope of study:
Scope of study intends to examine the relationship between risk and return in the
Indian equity market. The study considers the testing of the relationship between the
average rate of return and distributional risk variables, namely, the variance, skewness
and kurtosis of the returns distribution and security-market return correlation, on one
hand, and the financial risk variables, namely, liquidity ratio, leverage ratio, dividend
pay out ratio, growth in assets, sales, earnings, size and earnings per share, on the other.
Limitations of the study :
 Research is limited to one year only.

 Research is for Academic purpose only.
 The survey is conducted only in Amravati city
 The study is based on academic proposes only.

 This study is only for the people who are interested in stock market
Suggestions:
 A proper estimation and analysis of beta can be reliably taken recourse to in
understanding the risk involved and the return generated from equity shares.
 The risk-return analysis can be used as a stable platform by the investors in
establishing the trade off between portfolio risk and return
 The investors can use the security-market return correlation coefficient while
considering the investment options and evaluating the parity between security
return and market return.
 An analysis of the risk-return relationship on equity shares in different time
intervals, over short and long, is relevant for the investors, regulators and other
stakeholders in framing their investment policy.
Conclusion:
The analysis of testing the relationship between risk and return in the Indian stock
market reveals that of all the different risk variables considered in the study, the
distributional risk variables of the return distribution, confirm the working of risk-
return trade-off in the Indian context. On the other hand, the financial risk variables,
liquidity ratio, leverage ratio, dividend payout ratio, growth in assets, sales, earnings,
size and earnings per share, during the period of study exhibited an insignificant
association with the rate of return on equities in India. It also exposes the relation
between systematic risk and rate of return on equities in India. The presence of
randomness of the return series of both monthly market and monthly security returns
in India has proved that the Indian stock market is weakly efficient. It is noteworthy
to express that the Indian capital market exhibits a positive risk-return relationship.
Chapter 1
INTRODUCTION
Before an investor invests in any stock, he needs to be aware how the stock
market behaves. Investing in a good stock but at a bad time can have disastrous results,
while investment in a mediocre stock at the right time can bear profits. Financial
investors of today are facing this problem of trading as they do not properly understand
as to which stocks to buy or which stocks to sell in order to get optimum profits. They
are well aware that news moves financial markets. Hence analysing news and other
information about a particular stock before investing is the key here.
A stock market is also called as equity market or share market is the aggregation
of buyer and seller of stocks which represents ownership claims on business , these may
include securities listed on public stock exchange, as well as stock that is only trade
privately , such as share of private companies which are sold to investors through equity
crowdfunding platforms. Investment in stock market is most often done via stock
brokerages and electronic trading platforms. Investment is usually made with an
investment strategy in mind.
Risk is the total potential loss, established by a stop-loss order. The risk is the
total amount that could be lost, or the difference between the entry point for the trade and
the stop-loss order. Reward is the total potential profit, established by a profit target.
This is the point at which a security is sold. A Risk Reward Ratio is the measure of
return generated from the perspective of a risk taken over a specified period of time
which generally takes a starting period or point of time and ending period or point of
time and compares how the reward on investment has been i.e. in terms of trade it can
mean the difference between trade entry point and the profit booking/ sell order point. It
is defined as the percentage return obtained on the basis of taking a risk in the field of
trade or investment. Generally, there are two points involved which include the trade
entry point and the trade profit booking point. The risk-reward ratio can also be defined
as a measure to measure the profit-making potential to loss-making potential. Here both
the profit and loss-making potential must be defined by the trader beforehand. Trade risk
is defined by setting up a stop-loss order where risk is the difference in price between the
Page 1
trade start point and the stop-loss point. A target point is defined as the exit point
provided the trade moves in a favorable direction. A potential point of the profit is the
price difference between the targeted profit and the price at which trade was entered. As
a part of the process of economic liberalization, the stock market has been assigned an
important place in financing the Indian corporate sector. Besides enabling mobilizing
resources for investment, directly from the investors, providing liquidity for the investors
and monitoring and disciplining company managements are the principal functions of the
stock markets. The main attraction of the stock markets is that they provide for
entrepreneurs and governments a means of mobilizing resources directly from the
investors, and to the investors they offer liquidity. It has also been suggested that liquid
markets improve the allocation of resources and enhance prospects of long term
economic growth. Stock markets are also expected to play a major role in disciplining
company managements. In India, Equity market development received emphasis since
the very first phase of liberalization in the early 'eighties. Additional emphasis followed
after the liberalization process got deepened and widened in 1991 as development of
capital markets was made an integral part of the restructuring strategy. Today, Indian
markets conform to international standards both in terms of structure and in terms of
operating efficiency.
Many studies argue the importance of risk-return relationship in a stock market.

The pricing of stocks and bonds within the stock market is one of the most important
areas of finance and investment and affects the economic life of both industries and
individuals. Since cash flows from assets are uncertain and differ from asset to asset, the
expected rates of return from assets would be different among diverse assets classes
based on investors’ perspectives. The difference between required rates of return on
different assets reflects varying risks levels for investors in subjected assets. The
association between the expected rates of return of an asset on the risk makes the
expected rate of return concept and its relationship with some measures of risk the most
fundamental issue theoretically and practically. Evaluating the relationship between
expected rate of return and the risk of asset would help investors to make better and more
accurate decision on investing in different industries. The capital asset pricing model
(CAPM) is the most referenced theory that attempts to explain the relationship between
risk and expected rate of return and thus provide a conceptual method to determine the
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most important component of the asset valuation problem. Although different risk-return
models have proposed by literature, no models have substituted for the CAPM which is
“built on impeccable logic.” To this regards, this paper attempts to review the risk-return
and pricing methods theories and empirical studies to develop a performance measures
comparing different industry sectors.
1.1 What is Risk?
All investments involve some degree of risk. In finance, risk refers to the degree of
uncertainty and/or potential financial loss inherent in an investment decision. In general,
as investment risks rise, investors seek higher returns to compensate themselves for
taking such risks. Every saving and investment product has different risks and returns.
Differences include: how readily investors can get their money when they need it, how
fast their money will grow, and how safe their money will be. In this section, we are
going to talk about a number of risks investors face.
Business risk:
with a stock, you are purchasing a piece of ownership in a company. With a bond, you
are loaning money to a company. Returns from both of these investments require that
that the company stays in business. If a company goes bankrupt and its assets are
liquidated, common stockholders are the last in line to share in the proceeds. If there are
assets, the company’s bondholders will be paid first, then holders of preferred stock. If
you are a common stockholder, you get whatever is left, which may be nothing. If you
are purchasing an annuity make sure you consider the financial strength of the insurance
company issuing the annuity. You want to be sure that the company will still be around
and financially sound, during your pay out phase.
Volatility Risk:
Even when companies aren’t in danger of failing, their stock price may fluctuate up or
down. Large company stocks as a group, for example, have lost money on average about
one out of every three years. Market fluctuations can be unnerving to some investors. A
stock’s price can be affected by factors inside the company, such as a faulty product, or
by events the company has no control over, such as political and market events.
Page 3
Inflation Risk:
Inflation is a general upward movement of prices. Inflation reduces purchasing power,

which is a risk for investors receiving a fixed rate of interest. The principal concern for
individuals investing in cash equivalent is that inflation erode return.
Interest rate risk:
Interest rate changes can affect a bond’s value. If bonds are held to maturity the investor
will receive the face value, plus interest. If sold before maturity, the bond may be worth
more or less than the face value. Rising interest rates will make newly issued bonds
more appealing to investors because the newer bonds will have a higher rate of interest
than older ones. To sell an older bond with a lower interest rate, you might have to sell it
at a discount.
Liquidity Risk:
This refers to the risk that investors won’t find a market for their securities, potentially
preventing them from buying or selling when they want. This can be the case with the
more complicated investment products. It may also be the case with products that charge
a penalty for early withdraw.
Is there any Guarantee?
The Federal Deposit Insurance Corporation (FDIC) – Savings accounts, insured money
market accounts, and certificates of deposit (CDs) are generally viewed as safe because
they are federally insured by FDIC. This independent agency of the federal government
insures your money up to $250,000 per insured bank. It is important to note that the total
is per depositor not per account. But there’s a trade off between security and
availability; your money earns a low interest rate. The FDIC insures deposits only. It
does not insure securities, mutual funds, or similar types of investments that banks and
thrift institutions may offer. The National Credit Union Administration (NCUA) –The
National Credit Union Share Insurance Fund (NCUSIF) is the federal fund created by
Congress in 1970 to insure credit union member’s deposits in federally insured credit
unions. The Dodd -Frank Act permanently established NCUA’s standard maximum
share insurance amount at $250,000. NCUSIF is backed by the full faith and credit of
Page 4
the U.S. Government. Securities Investors Protection Corporation (SIPC) – Securities

you own, including mutual funds that are held for your account by a broker, or a bank's
brokerage subsidiary, are not insured against loss in value. The value of your
investments can go up or down depending on the demand for them in the market. The
Securities Investors Protection Corporation (SIPC), a non government entity, replaces
missing stocks and other securities in customer accounts held by SIPC member firm up
to $500,000, including up to $250,000 in cash, if the firm fails.
1.2 What is Reward ?
Reward can be defined as the actual income from a project as well as appreciation in the
value of capital. Thus there are two components in return—the basic component or the
periodic cash flows from the investment, either in the form of interest or dividends; and
the change in the price of the asset, commonly called as the capital gain or loss. The term
yield is often used in connection to return, which refers to the income component in
relation to some price for the asset. The total return of an asset for the holding period
relates to all the cash flows received by an investor during any designated time period to
the amount of money invested in the asset. Return on investment is the profit expressed
as a percentage of the initial investment. Profit includes income and capital gains. Risk
is the possibility that your investment will lose money. With the exception of U.S.
Treasury bonds, which are considered risk-free assets, all investments carry some
degree of risk. Successful investing is about finding the right balance between risk and
return.
It is measured as:
Total Return = Cash payments received + Price change in assets over the period
/Purchase price of the asset. In connection with return we use two terms—realized return
and expected or predicted return. Realized return is the return that was earned by the
firm, so it is historic. Expected or predicted return is the return the firm anticipates to
earn from an asset over some future period.
Page 5
1.3 Risk and Reward Ratio :
A Risk Reward Ratio is the measure of return generated from the perspective of a risk
taken over a specified period of time which generally takes a starting period or point of
time and ending period or point of time and compares how the reward on investment has
been i.e. in terms of trade it can mean the difference between trade entry point and the
profit booking/ sell order point.It is defined as the percentage return obtained on the basis
of taking a risk in the field of trade or investment. Generally, there are two points
involved which include the trade entry point and the trade profit booking point. The risk-
reward ratio can also be defined as a measure to measure the profit-making potential to
loss-making potential. Here both the profit and loss-making potential must be defined by
the trader beforehand.Trade risk is defined by setting up a stop-loss order where risk is
the difference in price between the trade start point and the stop-loss point. A target point
is defined as the exit point provided thetrade moves in a favourable direction. A potential
point of the profit is the price difference between the targeted profit and the price at
which trade was entered.
1.4 How does Risk Reward work :
 This ratio can be considered as a benchmark or a measure when traders deal with
individual shares of stock. The best technique to use the risk-reward strategy will
vary from trade to trade and thus strategy varies accordingly. The use of a trial
and error method is a must to come to a conclusion about choosing the best ratio
for a particular trade strategy. Also, many investors will have their own
predefined ratio value for their own investments.
 It is generally observed that strategists prevailing in the market generally look for
a 1:3 risk-reward ratio for their investments. This means there are three units of
return generated whenever the trader takes every one unit of the risk. This
relationship can be better handled by the traders/investors when they couple their
trade strategy with the usage of stop-loss orders and other hedging instruments in
the field of derivatives like a put option.
 It generally gives protection to investors to manage their risk of losing money in
the market. If the win rate is below 50% every trader is bound to lose money in
Page 6
the market. Comparing the stop-loss and take-profit gives us a measure of the
ratio of profit to loss or reward to risk. Investors use the risk-reward ratio to help
them keep the loss to bare minimum and manage their investment with a focus of
risk-reward perspective.
1.5 Importance of risk and reward ratio :
 It helps investors manage the risk of losing their hard-earned money in the
process of trading.
 It helps in setting up a stop loss point and a profit booking point for every
individual trade.
 It sets up a relation between the size or magnitude of the stop loss and the size of
the target profit to be booked.
 The risk to reward ratio acts as providing a direction for the continuation of the
trade.
 It acts as a cheering factor in the field of trading even for those who are not
regular players in the stock market.
1.6 How is risk reward ratio calculated :
To calculate your risk-reward ratio, follow these steps:
1- Determine a trade setup. Your strategy will do this for you, it will tell you:
 The direction you're going to trade
 The price you want to enter
2 - Determine your stop loss price level. Where will the market have to trade for your
trade setup to become invalid? That is where you place your stop loss.
3- Determine your profit target. What is the minimum level you think this market will
reach? That will be your target level. Anything on top is a bonus.
Now you’ll have your entry and exit points mapped out. This is where you can calculate
your risk and reward ratio. The calculation is as follows:
Page 7
 Pips between entry and stop loss level = risk
 Pips between entry and profit level = reward
If it were 50 pips to the stop and 100 pips to the target, the risk reward ratio would be
1:2.
Whilst we have now determined the risk-reward ratio, there are still some key stages to
go through to ensure the execution of your risk strategy is accurate.
4- Confirm how much you are willing to lose on the trade. It might be 1% of your
trading account. If your trading account is £10,000, then you would lose no more than
£100 on this trade.
5- Choose the correct position size. You have the amount of pips between your
expected entry and your stop loss. You also have the maximum you're willing to lose on
the trade - £100. Now you need to determine how many lots you’ll place on the trade.
This will also depend on the instrument you're trading. See below for a bit more detail
about position sizing.
 In layman’s word risk-reward ratio involves more of setting up a stop-loss point

and profit booking point when a trader or investor is trading an individual share
or stock. Suppose, we being an investor we purchase a share of a company for
$50 and based on our analysis we believe we can make a profit from the stock
and set out a profit booking limit as $70. So basically this means the stock will go
high in terms of value but we plan to exit the stock as soon as it touches $65
mark.
 Also, we find that the base level the stock can hit is $44 so based on that we set a
stop loss of $45 for the stock. Thus we can see now we have two major
benchmarks i.e. the risk based on the stop loss we have set which is $5 and also
the expected reward which is $20. So thus when we want to calculate the risk-
reward ratio, in this case, we simply divide the risk number with the reward
number which we have. In this case, we have $5:$20 = 1:4. Thus it means for
every unit of risk which we take we fetch 4 units of reward or return.
Page 8
 To calculate the risk/reward ratio, start by establishing both the risk and the
reward separately. Both these levels are set by the trader.
 Risk is the total potential loss, established by a stop-loss order. The risk is the
total amount that could be lost, or the difference between the entry point for the
trade and the stop-loss order.
 Reward is the total potential profit, established by a profit target. This is the point
at which a security is sold. The reward is the total amount you could gain from
the trade or the difference between the profit target and the entry point.
 The risk/reward ratio is the relationship between these two numbers: the risk
divided by the reward.
 If the ratio is great than 1.0, the potential risk is greater than the potential reward
on the trade. If the ratio is less than 1.0, the potential profit is greater than the
potential loss.
 Divide the risk - the amount the investor will lose if the price moves in a negative
direction by the reward - the profit the investor can make when the position is
closed. The traders should not have a 1:1 risk to reward ratio, as it indicates the
potential loss over the investment will be much higher than any predictable profit.
 A good risk to reward ratio is 1:2 which indicates the profit or reward is higher
than the loss. In a situation, where the trading suffers any loss, the trader is
assured definite break-even profit margin.
Example of risk and reward ratio:
An example of a risk-reward ratio can be a case of investing in stock after setting up a

stop loss point and a profit booking point. So suppose we take here into consideration a
single share of Microsoft Corporation which is currently trading at $183 for a single
share. A trader who wants to invest it in will set a stop loss of around $ 170 and also the
stock has enough potential to generate returns and may climb to $220. Thus we see the
risk associated here is $13 and the expected reward is $ 37. So thus when we want to
calculate the risk-reward ratio, in this case, we simply divide the risk number with the
reward number which we have. In this case we have $13:$37 = 1:3. Thus it means for
every unit of risk which we take we fetch 3 units of reward or return.
Page 9
1.7 Limitation of risk and reward ratio:
A low risk/reward ratio does not tell you everything you need to know about a trade. You
also need to know the likelihood of reaching those targets. A common mistake for day
traders is having a certain risk/reward ratio in mind before analysing a trade. This can
lead traders to establish their stop-loss and profit targets based on the entry point, rather
than the value of the security, without taking into account the market conditions
surrounding that trade. Choosing the best risk/reward ratios is a balancing act between
taking trades that offer more profit than risk while ensuring the trade still has a
reasonable chance of reaching the target before the stop loss. 2
To effectively use the risk/reward ratio, you need trading plan that establishes:
 Acceptable market conditions

 When and where to enter a trade
 Where to place your stop-loss and profit targets under those market conditions
The risk/reward ratio should not be the only measurement you use to establish whether a
trade is a good risk or not. It is often used in combination with other risk management
ratios.
1.8 Relationship Between Risk and Reward Of stock Market:
The first thing we need to know about risk and reward is that under certain limited
circumstances, taking more risk is associated with a higher expected return. The second
thing we need to understand about the relationship between risk and reward is that there
in many cases there is no relationship. It has been well established that on average stocks
have a higher return (reward) than treasury bills or bonds and that this extra reward
comes at the expense of a higher standard deviation of return than treasury bills. For
example stocks might have an average annual return of 11% but in any one year the
range might fall within say -10% to 20% two thirds of time and the range would be
outside of that range the other 1/3 of the time. Meanwhile treasury bills might average
only 5% but might have an expected range of plus or minus 1%. Further it is well
established that on average small company stocks are expected to have a higher return
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than large company stocks and that this comes at the expense of yet a higher standard
deviation in annual returns. One of the most widely accepted theories about risk and
return holds that there is a linear relationship between risk and return But there are many
fallacies and misconceptions about risk. The fact that a relationship between risk and
reward exists on average does not mean that the same relationship holds for individual
stocks.
Risk Fallacy Number 1: Taking more risk will lead to a higher return. False, if a higher
return was assured than it would not in fact be risky. The theory states that the average or
expected return should be higher. Due to the existence of risk the actual result could be a
much lower return
Risk Fallacy Number 2: All types of risk will lead to a higher expected average return.
False, the Capital Asset Pricing Model (“CAPM”) indicates that the only risk that is
expected to lead to a higher return is the non-diversifiable risk that is correlated with
overall market risk. CAPM indicates that taking risks that could be diversified away will
not be rewarded. My own theory is that stupid risks will not be rewarded. If you take a
stupid risk by putting all your money into one company that is over-valued then you will
not be rewarded. And, Warren Buffett has argued that there are cases where taking less
risk leads to higher returns. If one can identify under-valued stocks then Buffett argues
convincingly that this will both lower your risk and increase your return as compared to
the overall market.
Risk Fallacy Number 3: That risk can be measured. False, at least it can’t be measured
precisely. Most work on risk assumes that historic nominal (before adjusting for
inflation) volatility of the stock market price or the historic correlation (beta) of an
individual stock with the market are good measures of risk. Beta may capture the market
related risk and under CAPM that is the only risk that matters since all other risk can and
should be diversified away. But studies have shown that beta varies over time, therefore
it is not clear that beta can be actually measured. And calculations of beta vary
dramatically depending if one works with monthly, daily, weekly or annual returns. And
if one believes that diversifiable risks are also relevant then it is clear that those cannot
be so easily measured. How can you measure the chance that completely random events
will occur?
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In addition some investors are not so concerned about volatility but are much more
concerned about the risk that their long term wealth will be below an acceptable level.
Short term volatility does not address very well the risk of long term purchasing power.
For example treasury bills are not risky in the short term but putting all funds into
Treasury bills would cause a large risk of insufficient long term purchasing power, as the
returns barely keep up with inflation.
My belief is that at best we can get a rough qualitative sense of the risk but we cannot
precisely measure it. I also believe that their is too much focus on short term volatility
and not enough focus on the risk of long term real (after inflation) wealth risk.
A mythical average investor might be indifferent to the two positions along the SML.
But real individual people will typically have very strong preferences for one position or
the other. I may choose the safe route and expect a lower return. You may choose to take
a maximum amount of risk and its expected far superior return. There is nothing
equivalent about this. Neither of us would be willing to trade places. You might have
been willing to take on all that risk for a much lower risk premium than the market is
currently paying. I might not have been willing to take on the risk even if the market risk
premium was significantly larger. This is based on individual preferences and the
average market risk premium does not imply that individuals should accept that level of
premium as creating an equivalency.
Another problem with the concept of talking about a risk adjusted return is that it would
be necessary to be able to measure the risk of an investment before we could state what
its risk adjusted return is. As discussed above the concept of being able to accurately and
quantitatively measure risk is more false than true.
It is true that an investment should always have an expected return that is at least as high
as the market return for that level of risk. The problem is we can’t measure accurately
measure the risk of any investment and we also don’t accurately know the market return
for any given level of risk
1. Direct relationship between risk and return :
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(A) High risk-High Return : According to this type of relationship, if investor will take
more risk, he will get more reward. So, he invested million, it means his risk of loss is
million dollar. Suppose, he is earning 10% return. It means, his return is Lakh but he
invests more million, it means his risk of loss of money is million. Now, he will get Lakh
return.
(B) Low Risk-Low Return : It is also direct relationship between risk and return. If
investor decreases investment. It means, he is decreasing his risk of loss, at that time, his
return will also decrease.
2. Negative relationship between risk and return :
(A) High Risk Low return : Sometime, investor increases investment amount for
getting high return but with increasing return, he faces low return because it is nature of
that project. There is no benefit to increase investment in such project. Suppose, there are
1,00,000 lotteries in which you will earn the prize of You have bought 50% of
total lotteries. But, if you buy 75% of lotteries. Prize will same but at increasing of risk,
your return will decrease.
(B) Low Risk High Return : There are some projects, if you invest low amount, you
can earn high return. For example, Govt. of India need money. Because, govt. needs this
money in emergency and Govt. is giving high return on small investment. If you get this
opportunity and invest your money, you will get high return on your small risk of loss of
money.
Risk Management Techniques :
Risk management techniques are vital to the success of your trading strategy. It's what
separates great traders from average traders. Being able to apply these techniques at the
right time will help you to achieve your targets.
1. Set a plan with trading strategies
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A trade plan is a set of rules that govern how you trade. It’ll be a set of criteria that you
must follow to the tee. This ensures your trading is consistent and so you can easily track
its performance.
How do you set up a trading strategy?
There are a few things that you need to determine to set up your trading strategy.
 When will you be able to trade?
 What instruments will you trade?
 Trade setup. What analysis technique will you use?
o How will you determine the market direction?
o How will you determine your entry?
o How will you determine your exit?
 Risk management.
o How much will you risk per trade?
o How much market exposure will you have?
 Trade execution.
o What determines your actual buy or sell decision?
 Trade management.
o Will you add to or remove from your position?
o Will you reduce the stop loss?
If you can answer all these questions and be consistent in the way you execute your
strategy, then you’ll be able to better manage your risk.
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2. Diversify your portfolio
Diversifying your portfolio means buying different instruments. You can diversify your
portfolio within an asset class or you can diversify by trading all asset classes.
Diversifying within an asset class
This entails taking positions in instruments that aren’t directly correlated. We’ll offer two
examples; forex and stocks.
Stocks - If you had a portfolio of stocks, diversifying away from one sector would
reduce your risk. If you only owned stocks in the travel sector, should a global pandemic
rock the world (as we witnessed in 2020), your entire portfolio would take a huge hit.
The COVID-19 pandemic saw restrictions on global travel sweep the world plunging
travel-related stocks into dramatic lows.
Spreading your risk across several sectors can protect you from such catastrophes.
You can also diversify between asset classes. When trading with a broker like ATFX,
you have five different asset classes available, so you can better spread your risk.
Whilst all markets are interlinked, they do move separately. Factors that affect oil are
less likely to affect GBP/USD or bitcoin for example.
3. Add trading tools to your armoury
There are lots of trading tools that you can apply to your risk management strategy.
Below are a few types to start thinking about:
Technical indicators - These offer trading signals based on mathematical equations.

These let you know when you should enter or exit a trade. They would normally be used
as part of your trading strategy if you used technical analysis as your main approach.
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Economic calendar - This will show you when market-related news is due to be
released. Depending on the release, your research will tell you which market it might
affect. For instance, a Bank of England inflation report, will likely have an impact on the
GBP/USD. If you’re a stock trader, then you would watch out for earnings reports from
the stocks you were looking to trade.
Trading service tools - Some platforms will offer advanced order types that will help
you manage your trades and your risk.
For example, you can use an automatic trailing stop. This is set to a certain distance from
the price and will move in line with the price. It will only move if the price moves in
your favour. If you set your trailing stop loss to always stay 50 pips behind the price, and
you buy at 1.5000, the stop will be at 1.4950.
If the price moves to 1.5010, then the stop would follow to 1.4960. If the price moved
back to 1.5000, the stop would still remain at 1.4960. Note that you should only use a
tool like this if it is in your strategy.
Autotrading - Automatic trading is becoming more and more popular. This is where you
set in your trading parameters and let an algorithm take the trades on your behalf. As
long as you set the correct stop loss and take profit levels then you should never breach
your risk management rules. MT4 is a world leader when it comes to autotrading with
Expert Advisors (EAs) used to automate your trading. Feel free to try a demo and test
out MT4 with your strategy to see how it might perform without your interference.
Tools such as Trading Central or Autochartist offer a huge amount and can definitely
add value to your trading. They can offer first class technical analysis reports, technical
strategies that you can experiment with, as well as advanced indicators that are specific
to MT4.
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4. Calculate your additional costs
As an independent financial trader, you will have fixed and variable costs. Therefore,
you must continually reassess your trading expenses to ensure you’re not paying more
than you should and need to. Overtrading can have a devastating effect on your bottom
line.
How do you calculate your additional costs?
1- First you need to know what they are. You will incur three main charges when trading
through a broker:
 Spread - difference between the bid and the ask price
 Commission - the set amount charged to take a trade
 Overnight charges - the fee you pay to hold your position overnight on
leveraged trades
2- Next you need to understand which applies to you. This will depend on the
instruments you trade and the broker you use. Understand how much you are charged per
trade and overnight.
3- Determine how often you trade and whether you hold overnight positions (if you trade
on leveraged products).
4- Average the number of trades you take per day, per week or per month to give you an
idea about the volume you trade.
5- Once you have your volume and cost per trade, you can then multiply, to figure out
how much you’re paying the broker to trade.
If you find this to be more than you expected, it’s probably worth shopping around for
better value. Remember, costs will have an effect on your overall risk management
strategy. If you can keep trading costs down then you’ll have more to risk elsewhere.
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5. Keep your emotions in check (Beat your feelings with trading psychology)
Trading psychology is one of the hardest things in trading to manage. You’re trying to
manage yourself and your emotions.
You’ll find that you’re not alone in this. All the financial markets can be attributed to
states of psychology. The more you trade and analyse the markets, the more you’ll notice
these periods within the markets.
1.9 CONCEPT OF STOCK MARKET
Stock market is a market where a number of securities are traded such as equity shares,
debentures, bonds, insurance products, mutual funds etc. mostly the existing securities
are traded in this market. India has one of the oldest stock markets in Asia and this stock
exchange is the Bombay Stock Exchange which was established in 1875. It was started
under the banner of “The Native Stock and Share Brokers Association”. The main aim
of this article is to study the fluctuations in share prices of selected companies in India.
The Stock exchange is a market for old securities which have been already issued and
listed on a stock exchange. These Securities are purchased and sold continuously among
investors without involvement of companies. The Stock exchange provides not only free
transferability of shares but also makes continuous evaluation of securities traded in the
market. The present study is deliberate to examine the Risk & Return Analysis of
Selected Stocks in India. Risk may be defined as the chance of variations in actual return.
Return is defined as the gain in the value of investment. The return on an investment
portfolio helps an investor to evaluate the financial performance of the investment.
Stock Markets have existed in India for a very long time .yet the professionals in the
field of finance talking negatively about these instruments. Very important to understand
what the old system was verse the new and the old system were based on trust. They
were closed group systems and hence deviation from truly competitive markets. Such
closed groups are vulnerable to problem when the demand of the economy reaches
beyond the capacity of the group and group has expended without open and transparent
criteria for entry, the net work of trust gets disrupted, with the result that the system is
disrupted by frauds. On the other hand, the modern market place of Stock Markets,
having well developed risk management, transparent rules for entry and stringent
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regulation, is faceless. The old type system had to transform into a new is definitely
clear that they have played
Stock Market is a place where shares of pubic listed companies are traded. The primary
market is where companies float shares to the general public in an initial public offering
(IPO) to raise capital. Once new securities have been sold in the primary market, they
are traded in the secondary market—where one investor buys shares from another
investor at the prevailing market price or at whatever prices both the buyer and seller
agree upon. The secondary market or the stock exchanges are regulated by the
regulatory authority. In India, the secondary and primary markets are governed by the
Security and Exchange Board of India (SEBI). A stock exchange facilitates stock
brokers to trade company stocks and other securities. A stock may be bought or sold
only if it is listed on an exchange. Thus, it is the meeting place of the stock buyers and
sellers. India's premier stock exchanges are the Bombay Stock Exchange and the
National Stock Exchange. The Indian securities market has become one of the most
dynamic and efficient securities markets in Asia today. The Indian market now
conforms to international standards in terms of operating efficiency. In this context, it
would be informative to understand the origin and growth of the Indian stock market.
The concept of stock markets came to India in 1875, when Bombay Stock Exchange
(BSE) was established as, The Native Share and Stockbrokers Association', a voluntary
non-profit making association. We all know it, the Bhaji market in your neighbourhood
is a place where vegetables are bought and sold. Like Bhaji market, a stock market as a
place where stocks are bought and sold. The stock market determines the day's price for
a stock through a process of bid and offer. You bid to buy a stock and offer to sell the
stock at a price. Buyers compete with each other for the best bid, i.e. the highest price
quoted to purchase a particular stock. Similarly, sellers compete with each other for the
lowest price quoted to sell the stock. When a match is made between the best bid and the
best offer a trade is executed. In automated exchanges high-speed computers do this
entire job. Stock market is a market where a number of securities are traded such as
equity shares, debentures, bonds, insurance products, mutual funds etc. mostly the
existing securities are traded in this market. India has one of the oldest stock markets in
Asia and this stock exchange is the Bombay Stock Exchange which was established in
1875. It was started under the banner of “The Native Stock and Share Brokers
Association”. The main aim of this article is to study the fluctuations in share prices of
Page 19
selected companies in India. The Stock exchange is a market for old securities which
have been already issued and listed on a stock exchange. These Securities are purchased
and sold continuously among investors without involvement of companies. The Stock
exchange provides not only free transfer of shares but also makes continuous evaluation
of securities traded in the market. The present study is deliberate to examine the Risk &
Return Analysis of Selected Stocks in India. Risk may be defined as the chance of
variations in actual return. Return is defined as the gain in the value of investment. The
return on an investment portfolio helps an investor to evaluate the financial performance
of the investment. Stocks of various companies are listed on stock exchanges. Presently
there are 23 stock markets in India. The Bombay Stock Exchange (BSE), the National
Stock Exchange (NSE) and the Calcutta Stock Exchange (CSE) are the three large stock
exchanges. There are many small regional exchanges located in state capitals and other
major cities. Presently Nifty and Sensex are moving around to 5900 and 19600 (July
2013). All activities of Indian stock market are regulated and controlled by SEBI.
1.10 HISTORICAL EVOLUTION OF INDIAN STOCK MARKET
As already stated, the Indian Stock markets have played a significant role in the early
attempts at industrialization in India in the late nineteenth and early twentieth centuries.
The early textile mills and the first steel plants were funded in the stock market. Some of
these capital raising exercises were large in relation to the size of the financial sector in
those days. Beginning in the late fifties, the country embarked on an inward looking
socialistic model of development that sought to put the commanding heights of the
economy in the hands of the public sector. The state took control of the allocation of
resources in the economy as the banks and insurance companies were nationalized and
development financial institutions grew in importance. A regime of financial repression
came into being and the stock market stagnated.
The period from 1984 to 1992 was in some ways the high water mark of the Indian
capital markets. As the markets responded enthusiastically to the first whiff of reforms in
the mid 1980s and to the major reform initiative of 1991, the stock market soared
through the roof. From October 1984 to September 1992, the stock market index went up
more than ten times representing an annual compound return of 34per cent.
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The Sensex crossed the 1,000 mark on July 25, 1990; the 4,000 mark on March 30, 1992;
the
5,000 mark on October 11, 1999; the 6,000 mark on January 2, 2004; the 7, the 9,000
mark on December 09, 2005; and finally the historic 10,000 mark on February 7, 2006. It
created another landmark when it touched 11,000 on March 27, 2006. The Sensex
reached an all time high of 12,671 in May 2006. To reach from the 11,000 mark to the
12,000 mark only took 19 working days, the shortest time interval for a 1000 points
climb in BSE Sensex history, surpassing the just set record of 29 days that it took to
reach 11,000 from 10,000.
INVESTORS PREFERENCE IN STOCK MARKET
Though most of the investors want a safe and secure return on their investment, they also
look for maximum returns. The pure debt investment brings an average return with lesser
liquidity as compared to the equity investments. So in search of higher return (keeping
the risk factor in mind) investor are a heading towards equity investment on analysis of
recent year investment trends, FII, entrance and operations in Indian stock markets, it has
been found that equity is gaining ground in India. The main attraction of equity among
investors are- 1.Higher return (especially I case of capitalization and dividend if any)
2. Higher Liquidity
3. Option to start trading with small investments
Page 21
4. Daily trading (as it increase chances of more “buy or sell” transaction which
leads to fast profits/loss generation)
With these benefits, equity has a risk factor of poor dividend payout (as against fixed
“interest” income in debt) or the negligible capitalization. Moreover, sometime the
investment in equity trading goes to bottom level and nothing is expected in return. Still,
the attraction of equity remains high in investors mind become of “return &liquidity
factor. And this perception has leaded the investment trends from debt to equity and
portfolio investment.
INVESTMENT ALTERNATIVE
There is a wide of range of investment alternative available to an investor in Indian stock

market.
These may be classified as shown in
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Investment
Alternative
Non
marketable Equity Shares
Financial
Assets
Money
Market
Bonds Instruments
Mutual
Funds
Life Insurance
Schemes
Policies
Real Estate Precious

Objects
FinancialDerivati ves
(A) NON- MARKETABLE FINANCIAL ASSETS: A good portion of financial assets

is represented by non marketable financial assets. These can be classified into the
following broad.
 Bank deposits
 Post office deposits
 Company deposits
 Provident fund deposits
Page 23
(B) EQUITY SHARES: Equity shares represent ownership capital. As an equity

shareholder, you have an ownership stake in the company. This essentially means
that you have a residual interest in income and wealth. Blue chip shares Growth
shares. Income shares
 Cyclical shares
 Speculative shares
(C) BONDS: Bonds or debentures represent long terms debt instruments.
 Government Securities
 Savings bonds
 Government agency securities
 PSU bonds
 Debentures of private sector companies
(D) MONEY MARKET INSTRUMENTS: Debt instruments which have a maturity of

less than one year at the time of issue are called money market instruments.
 Treasury bills.
 Commercial paper
 Certificates of deposit
(E) MUTUAL FUNDS: Instead of directly buying equity shares and/or fixed income
instruments, you can participate in various schemes floated by mutual funds.
 Equity schemes
 Debt Schemes
 Balanced schemes
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(F) LIFE INSURANCE: In a broad sense, life insurance may be viewed as and
investment. Insurance premiums represent the sacrifice and the assured sum, the
benefits.
 Money back policy
 Whole back policy
 Terms assurance policy
(G) REAL ESTATE: FOR the bulk of the inverters the important asset in their portfolio
is a residential house.
 Agricultural land
 Semi urban land
 Commercial property
(H) PRECIOUS OBJECTS: Precious objects are items that are generally small in size
but highly valuable in monetary terms. Some important precious objects are:
 Gold and Silver
 Precious stones
 Art objects
(I) FINANCIAL DERIVATIVES: The term „derivative‟ indicates that it has no

independent value i.e. its value is entirely derived from the value of underlying asset.
The underlying asset can be securities, commodities, currency etc. Some important
financial derivatives:
 Forward
 Future
 Option warrants
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 swaps
1.11 OBJECTIVES OF THE STUDY
Every study based on some clearly defined objectives. Objectives decide the all over
framework of any study. The main objective of this study is to capture the trends,
activities and movements of the Indian Stock Market. The present study “ based on
following objectives:- To Study the various aspect of Indian Stock Market in detail.
 To find out the views of different researcher and author in relation to Indian
Stock Market.
 To know the past and current movements in Indian Stock Market.
 To know the future prospects of Indian stock market.
 To help the investors (current and potential) to understand the impact of

important happenings on the Indian Stock exchange.
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Chapter 2
LITERATURE REVIEW
2.1 INTRODUCTION
A literature review discusses and analyses published information in a particular subject

area. Sometimes the information covers a certain time period. A literature review is more
than a summary of the sources, it has an organizational pattern that combines both
summary and synthesis. A summary is a recap of the important information of the
source, but a synthesis is a re-organization, of that information. It might give a new
interpretation of old material or combine new with old interpretations. Or it might trace
the intellectual progression of the field, including major debates. And depending on the
situation, the literature review may evaluate the sources and advise the reader on the
most pertinent or relevant.
2.2 Why do we write literature reviews?
Literature reviews provide you with a handy guide to a particular topic. If you have
limited time to conduct research, literature reviews can give you an overview or act as a
stepping stone.For professionals, they are useful reports that keep them up to date with
what is current in the field.For scholars, the depth and breadth of the literature review
emphasizes the credibility of the writer in his or her field. Literature reviews also provide
a solid background for a research paper’s investigation.
2.3 Definition :
1) A literature review is a body of text that aim to review the critical points of knowledge
on a particular topic of research. (ANA, 2000).
2) A literature review is an account of what has been already established or published on
a particular research topic by accredited scholars and researchs. (University of Toronto,
2001).
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2.4 LITERATURE REVIEW
Gupta (1981) in an extensive study titled `Return on New Equity Issues' states that the
investment performance of new issues of equity shares, especially those of new
companies, deserves separate analysis. The factor significantly influencing the rate of
return on new issues to the original buyers is the `fixed price' at which they are issued.
The return on equities includes dividends and capital appreciation. This study presents
sound estimates of rates of return on equities, and examines the variability of such
returns over time.
Jawahar Lal (1992) presents a profile of Indian investors and evaluates their investment
decisions. He made an effort to study their familiarity with, and comprehension of
financial information, and the extent to which this is put to use. The information that the
companies provide generally fails to meet the needs of a variety of individual investors
and there is a general impression that the company's Annual Report and other statements
are not well received by them.
Nabhi Kumar Jain (1992) specified certain tips for buying shares for holding and also
for selling shares. He advised the investors to buy shares of a growing company of a
growing industry. Buy shares by diversifying in a number of growth companies
operating in a different but equally fast growing sector of the economy. He suggested
selling the shares the moment company has or almost reached the peak of its growth.
Also, sell the shares the moment you realise you have made a mistake in the initial
selection of the shares. The only option to decide when to buy and sell high priced shares
is to identify the individual merit or demerit of each of the shares in the portfolio and
arrive at a decision.
L.C.Gupta (1992) revealed the findings of his study that there is existence of wild
speculation in the Indian stock market. The over speculative character of the Indian stock
market is reflected in extremely high concentration of the market activity in a handful of
shares to the neglect of the remaining shares and absolutely high trading velocities of the
Page 28
speculative counters. He opined that, short- term speculation, if excessive, could lead to
"artificial price". An artificial price is one which is not justified by prospective earnings,
dividends, financial strength and assets or which is brought about by speculators through
rumours, manipulations, etc. He concluded that such artificial prices are bound to crash
sometime or other as history has repeated and proved.
Sunil Damodar (1993) evaluated the 'Derivatives' especially the 'futures' as a tool for
short-term risk control. He opined that derivatives have become an indispensable tool for
finance managers whose prime objective is to manage or reduce the risk inherent in their
portfolios. He disclosed that the over-riding feature of 'financial futures' in risk
management is that these instruments tend to be most valuable when risk control is
needed for a short- term, i.e., for a year or less. They tend to be cheapest and easily
available for protecting against or benefiting from short term price. Their low execution
costs also make them very suitable for frequent and short term trading to manage risk,
more effectively.
Barents Group LLC (1997) studied that India‟s household savings and foreign
investors are key sources of this capital and can and will be increasingly attracted to
more efficient, safe and transparent market. Retail investors in India are mostly short-
term traders, and day trading is not uncommon. To the extent that buying publicly traded
equities is perceived as a risky and speculative short-term activity, many potential
investors will simply avoid capital market instruments altogether in deciding to allocate
savings.
R. Dixon and R.K. Bhandari (1997) said in their study that consequently derivative
instruments can have a significant impact on financial institutions, individual investors
and even national economies. Using derivatives to hedge against risk carries in itself a
new risk was brought sharply into focus by the collapse of Barings Bank. There is a clear
call for international harmonization and its recognition by both traders and regulators.
There are calls also for a new international body to be set up to ensure that derivatives,
while remaining an effective tool of risk management, carry a minimum risk to investors,
institutions and national/global economies. Considers the expanding role of banks and
Page 29
securities houses in the light of their sharp reactions to increases in interest rates and the
effect their presence in the derivatives market may have on market volatility.
Madhusudan (1998) found that BSE sensitivity and national indices did not follow
random walk by using correlation analysis on monthly stock returns data over the period
January 1981 to December 1992.
Odean (1998), Boys Will Be Boys: Gender, Overconfidence, And Common Stock
Investment, The Quarterly Journal of Economics, ISSN 1531-4650 develops models
in which overconfident investors overestimate the precision of their knowledge about the
value of a financial security. They overestimate the probability that their personal
assessments of the security’s value are more accurate than the assessments of others.
Thus, overconfident investors believe more strongly in their own valuations, and concern
themselves less about the beliefs of others.
Patrick McAllister and John R. Mansfield (1998) stated that derivatives have been an
expanding and controversial feature of the financial markets since the late 1980s. They
are used by a wide range of manufacturers and investors to manage risk. This paper
analyses the role and potential of financial derivatives investment property portfolio
management. The limitations and problems of direct investment in commercial property
are briefly discussed and the main principles and types of derivatives are analyzed and
explained. The potential of financial derivatives to mitigate many of the problems
associated with direct property investment is examined.
Yoon Je Cho (1998) showed in his study that increasing turnover figures in the Indian
stock exchanges from 1994-95 to 1996-97, implying that they are dominated by
speculative investments, which is not unusual in emerging markets. However, trading
volumes in the Indian capital market are fairly large compared to those in other emerging
markets. The substantial increase in turnover may be attributed primarily to the
expansion of the NSE‟s trading network. But this also reflects the fact that the Indian
stock market is dominated by speculative investments for short-term capital gains, rather
than long-term investment.
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Arun Jethmalani (1999) reviewed the existence and measurement of risk involved in
investing in corporate securities of shares and debentures. He commended that risk is
usually determined, based on the likely variance of returns. It is more difficult to
compare 80 risks within the same class of investments. He is of the opinion that the
investors accept the risk measurement made by the credit rating agencies, but it was
questioned after the Asian crisis. Historically, stocks have been considered the most
risky of financial instruments. He revealed that the stocks have always outperformed
bonds over the long term. He also commented on the 'diversification theory' concluding
that holding a small number of non-correlated stocks can provide adequate risk
reduction. A debt-oriented portfolio may reduce short term uncertainty, but will
definitely reduce long-term returns. He argued that the 'safe debt related investments'
would never make an investor rich. He also revealed that too many diversifications tend
to reduce the chances of big gains, while doing little to reduce risk. Equity investing is
risky, if the money will be needed a few months down the line. He concluded his article
by commenting that risk is not measurable or quantifiable. But risk is calculated on the
basis of historic volatility. Returns are proportional to the risks, and investments should
be based on the investors' ability to bear the risks, he advised.
Suresh G Lalwani (1999)emphasised the need for risk management in the securities
market with particular emphasis on the price risk. He commented that the securities
market is a 'vicious animal' and there is more than a fair chance that far from improving,
the situation could deteriorate.
Bhanu Pant and Dr. T.R.Bishnoy (2001) analyzed the behaviour of the daily and
weekly returns of five Indian stock market indices for random walk during April 1996 to
June 2001.They found that Indian Stock Market Indices did not follow random walk.
Hong Kong Exchanges and Clearing Ltd. (2002) surveyed on derivatives retail
investors, and argued first based on empirical evidence that years of trading experience
and usual deal size have a positive correlation. Second, Male investors traded to trade
more frequently than female investors. Third, the usual deal size of investor with higher
personal income traded to be larger. Fourth majority of respondents are motivated by
their stock trading experience to start derivatives trading. Fifth, trading for profit is the
key reason for derivatives trading other than high rate of return, hedging, etc. Sixth, the
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most significant motivating factors are more liquid market and more transparent market.
Seventh, majority of traders are infrequent in trade- 3 times or less in a month and Index
futures is the most popular product to trade most frequently. Ninth, a large proportion of
the investors invest in exchange cash products than derivatives or investment avenues.
Through empirical evidence form investors opinion, study argued that the liquidity of
derivatives products other than futures is low. High transaction costs or margin
requirement is the barrier for active participation in derivatives market. But also shows
that more active traders do not have much complaint towards transaction costs and
margin requirement.
Leyla Şenturk Ozer, AzizeErgeneli and Mehmet Baha Karan (2004) studied that the
risk factor is one of the main determinants of investment decisions. Market participants
that are rational investors ultimately should receive greater returns from more risky
investments. They also concluded that the crisis and resulting deep recession in 2002
changed many things, including market confidence of investors and financial analysts. In
addition to decreasing trading volume of Istanbul Stock Exchange (ISE), the number of
individual investors reduced and investment horizon of investors shortened and liquid
instruments.
Rajeswari, T. R. and Moorthy, V. E. R. (2005) said that expectations of the investors

influenced by their perception and human generally relate perception to action. The
study revealed that the most preferred vehicle is bank deposit with mutual funds and
equity on fourth and sixth respectively. The survey also revealed that the investment
decision is made by investors on their own, and other sources influencing their selection
decision are news papers, magazine, brokers, television and friends or relatives.
Chris Veld and Yulia V. Veld-Merkoulova (2006) found that investors consider the
original investment returns to be the most important benchmark, followed by the risk-
free rate of return and the market return. Study found that investors with longer time
horizon would generally be better off investing in stocks compared to investors with
shorter time horizon. They knew through the question on risk perceptions that investors
who are more risk tolerant would benefit from relatively larger investment in stocks.
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Their study showed the investors optimize their utility by choosing the alternative with
the lowest perceived risk.
Narender L. Ahuja (2006) expressed Futures and options trading helps in hedging the
price risk and also provides investment opportunity to speculators who are willing to
assume risk for a possible return. They can also help in building a competitive edge and
enable businesses to smoothen their earnings because non-hedging of the risk would
increase the volatility of their quarterly earnings. At the same time, it is true that too
much speculative activity in essential commodities would destabilize the markets and
therefore, these markets are normally regulated as per the laws of the country
Randall Dodd and Stephany Griffith-Jones (2006) studied that derivatives markets
serve two important economic purposes: risk shifting and price discovery. Derivatives
markets can serve to determine not just spot prices but also future prices (and in the
options the price of the risk is determined). In the research, interviews with
representatives from several major corporations revealed that they sometimes prefer to
use options as a means to hedge. They also argued derivatives have a potential to
encourage international capital inflows.
Nicole Branger and Beate Breuer (2007) showed that investors can benefit from
including derivatives into their portfolios. For retail investors, however, a direct
investment in derivatives is often too complicated. They argued if the investor can trade
only in the stock and money market account, the exposure of his portfolio to volatility
risk will be zero, and the relation between the exposure to stock diffusion risk and jump
risk will be fixed. They proved through documentation both theoretically and empirically
that investors can increase their utility significantly by trading plain vanilla options. And
also told that in a complete market and with continuous trading, it does not matter which
derivatives an investor uses to realize his optimal asset allocation. But with incomplete
markets, and in particular, discrete trading, on the other hand, the choice of derivatives
may actually matter a lot. This problem particularly sever for retail investor, who are
hindered from implementing their optimal payoff profile by too high minimum
investment amounts, high transaction costs or margin requirements, short-selling
restrictions and may be also lack of knowledge.
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Philipp Schmitz and Martin Weber (2007) exposed that the trading behavior is also
influenced if the underlying reaches some exceptional prices. The probability to buy
calls is positively related to the holding of the underlying in the portfolio, meaning that
investors tend to leverage their stock positions, while the relation between put purchases
and portfolio holdings of the underlying is negative. They also showed higher option
market trading activity is positively correlated with past returns and volatility, and
negatively correlated with book-to-market ratios. In addition they report that investors
open and close long and short call positions if past week's return is positive and write
puts as well as close bought and written put positions if the past returns are negative.
B. Das, Ms. S. Mohanty and N. Chandra Shil (2008) studied the behavior of the
investors in the selection of investment vehicles. Retail investors face a lot of problem in
the stock market. Empirically they found and concluded which are valuable for both the
investors and the companies having such investment opportunities. First, different
investment avenues do not provide the same level of satisfaction. And majority of
investors are from younger group.
Gupta and Naveen Jain (2008) found that majority of the investors are from younger
group and as per occupation, salaried persons are more inclined towards investment.
Study also argued education qualification is the major influenced factor in investment.
Their most preferred investment is found to be shares followed by mutual funds.
Empirically they found and argued the Indian stock market is considerably dominated by
the speculating crowd, the large scale of day trading and also fact the futures trading in
individual stocks is several times the value of trading in cash segment. They also found
the largest proportions of the investors are worried about too much volatility of the
market. For trader and speculators, price volatility is an opportunity to make quick
profits. In the study, high proportions of investors have a very favorable opinion about
the capital market regulation.
Prasanna P. K. (2008) empirically fond that foreign investors invested more in

companies with a higher volume of shares owned by general public. Foreign investors
choose the companies where family shareholding of promoters is not essential. The study
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concluded that corporate performance is the major influencing factor for investment
decision for any investor. As far as financial performance is concerned the share return
and earnings per share are significant factors influencing investment decision. The study
concluded that it is required to understand when FII withdraw their funds and when they
pump in more money.
Ashutosh Vashishtha and Satish Kumar (2010) studied encompasses scope an

analysis of historical roots of derivative market of India. The emergence of derivatives
market is an ingenious feat of financial engineering that provides an effective and less
costly solution to the problem of risk that is embedded in the price unpredictability of the
underlying asset. In India, since its inception derivatives market has exhibited
exponential growth both in terms of
volume and number of traded contracts. They argued that NSE and BSE has added more
products in their derivatives segment but still it is far less than the depth and variety of
products prevailing across many developed capital markets.
David Nicolaus (2010) studied that retail derivatives allow retail investors to pursue
sophisticated trading, investment strategies and hedging financial instruments. Retail
investors‟ motivation for improving the after tax return of their household portfolio
represents a major driver of the derivatives choice of the products and that provide only
little equity exposure for the investor. The derivatives reveal the divergent belief of retail
investors about the future price level of the underlying as these can be tailored to specific
demand of the investor. He argued the potential role of search costs and financial advice
on the portfolio decisions of retail investors, the flexibility of retail derivatives and low
issuance costs are likely to emphasize the existing frictions in financial retail markets
such as an increase of strategies and heuristics used by retail investors to cope with the
complex decision situation or an inadequate disclosure of conflicts of interest in financial
retail markets.
Gaurav Kabra, Prashant Mishra and Manoj Dash (2010) studied key factors
influencing investment behaviour and ways these factors impacts investment risk
tolerance and decision making process among men and women and those different age
groups. They said that not all investments will be profitable, as investor will not always
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make the correct investment decisions over the period of years. Through evidence they
proved that security as the most important criterion; there is no significant difference of
security, opinion, hedging in all age group. But there is significant difference of
awareness, benefits and duration in all age group. From the empirical results they
concluded the modern investor is a mature and adequately groomed person.
R RRajamohan (2010) analyzed the role of the financial knowledge is important in

decision making in information intensive assets like stocks and other risky securities.
Hence, reading habit, as a proxy for financial knowledge. Younger people have greater
labor flexibility than older people; if the returns on their investments turn out to be low,
they could work more or retire later. Hence age an important factor to be considered in
household portfolio analysis.
Sheng-Hung Chen and Chun-Hung Tsai (2010) wanted to identifying key factors
influencing individual investor’s decision to make portfolio choices is of importance to
understand their heterogeneous investment behavior. Through conjoint analysis examine
how individual investors derive their preferences for financial assets. Study stated female
investors tend to be more detail oriented; elder is more likely to have low level of risk
tolerance; the level of education is thought to impact on a person‟s ability to accept risk;
increasing income level of individual investor is associated with increased levels of risk
tolerance. At last they argued single investors are more risk tolerance than married
investors.
Shyan-Rong Chou, Gow-Liang Huang and Hui-Lin Hsu (2010) expressed that faced
with the series of financial events leading to the current turmoil, unpleasant investor
experience has become common and personal experiences and reports of such are
demonstrated in risk and attitudes to risk. The paper showed that investors are able to
choose an investment with potential risk and returns to suit their own preferences.
Products of lower potential profit are tolerated when the risk associated with those
products is similarly low. In their study they found that attitude to risk is very similar for
both the genders. The study shows most stock trading is transacted by individual rather
than institutional investors, therefore the capital gains and losses from stock price
fluctuations are felt first-hand by individual investors
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RAVI KANT (2011), Testing Of Relationship Between Stock Return And Trading
Volume In India, International Journal of Multidisciplinary Research (Vol.1, Issue-
06), ISSN 2249- 2496 :The paper draws attention towards the sensitive relationship that
exist between stock returns and trading volume in India. The paper observed that, at
times the volumes do not play a crucial role. In case of Futures & Options, the volumes
matters during the short term news favouring a particular company. However it is not
easy to predict the behavior of trading volume and stock return.
Rajeev Jain (2012), Investor’s Attitude towards Secondary Market Equity Investments
and Influence of Behavioural Finance, International Journal on Emerging
Technologies
(Vol.3, Issue 2) ISSN (Online): 2249-3255 :It’s a fact that only few investors create
immense wealth from a stock market and also manage to keep it for decades. These
investors take the right decisions and for doing this one needs experience. But
experience comes from bad decisions too. Investors who create wealth from equity
markets and keep it for decades, at times for generations, do not panic when a market
falls.
Yu-Ling-lin (2012) investigated into default risk and equity returns in Taiwanese
equity markets :The major goal of the paper was to evaluate correlation between default
risk, size, book to market value and equity returns. The results revealed that size and
book to market values had effect on portfolios that defaulted. The regression analysis
revealed that these two factors exercised significant influence on returns and systematic
risk.
Bing Zhu (2012), The Effects Of Macroeconomic Factors On Stock Return Of

Energy Sector In Shanghai Stock Market, International Journal of Scientific and
Research Publications (Vol. 2, Issue-11), ISSN 2250-3153: The study aims at
understanding the performance of arbitrage pricing theory (APT) in the Shanghai Stock
Exchange. In finance, arbitrage pricing theory (APT) is a general theory of asset pricing
that holds that the expected return of a financial asset. The research points out the fact
that factors such as foreign reserve, exports, exchange rates, and unemployment rate
have an impact on the returns of energy sector. As the foreign reserve increases by 1
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point, the stock return of energy sector increases by 2.142004. This shows that foreign
reserves have a positive direct impact on the returns of energy sector.
Mallikarjunappa T (2012) analyzed the relationship between the risk and return of
Indian commodity futures market :The major emphasis of the study was on futures
contracts of different commodities and four indices. The results showed that platinum
and refined sunflower oil commodities yielded highest returns of course carrying the
highest risk factors. The overall analysis revealed that there was a high degree of positive
correlation between the returns and risk in the Indian commodities futures market.
Domenico Celenza and Fabrizio Rossi (2012), The Relationship Between

Intellectual Capital And Stock Market Performance: Emprical Evidence From
Italy, Journal of Modern Accounting and Auditing (Vol. 8, Issue-11), ISSN 1548-
6583:.This study aims at providing a relation between the intellectual capital (IC) and
returns of a company. It also aims at evaluating the value of IC.
The accounting records are still incomplete inspite of the regulatory accounting
standard. It is limited in transmitting information that is slowly reflected in the prices of
securities of listed companies to the stock market.
As the information arrives into the market, it becomes old. Compared to the degree of
circulation of information in the market, the financial indicators appear to be static.
The beta factor does not explain the market value of firms and changes in stock prices.
The conclusions stand true as, the financial statements, made at the end of the year; fail
to inform the value of the firm. The speculation in the market also affects the investor’s
sentiment. The beta index indicates the systematic risks associated with the stocks and
fails to elaborate the reason for changes in stock prices and market value of firms.
Kaushal A. Bhatt (2013), Investment and Trading Pattern of Individuals Dealing in

Stock Market, The SIJ Transactions on Industrial, Financial & Business
Management (IFBM) (Vol.1, Issue-02), ISSN: 2321 – 242X: The paper aims at
studying the literacy and awarenss of capital markets among investors regarding various
investment avenues. To find and identify segments preferred more by the people and the
influencing force behind the decision making, while investing in currently available
options including stock markets. It concludes that investors are moving to new
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investment avenues such as equity market, mutual funds, bonds, and others like gold,
land etc. This is due to the decreasing trend of bank rates. This also increases the scope
of business for the investment companies. The investors are also risk sensitive. They
want more safety and security. The stock markets have become very popular due to high
rate of return but due to uncertainty and risk many people do not invest in equity
markets. This stands true due to the lack of stability in the current market scenarios. The
risk related to investment also defines the amount invested by people in the particular
stock. The factors like age, occupation and income level are key factors in investment
decision making of people. The other major factors being considered were market
scenario, risk involved and other investment opportunities.
Anju Bala (2013), Indian Stock Market - Review Of Literature, TRANS Asian
Journal of Marketing & Management Research (Vol.2, Issue-7), ISSN 2279-0667:
The paper has explained the logistics involved into the working of the stock market and
the investors preferences of selecting stock market as a tool of investment.
The paper studies the different asset class and other financial alternative available to
investors covering all age groups depending on their requirements such as :
- NON MARKETABLE FINANCIAL ASSETS (Bank Deposits, Company Deposits)
- EQUITY SHARES (Blue Chips shares, Growth shares)
- BONDS (Government Securities, PSU Bonds)
- MONEY MARKET INSTRUMENTS (Treasury Bills, Certificates of Deposit)
- MUTUAL FUNDS (Balanced Schemes, Debt Schemes)
- LIFE INSURANCE (Money back policy, Whole Back policy)
- REAL ESTATE (Agricultural Land, Commercial Property)
- PRECIOUS OBJECT (Gold & Silver)
- FINANCIAL DERIVATIVES (Future & Option warrants)
It has recommended a list of measures for the improvement of investor participation into
the stock market. It has recommended the listing of stock prices on multiple stock
exchanges to improve liquidity and gain investor confidence. It has also observed that
speculation is widespread into the Indian stock market system and thereby it cause
volatility into the prices of shares. This volatility creates insecurity. It has further
observed that investors use technical analysis and fundamental analysis for selecting
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their investment into the stock market and the low cost of operations into the derivatives
market has made it a preferred choice of investment
Rakesh H.M (2014), A Study On Individual Investors Behavior In Stock Markets

Of India, IJMSS (Vol.02, Issue-02), ISSN:2321-1784: The paper proposes to study the
behavior of individual investors in the stock markets and the factors that influence their
investment decisions, which include awareness level, investment duration etc. The
research was based on the primary data collected from the city of Mysore of 150
respondents, being stock market investors. The research paper observes that only 10 %
of the respondents intended to stay invested into the stock market for a period of more
than 5 years. In other words, the research paper observed that people do not want to stay
committed for longer period of time into the stock market despite it giving better returns.
The paper analyses that annual income and annual savings are given importance by
investors, but the level of savings are decided by their level of income. He states that
“investors are fully aware about the stock market and they feel that market movements
also affect the investment pattern of investors in the stock market.” The paper however
remains silent on its observation about the uneducated investors who are not aware of the
market conditions, with market trends and the stock price movements. It focuses on the
factors influencing savings and sources of information for decision making. The income
level of an individual, also decide the investment pattern of the investor. The investor’s
income level does determine the type of investment avenues the investor prefers.
Reena Rai (2014), Factors Affecting Investors’ Decision Making Behavior In The
Stock Market: An Analytical Review, Indian Journal of Applied Research (Vol.4,
Issue-9), ISSN - 2249-555X: The paper under study aims to study the factors
influencing an investors decision making behavior on basis of related studies. It states
that the various factors that influence include various demographic factors such as
gender, age, education. It is known that men are more overconfident than women. Age
plays a role on the mindset of the individual and the propensity to take risk. It also
explains sometimes, the precautious attitude and conservatism. On the firm level the
decision of the investors depend on capital structure average pricing, political and media
exposure, trend analysis, past performance of company’s stocks, expected dividend and
EPS etc. Finally, it concludes that out of the various factors affecting behavior of
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investors some factors have a slight role while some majorly impact investor behavior.
The general factors being gender, age, confidence levels, cognitive bias, risk factors,
company’s performance.
Uday kumar and suresh (2014) have attempted to analyze the risk and return
relationship of induna stock markets for period 2007-2014 :The focus of their
research was to understand the behavioral pattern of major stock market indices and
correlation coefficient between suh indices. The result indicated that BSE sensex was the
best index that explains risk return relationship.
Gurinder Singh And Navleen Kaur (2015), Investigation of the Determinants to

Augment Investment in the Indian Stock Market, International Journal of
Scientific and Research Publications (Vol.5, Issue-03), ISSN 2250-3153: states about
the perception of investors and non investors towards Indian Stock Market. Those who
are non investors always calculate the insecurity of loss of money in the market and the
risk of investing. There are other categories of people who are ready to invest but they
want investor friendly schemes, which are not only simplified but also have an easy exit
option. So government and fund houses need to spread awareness about investor on a
large scale. Initial tax incentive provided by government for first time investor will also
encourage many people to get invested roping in celebrity to advertise as it affects the
mass population. A proper clarity must be given to people through various means
between Trading and Investment. However a SIP (Systematic Investment Plan) thing
would be a great option for low income group.
Kajal Gandhi (2015), Retail Investors Participation in Indian Stock Market- A

Survey, GJRA - Global Journal For Research Analysis (Vol.4, Issue-02), ISSN No
2277 - 8160 : paper findings were based on the survey which has beeen carried out
among five cities-Mumbai, Delhi, Kolkata, Chennai and Ahmedabad. The respondents
of the metro cities are more inclined towards investing in stock market as they consider it
as financial tool but they don't have expertise knowledge or don't prefer to hire a
professional to manage their portfolio due to which they fall prey of losses. However,
people at Tier-II cities like Ahmedabad still consider the traditional investment like gold,
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property, gold and bank deposits are their favorite option this is due to narrow minded as
their is low saving habits, low awareness of investment opportunities.
Pramod kumar (2016) compared risk and return of Bombay stock market with selected
banking stocks in India: This paper examined correlation coefficient between risk and
return of BSE Sensex and banking shares. The results indicated that stock market returns
of Sensex are positively correlated with the returns of entire banking stocks barring
ICICI bank stock. Analysis of beta indicated that ICICI bank was the greatest defensive
stock as it was negatively sensitive to variations in Sensex return
Gorbunova (2016) analyzed equity securities in Russia in terms of risk and return
relationship: He paid special attention to analyzing the returns and risks involved in
equity investment which would help develop a rating mechanism of the investment
options. The analysis of systematic risk indicated that the returns of the stocks were
primarily driven by the market risks rather than stock specific risk. The findings are of
high use in terms of understanding and choosing the best stocks for the investment.
Bala Kalyan (2018) conducted a study on risk return analysis of selected securities in
India with an objective of providing investors basic idea of investing:The analysis was
done in terms of mean returns and standard deviation and co-efficient of variation.
Among many other findings the study revealed that February 2017 was the most
favorable month for the investors. The paper emphasized the market fluctuations and
provided useful data for picking up good stocks.
Ruchi Nithyanad Prabhu (2018) carried research pertaining to analysis of risk and
return of Nifty stocks in India: The prime objective of the study was to compare the
performance of NSE 50 stocks in terms of risk and return. He has found that some stocks
moved along with the market whereas some other stocks moved in opposite direction.
The results also indicated volatility of individual stocks visa-vis NSE index was highly
varying.
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CHAPTER 3
RESRARCH METHODOLOGY
3.1 RESRARCH METHODOLOGY
Research is the organized way of collecting facts &analyzing them in the form of
numerical data relevant to formulating problem & thus arriving at a certain conclusion
over problem based on the collected data.
It can be defined as. "the systematic method consisting of enunciating the

problem, formulating a hypothesis, collecting facts or data, analyzing the facts &
reaching certain conclusions either in the form of solutions towards the concerned
problem or in certain generalizations for the theoretical formulation."
Research Methodology involves activities designed to achieve research

objectives. In order to ensure that appropriate information is collected, a detailed
research plan must be developed. The methodology adopted for this study is based on the
primary data, will be extracted from the 100 respondents via structure questionnaire
method in the city of Amravati.
Research Process:
Given below is simple flow chart of research process.
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3.2 Research Problem Definitions:

A research problem in general refers to some difficult which research
experiences in the context of either a theoretical or practical situation and want a
solution for the same. Research problem is a problem that someone would like to
research anything that a person find unsatisfactory or unsettling, a difficult of
some sort. A state of affairs that need to be change a research problem involves
area of concerns to research, for condition they wants to improve , difficulties
they want to eliminate questions for which they wants to seek. The identification
or research problem is first and foremost step that every researcher has to
undertake. At time, it become rather difficult for an inexperienced researcher or a
novice/beginner in research to conceptualizes a research problem. In general, a
research problem should be understood as some difficult, unclear situation which
a research experiences in practical or theoretical context and wants to obtain a
tangible explanation. Clarification or offer solution to it. For student; this
problem may be as a result of theoretical encounter in the area of specialization.
As such before embarking on any research, you should identify the major
research area of your interest, mostly the area of your specialization. For instance
from : education ,social sciences, humanities, business administration among
others. Three sources usually contribution to problem identification. Own
experiences of others may be a sources of could be researched. Research can thus
be aimed at clarifying or substantiating an existing theory, at clarifying
contradictory findings, at correcting a faulty methodology, at correcting the
inadequate or unsuitable use of statistical techniques, at recording conflicting
opinions or at solving existing practical problem.
3.3 Research Objective:
Introduction:
 Research is an organized investigation of a problem in which there is an attempt to gain

solution to a problem
 To get solution of right problem, clearly defined objective are very important.
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 Clearly defined objective enlighten the way in which the researcher has to proceed.
Meaning:
The purpose of research is to discover answers to questions through the

application of scientific procedures. The main aim of research is to find out the
truth which is hidden and which has not been discovered as yet. Though each
research study has its own specific purpose, we may think of research objectives
as falling into a number of following broad groupings:
1. To gain familiarity with a phenomenon or to achieve new insights into it

(studies with this object in view are termed as exploratory or formulative research
studies);
2. To portray accurately the characteristics of a particular individual, situation or a

group (studies with this object in view are known as descriptive research studies);
3. To determine the frequency with which something occurs or with which it is

associated with something else (studies with this object in view are known as
diagnostic research studies);
3.4 Objective of Research:
1) To identify the risk and reward in investing.
2) To study relationship between the risk and reward ratio.
3) To analyse and identify the factors influencing the individuals investors while
choosing a stock for investment.
3.5 Hypothesis of Research:
From the above objectives of the following hypothesis is formulated to test the efficiency of
the risk and reward of the stock market investor:
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H0.1 Investing in stock will lead to risk.

H1.1 Investing in stock will lead to reward.
H0.2Investing in a good stock but at a bad time can have disastrous results.
H0.2 Investment in a mediocre stock at the right time can bear profits.
3.6 Research Methodology:
Research Methodology was way to systematically solve there search problem. It

may be understood was science of studying how research his done scientifically. We
can say that research methodology had many dimensions and research methods Do
constitute apart of research methodology .The scope of research methodology was wider
than that of research methods.
A. Research Design:.
The research his analytical and descriptive in nature. The researcher for the
purpose here had made use of primary data and secondary data .The research has made
use of closed questionnaire where sample of 100 was used.
The data was collected and was analyzed by using SPSS software .Secondary
Sources were also used with respect to Review of Literature , Journal sand articles.
Descriptive Statistics was done by using Mean, Standard Deviation, Frequency and In
ferential statistics was used like correlation, regression and ANOVA.
B. Sources of Data collection.:
The task of data collection begins after research problem has been defined. While
deciding about the method of data collection to be used for the study the researcher have
to keep in mind two types of data viz primary & secondary. The primary data are those
which are collected afresh & for the first time& thus to be happen to be original in
character ; The secondary data on the mother .hand., are those which have already been
collected by someone else & which have already been passed through the statistical
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process. The researcher would' have to decide which sort of data he would be using for
his study & accordingly he will have to select one other method of data collection.
Primary Data:
Primary Data are those, which are collected afresh and for the first time and thus happen
to be original in character. Primary can be collected as an experiment or through this
research primary data will be collected through questionnaire and personal interviews
and schedules, through survey. Primary data may be described as those data, which have
observed & recorded by researcher for first time to their knowledge.
Secondary Data:-
The term secondary data refers data that.is already available;- Secondary data: may either
be published data or unpublished data. It is the data which have already been collected
by some one else and which have already been pass through the statistical process.
Secondary data will be collected from Magazines books News papers, Internet etc.
3.7 Sampling:
Sampling means it consist what is the sampling unit, sample size and sampling
Technique.
Sampling Universe:
All units of collectively related with the subject matter about which an investigation is
being conducted are called „Universe‟. In other words by universe is meant that group of
units which is being studied for purpose of investigation. For example, if an investigation
is to conducted on the mark obtained in statistics by the student of a class then all of the
student of that class in that subject will be the „Universe‟. If that class consists of 50
students, same 50 students will form the „Universe‟. According to Simpson and Kafka ,
A universe or population may be defined as an aggregate of items possessing a common
trait or traits. All the items under consideration in any field of inquiry together constitute
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a universe. The universe of study will be the individual lower income groups whom
belong to Amravati.
Sample Size:
The purpose of research is the main determinant of the level of accuracy required in the
results, and this level of accuracy or exactness is the main determinant of a sample size.
In general, the large sample size, the more accurate will be his estimate. In general, the
research budget determines the sample. The sample size of statistical sample is the
number of observation that constitutes it. It is typically denoted n a positive integer
(natural number). The sample size n is chosen of that the sampling error and the standard
error of the statistic are fixed at some pre-assigned level. So, the sample size was 100
investors. Because the study was limited to Amravati city only.
Sampling Technique:
Convenience method of sampling is used to collect the data from the respondents.
Researchers or field workers have the freedom to choose whomever they find, thus the
name “convenience”. About 100 samples were collected from Amravati and most of the
respondents were customers coming in to stock broker’s office and certain addresses
were collected from reputed brokers.
Non Probability :
Sampling Non-probability sampling is that sampling procedure which does not afford
any basis for estimating the probability that item in the population has been included in
the sample. Non-probability sampling is also known by different names the as deliberate
sampling, purposive sampling and judgment sampling. In this type of sampling items for
the samples are elected deliberately by the researcher, his choice concerning the items
remains supreme. In other word, under non-probability sampling the organizers of the
inquiry purposively choose the particulars units of the universe for constituting a sample
on the basis that the small mass that they select out of huge one will be typical or
representative of the whole. As the universe was too large with a heterogeneous
population, Non-Probability Sampling technique was used. Purposive and Convenience
sampling methods were used, as the workers families belonging to the specified
Page 48
demographic variables were to be selected. Purposive sampling method was used as

individual workers families belonging to the above mentioned demographic features
were to be selected. Convenience sampling method was used to reach the required
sample of workers families from the large group within the available time span.
SURVEY PLAN :
A sample for the study will be collected from Amravati city. It will include individual
investor. The respondent ratio will be 1:5.
3.8 SCOPE AND LIMITATION:

Scope of study This analysis on individual investors behaviour is an attempt to know the
profile if the investor and know the characteristics of the investors to know their
preference with respect to their investment the study also tries to on unravel the influence
of demographic factors like age , education , income on risk level of the investors.
3.9 Limitations of Research Study:

As such every factor possess same kind of limitation. Thats why everyone says that
nothing can be perfect but it can be improved to minimize the error.
 The survey is conducted only in Amravati city

 The study is based on academic proposes only.
 This study is only for the people who are interested in stock market.
Page 49
CHAPTER 4
DATA INTERPRETATION AND DATA ANALYSIS
I. Age
Table No. 4.1 Age
Sr. Number Age No. of respondent Percentage
1 Up to 20 3 3%
2 21-30 60 60%
3 31-40 25 25%
4 41-50 11 11%
5 Above 50 1 1%
Total 100 100%
Graph No. 4.1 Age
Age
1% 3%
11%
Up to 20
21-30
25% 31-40
41-50
60%
Above 50
Page 50
Data Analysis :-
From the above graph it is interpreted that 3% participants have age Up to 20, 60%
participants have age between 21-30, 25% participants have age between 31-40, 11%
participants have age between 41-50 years, 1% participants have age Above 50.
Data Interpretation :-
After analyzing the data, it can be interpreted the most of respondents having age
between 21-30.
II. Gender
Table No 4.2 Gender
Sr. Number Gender No. of respondent Percentage
1 Male 84 84%
2 Female 84 16%
3 Transgender 00 00%
Total 100 100%
Graph No. 4.2 Gender
Gender
100%
80%
60%
84%
40%
20% 16%
0%
0%
Male Female Transgender
Page 51
Data Analysis :-
The above table spells about the respondents gender in which 84% respondents are male
and 16% respondents are femal.
After analyzing the data, it can be interpreted the most of respondents are male.
III. Marital Status
Table No. 4.3 Marital Status
Sr. Number Marital Status No. of Percentage

respondent
1 Married 43 43%
2 Unmarried 57 57%
3 Divorced 00 00%
4 Widow 00 00%
Total 100 100%
Graph No. 4.3 Marital Status
Marital Status
60%
50%
40%
30% 57%
43%
20%
10%
0% 0%
0%
Married Unmarried Divorced Widow
Page 52
Data Analysis :-
The above table explains about the Marital Status of respondents in which 43%
respondents are married and 57% respondents are unmarried.
after analysing the data it can be interpreted the most of respondents Marital Status are
unmarried.
IV. Educational Qualification
Table No. 4.4 Educational Qualification

Sr. Number Education No. of respondent Percentage
1 Below SSC 11 11%
2 SSC 31 31%
3 HSC 22 22%
4 UG 31 31%
5 PG 5 5%
Total 100 100%
Graph No. 4.4 Educational Qualification
Education
5%
11% Below SSC
31%
SSC
31%
HSC
22% UG
PG
Page 53
Data Analysis :-
The above table and graph explains about the Educational Qualification of respondents
in which 11% respondents having education Below SSC, 31% having education SSC,
22% respondents having education HSC, 31% respondents having education UG and 5%
respondents having education PG.
After analysing the data it can be interpreted the most of respondents having educational
qualification are UG.
V. What percent of your monthly salary do you save?
Table No. 4.5 Monthly Salary Respondents Save.
Sr. Number Percentage of Saving No. of respondent Percentage %
1 less than 20% 26 26%
2 over 50% 22 22%
3 between 20% -35% 24 24%
4 between 35% -50% 20 20%
5 More than 50% 8 8%
Total 100 100%
Page 54
Graph No. 4.5 Monthly Salary Respondents Save
Percentage of Saving
8%
26%
20% less than 20%
over 50%
between 20% -35%
22%
24%
between 35% -50%
More than 50%
Data Analysis :-
The above table and graph explains about the percent of monthly salary respondents save
in which 26% respondents save less than 20% , 22% respondents save over 50%, 24%
respondents save between 20% -35% , 20% respondents save between 35% -50%, 8%
respondents save More than 50%.
After analysing the data it can be interpreted the most of respondents save between 20%
-35%.
VI. Which option do you prefer from the following risk and return point of
view?
Table No. 4.6 Risk And Return Point Of View

Sr. Number Risk and Return Option No. of respondent Percentage
1 Debenture 3 3%
2 Bank Nifty 12 12%
3 Stock 30 30%
Page 55
4 Mutual Fund 21 21%
5 Gold 25 25%
6 Bank fix deposit 10 10%
7 Real estate 6 6%
8 Debt securities 3 3%
Total 100 100%
Graph No. 4.6 Risk And Return Point Of View
Risk and Return Option

3% 3%
Debenture
5%
11% Bank Nifty
9%
Stock
Mutual Fund
23% 27% Gold

Bank fix deposit
Real estate
19% Debt securities
Data Analysis :-
The above table spells about the option respondents prefer in risk and return point of
view in which 3% respondents said Debenture, 11% respondents said Bank Nifty, 27%
respondents said Stock, 19% respondents said Mutual Fund, 23% respondents said Gold,
9% respondents said Bank fix deposit, 5% respondents said Real estate, 3% respondents
said Debt securities.
After analysing data, it can be interpreted it maximum respondents prefer in risk and
return point of view are stock.
Page 56
VII. From risk and return ratio which options do you choose from following?
Table No. 4.7 Options for Risk and Return Ratio
Sr. Number Options No. of respondent Percentage
1 Intraday Trading 10 10%
2 Delivery Trading 11 11%
3 Option Trading 11 11%
4 Margin Trading 12 12%
5 IPO Trading 21 21%
6 Future Trading 15 15%
7 For Long Time 19 19%

Investment
8 Other 1 1%
Total 100 100%
Graph No. 4.7 Options for Risk and Return Ratio
Options
1% Intraday Trading
19% 10% Delivery Trading
11%
11% Option Trading
15%
Margin Trading
12%
21% IPO Trading
Future Trading
For Long Time Investment
Data Analysis :-
The above table and graph explains about the From risk and return ratio which options
respondents choose in which 10% respondents said Intraday Trading, 11% respondents
said Delivery Trading, 11% respondents said Option Trading, 12% respondents said
Margin Trading, 21% respondents said IPO Trading , 15% respondents said Future
Trading 19% respondents said For Long Time Investment , 1% respondents said Other.
Page 57
After analyzing the data, it can be interpreted the most of respondents choose IPO
trading as a risk and return ratio.
VIII. Do you use any stock market app for collecting information about stock?
Table No. 4.8 Stock Market App For Collecting Information
Sr. Number Stock Market App No. of Percentage
respondent
1 Money control 13 13%
2 5 paisa 11 11%
3 Stock Edge 12 12%
4 Mint 21 21%
5 Zerodha 14 14%
6 Angel broking 11 11%
7 Upstock 16 16%
8 Others 2 2%
Total 100 100%
Graph No. 4.8 Stock Market App For Collecting Information
Stock Market App

2%
Money control
16% 13%
5 paisa
11%
11% Stock Edge
12%
14% Mint
21% Zerodha
Angel broking
Upstock
Page 58
Data Analysis :-
The above table and graph spells out the use any stock market app for collecting
information about stock in which 13% respondents said Money control, 11% said 5
paisa, 12% said Stock Edge, 21% said Mint, 14% said Zerodha, 11% said Angel broking,
16% said Upstock and 2% said Others.
After the analyzing the data, it can be seen that majority of respondents use mint stock
market app for collecting information about stock.
IX. Since long you are investing in a stock market?
Table No. 4.9 Time Duration

Sr. Number Time duration No. of respondent Percentage %
1 3 months 15 15%
2 6 Months 30 30%
3 1 year 26 26%
4 More than 1 year 25 25%
5 Upto 5 years 4 4%
Total 100 100%
Graph No. 4.9 Time Duration
Time duration
4%
15% 3 months
25% 6 Months
1 year
30% More than 1 year
26% Upto 5 years
Page 59
Data Analysis :-
The above table and graph spells out the Since how long respondents are investing in a
stock market in which 15% respondents said 3 months, 30% respondents said 6 Months,
26% respondents said 1 year, 25% respondents said More than 1 year, 4% respondents
said Upto 5 years.
After the analyzing the data, it can be seen that majority of the respondents investing in a
stock market since 6 months.
X. As per your experience, how much of amount should be invest in stock

market?
Table No. 4.10 Amount Investment in Market

Sr. Number Amount Investment No. of Percentage
in Market respondent
1 0 to 20000 25 25%
2 20000 to 40000 20 20%
3 40000 to 60000 23 23%
4 60000 to 80000 21 21%
5 80000 or More 11 11%
Total 100 100%
Graph No. 4.10 Amount Investment in Market
Amount Investment in Market

11%
0 to 20000
25%
21% 20000 to 40000
20% 40000 to 60000
23%
60000 to 80000
80000 or More
Page 60
Data Analysis :-
The above table and graph spells out the how much of amount should be invest in stock
market in which 25% respondents said 0 to 20000, 20% respondents said 20000 to
40000, 23% respondents said 40000 to 60000 , 21% respondents said 60000 to 80000,
11% respondents said 80000 or More.
After the analysing the data it can be seen that maximum number of respondents invest
0-20000 amount in stock market.
XI. Which share do you prefer most?
Table No. 4.11 Most Preferred Shares

Sr. Number Most preferred Shares No. of Percentage
respondent %
1 High dividend payout 11 11%

share
2 Capital appreciation share 16 16%
3 Depend upon bull/bear 35 35%

market conditions
4 Suggested by 12 12%
broker/friend
5 More volatile share 6 6%
6 Market sentiment 14 14%
7 Company brand 12 12%
8 Other 4 4%
Total 100 100%
Page 61
Graph No. 4.11 Most Preferred Shares
Most preferred Shares

4% 10% High dividend payout
11% share
Capital appreciation share
14%
13%
Depend upon bull/bear
market conditions
5% Suggested by
broker/friend
11% 32% More volatile share
Data Analysis :-
The above table and graph spells out share respondents prefer most in which 10%
respondents said High dividend payout share, 14% respondents said Capital appreciation
share, 32% respondents said Depend upon bull/bear market conditions, 11% respondents
said Suggested by broker/friend, 5% respondents said More volatile share, 13%
respondents said Market sentiment, 11% respondents said Company brand, 4%
respondents said Other.
After the analysing the data it can be seen that most of the respondents prefer share
depend open bull/ bear market conditions.
XII. What attracts you towards stock market?

Table No. 4.12 Attracts Towards Stock Market
Sr. Number Factors attract towards No. of Percentage

share market respondent
1 Reward 12 12%
2 Speculation 20 20%
3 High return 39 39%
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4 liquidity of investment 27 27%

fund
5 Other 2 2%
Total 100 100%
Graph No. 4.12 Attracts Towards Stock Market
Factors attract towards share market

2%
Reward
12%
Speculation
27%
20% High return
liquidity of investment
fund
39% Other
Data Analysis :-
The above table and graph explains what attracts respondents towards stock market in
which 12% respondents said Reward, 20% respondents said Speculation,39%
respondents said High return, 27% respondents said liquidity of investment fund, 2%
After the analysing the data it can be seen that majority of the respondents said high
return attracts them towards stock market.
Page 63
XIII. What is your motive to invest in stock market?
Table No. 4.13 Motive To Invest In Stock Market
Sr. Number Motive to Invest in No. of Percentage

Stock Market respondent
1 To gain more income 23 23%
2 To do because interest in 22 22%

it
3 It gives high return of 30 30%

investment than banks,
post or other things
4 For Learning Stock 22 22%

Market
5 As a Modern Type of 3 3%
Investment
Total 100 100%
Graph No. 4.13 Motive To Invest In Stock Market
Motive To Invest In Stock Market
3% To gain more income
23%
22% To do because interest in it
It gives high return of

investment than banks, post or
other things
For Learning Stock Market
22%
30% As a Modern Type of
Investment
Page 64
Data Analysis :-
The above table and graph spells out the respondents motive to invest in stock market in
which 23% respondents said To gain more income, 22% respondents said To do because
interest in it, 30% respondents said It gives high return of investment than banks,post or
other things 22% said respondents said For Learning Stock Market 3% respondents said
As a Modern Type of Investment.
After the analysing the data it can be seen that maximum number of respondents s
Motive to invest in stock market is It gives high Return Of investment then banks,post or
other things.
XIV. Can share market is best income source for everyone?
Table No. 4.14 Share Market Is Best Income Source
Sr. Number Share Market Best No. of respondent Percentage %

Income Source
1 Strongly Agree 20 20%
2 Agree 29 29%
3 Neutral 31 31%
4 Disagree 17 17%
5 Strongly Disagree 3 3%
Total 100 100%
Page 65
Graph No. 4.14 Share Market Is Best Income Source
Best Income Source

3%
17% 20% Strongly

Agree
29% Neutral
31%
Disagree
Strongly Disagree
The above table and graph clearly explains the share market is best income source for
everyone in which 20% respondents are Strongly Agree, 29% respondents are Agree,
31% respondents are Neutral, 17% respondents are Disagree, 3% respondents are
Strongly Disagree.
After the analysing the data it can be seen that most of the respondents are neutral that
share market is Best income source for everyone.
XV. When you choose your stock for investment then which stock of point you
consider?
Table No. 4.15 Points Consider while Investing

Sr. Number Points consider while No. of Percentage
investing respondent
1 Investment amount of 18 18%

investor
2 Market capitalization of 27 27%

company.
Page 66
3 Past performance of 27 27%

company
4 liquidity of stock 16 16%
5 financial statement of 12 12%

company.
Total 100 100%
Graph No. 4.15 Points Consider while Investing
Points consider while investing

Investment amount of
investor
12% 18%
Market capitalization of
16% company.
Past performance of
27% company
27% liquidity of stock
financial statement of
company.
Data Analysis :-
The above table and graph clearly explains the respondents consider points when they
choose stock for investment in which 18% respondents said Investment amount of
investor, 27% respondents said Market capitalization of company, 27% respondents said
Past performance of company, 16% respondents said liquidity of stock, 12% respondents
said financial statement of company.
After the analysing the data it can be seen that majority of the respondents consider
market capitalization of company and past performance of company.
Page 67
XVI. How much risk you can take?
Table No. 4.16 Risk Respondents Can Take

Sr. Number Risk Respondents No. of Percentage
Can Take respondent
1 10% portfolio 20 20%
5 Other 9 9%
Total 100 100%
Graph No. 4.16 Risk Respondents Can Take
Risk
9%
20% 10% portfolio
18% 20% portfolio
30% portfolio
40% portfolio
26%
Other
27%
Data Analysis :-
The above table explains about the risk respondents can take in which 20% respondents
said 10% portfolio , 26% respondents said 20% portfolio, 27% respondents said 30%
portfolio, 18% respondents said 40% portfolio, 9% respondents said Other.
Page 68
After the analysing the data it can be seen that most of the respondents can take 30%
portfolio risk.
XVII. In which stock you mostly invest your money?

Table No. 4.17 Stock Respondents Mostly Invest
Sr. Number Stock Respondents No. of Percentage
Mostly Invest respondent
1 Penny stocks 11 11%
2 Blue chip stock 21 21%
3 Growth stock 29 29%
4 Speculative stock 14 14%
5 Value Stock 12 12%
6 Cyclic stock 7 7%
7 Income Stock 7 7%
Total 100 100%
Graph No. 4.17 Stock Respondents Mostly Invest
Stocks
7% Penny stocks
11%
7% Blue chip stock
12% Growth stock

21%
Speculative stock
14% Value Stock

Cyclic stock
28% Income Stock
Page 69
Data Analysis :-
The above table explains about the in which stock respondents mostly invest their money
in which 11% respondents said Penny stocks, 21% respondents said Blue chip stock,
28% respondents said Growth stock, 14% respondents said Speculative stock, 12%
respondents said Value Stock, 7% respondents said Cyclic stock, 7% respondents said
Income Stock.
After the analysing the data it can be seen that majority of the respondents mostly invest
their money in growth stock and some invest in blue chip stock for their investment.
XVIII. What type of investor you are?
Table No. 4.18 Type Of Investor

Sr. Number Investor Type No. of Percentage
respondent
1 Risk Avoider 16 16%
2 Risk Embrace 15 15%
3 Risk Mitigator 31 31%
4 Risk Averse 25 25%
5 Risk Manager 13 13%
Total 100 100%
Page 70
Graph No. 4.18 Type Of Investor
Investor Type
13% 16% Risk Avoider

Risk Embrace
15% Risk Mitigator
25%
Risk Averse
Risk Manager
31%
Data Analysis :-
The above table and graph explains about the what type of investor respondents are in
which 16% respondents said Risk Avoider, 15% respondents said Risk Embrace, 31%
respondents said Risk Mitigator, 25% respondents said Risk Averse, 13 % respondents
said Risk Manager.
After analyse the data it can be seen that majority of the respondents are Risk mitigator
type of investor.
XIX. What will you suggest to the investors who are freshers in the field of stock
market?
Table No. 4.19 Suggestions For New Investors
Sr. Number Suggestions For New No. of respondent Percentage

Investors
1 Portfolio Making 25 25%
2 Regarding Holding 23 23%

Period
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3 Technical Analysis 25 25%
4 Fundamental Analysis 22 22%
5 Chart 5 5%
Total 100 100%
Graph No. 4.19 Suggestions For New Investors
Suggestions
5%
25% Portfolio Making
22%
Regarding Holding Period
Technical Analysis
Fundamental Analysis
23% Chart
25%
Data Analysis :-
The above table spells about the suggestions to the investors who are freshers in the field
of stock market in which 25% respondents said Portfolio Making, 23% respondents said
Regarding Holding Period, 25% respondents said Technical Analysis, 22% respondents
said Fundamental Analysis, 5% respondents said Chart.
After analyse the data it can be seen that majority of respondents want to give
suggestions to the investors who are freshers in the field of stock market for portfolio
making and technical analysis.
Page 72
XX. What is your risk to reward ratio?
Table No. 4.20 Risk To Reward Ratio

Sr. Number Risk Reward Ratio No. Of Respondent Percentage
1 1:1 21 21%
2 1:2 24 24%
3 1:3 26 26%
4 1:4 20 20%
5 1:5 9 9%
Total 100 100%
Graph No. 4.20 Risk To Reward Ratio
Risk Reward Ratio
9% 21%
20% 1:01
1:02
24% 1:03
26% 1:04
1:05
Data Analysis :-
The above table spells about the respondents risk to reward ratio in which 21%
respondents said 1:1, 24% respondents said 1:2, 26% respondents said 1:3, 20%
respondents said 1:4, 9% respondents said 1:5.
Page 73
After the analysing the data it can be seen that most of the respondents risk to reward
ratio is 1:2.
XXI. How often do you indulge in risk reward analysis?
Table No. 4.21 Risk Reward Analysis
Sr. Number Risk reward analysis No. of respondent Percentage %
1 Always 12 12%
2 Rarely 20 20%
3 Sometimes 43 43%
4 Never 20 20%
5 Can't Say 5 5%
Total 100 100%
Graph No. 4.21 Risk Reward Analysis
Risk reward analysis
5% 12%
20%
Always
20%
Rarely
Sometimes
Never
43%
Can't Say
Page 74
Data Analysis :-
The above table spells about the how often do respondents indulge in risk reward
analysis in which 12% respondents said Always, 20% respondents said Rarely, 43%
respondents said Sometimes, 20% respondents said Never, 5% respondents said Can't
Say.
After the analysing the data it can be seen that maximum number of respondents
sometimes including in risk reward.
XXII. How often you take help of risk and reward ratio to manage your risk of
losing money on trades?
Table No. 4.22 Risk And Reward Ratio To Manage Their Risk Of Losing Money
Sr. Number Risk And Reward Ratio No. of Percentage
respondent
To Manage Their Risk
Of Losing Money
1 Always 14 14%
2 Never 21 21%
3 Sometimes 36 36%
4 Can’t say 23 23%
5 Rarely 6 6%
Total 100 100%
Page 75
Graph No. 4.22 Risk And Reward Ratio To Manage Their Risk Of Losing Money
Risk and Reward Ratio

6%
14% Always
23% Never
21% Sometimes
Can’t say
Rarely
36%
Data Analysis :-
The above table and graph clearly explains the how often respondents take help of risk
and reward ratio to manage their risk of losing money on trades in which 14%
respondents said Always, 21% respondents said Never,36% respondents said Sometimes,
23% respondents said Can’t say, 6% respondents said Rarely.
After deleting the data it can be seen that majority of the respondents sometimes take
help of risks and rewards ratio to manage their risks of losing money on trades.
XXIII. How often do you face risk risk reward dilemma?
Table No. 4.23 Face Of Risk Reward Dilemma

Sr. Number Risk Reward No. of Percentage
Dilemma respondent
1 Always 9 9%
2 Never 23 23%
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3 Sometimes 35 35%
4 Can’t say 23 23%
5 Rarely 10 10%
Total 100 100%
Graph No. 4.23 Face Of Risk Reward Dilemma
Risk Reward Dilemma
10% 9%
Always
23% Never
23%
Sometimes
Can’t say
Rarely
35%
Data Analysis :-
The above table explains about the how often do respondents face risk reward dilemma
in which 9% respondents said Always, 23% respondents said Never, 35% respondents
said Sometimes, 23% respondents said Can’t say, 10% respondents said Rarely.
After the analysing the data it can be seen the most of the respondents sometime face risk
reward dilemma
Page 77
XXIV. Do you analyze risk and reward component of potential investment

alternative?
Table No. 4.24 Analysis risk and reward component

Sr. Number Analysis risk and No. of Percentage
reward component respondent
1 Always 16 16%
2 Sometimes 29 29%
3 Rarely 31 31%
4 Never 5 5%
5 Can’t say 18 18%
Total 100 100%
Graph No. 4.24 Analysis risk and reward component
Analysis risk and reward component
18% 16%
5%
Always
Sometimes
29%
Rarely
32%
Never
Can’t say
Data Analysis :-
The above table explains about the analyze risk and reward component of potential
investment alternative in which 16% respondents said Always, 29% respondents said
Page 78
Sometimes, 32% respondents said Rarely,5% respondents said Never, 18% respondents
said Can’t say.
After the analysing the data it can be seen the most of respondents Rarely analysis risk
and reward component of potential investment alternative
XXV. What thing should we know when invest in stock market?
Table No. 4.25 Basis Thing That Investor Should Know

Sr. Number Basis Thing That Investor No. of Percentage
Should Know respondent
1 Detailed knowledge of 20 20%

stock market.
2 To get more reward and 26 26%

return
3 Invest in top companies 19 19%

share to get more return of
investment
4 To get more money invest 30 30%

in stock market
5 Other 5 5%
Total 100 100%
Page 79
Graph No. 4.25 Basis Thing That Investor Should Know
Basis Thing That Investor Should

Know
5% Detailed knowledge of
stock market.
20%
To get more reward and
30% return
26% Invest in top companies

share to get more return
19% of investment
To get more money invest
in stock market
Data Analysis :-
The above table and graph explains about the thing should respondents know when
invest in stock market in which 20% of the respondents said Detailed knowledge of stock
market, 26% of the respondents said To get more reward and return, 19% of the
respondents said Invest in top companies share to get more return of investment, 30% of
the respondents said To get more money invest in stock market, 5% of the respondents
said Other.
After the analysing the data it can be seen the the maximum respondents invest in stock
market to get more money invest in stock market.
Page 80
XXVI. What is your suggestion for beginners who are interested to invest in stock
market?
Table No. 4.26 Suggestion For Beginners
Sr. Number Suggestion For No. of respondent Percentage
Beginners
1 Learn each and every 20 20%

concept before invest
2 Decide your risk reward 12 12%

ratio
3 Trade with stop loss 11 11%

facility
4 Do not greedy 12 12%
5 Do not trade with 11 11%

speculation or gambling
6 Invest if you like to take 14 14%

risk
7 Invest small amount 15 15%
8 There is risk, do not 5 5%

invest
Total 100 100%
Graph No. 4.26 Suggestion For Beginners
Suggestions
Learn each and every concept
5% before invest
20%
15% Decide your risk reward ratio
Trade with stop loss facility

14% 12%
Do not greedy
11%
11%
12% Do not trade with speculation
or gambling
Page 81
Data Analysis :-
The above table spells about the suggestion for beginners who are interested to invest in
stock market in which 20% respondents said Learn each and every concept before invest,
12% respondents said Decide your risk reward ratio, 11% respondents said Trade with
stop loss facility, 12% respondents said Do not greedy, 11% respondents said Do not
trade with speculation or gambling, 14% respondents said Invest if you like to take risk,
15% respondents said Invest small amount,5% respondents said There is risk, do not
invest
After the analysing of data it can be seen the the most of the respondents want to give
suggestion for beginners who are interested to invest in stock market is to invest small
amount.
Page 82
CHAPTER 5
FINDINGS, CONCLUSIONS AND SUGGESTIONS
5.1 FINDINGS
 It was found that 3% participants have age Up to 20, 60% between 21-30, 25%
between 31-40, 11% between 41-50 years, 1% have age Above 50.
 It was found that the respondents gender in which 84% respondents are male and
16% respondents are female having Marital Status of respondents 43%
respondents are married and 57% respondents are unmarried.
 It was found that the Educational Qualification of respondents in which 11%
respondents having education Below SSC, 31% having SSC, 22% HSC, 31% and
5% PG.
 The percent of monthly salary respondents save in which 26% respondents save
less than 20% , 22% respondents save over 50%, 24% respondents save between
20% -35% , 20% respondents save between 35% -50%, 8% respondents save
More than 50%.
 It was found that the option respondents prefer in risk and return point of view in
which 3% respondents said Debenture, 11% Nifty, 27% Stock, 19% Mutual
Fund, 23% Gold, 9% Bank fix deposit, 5% Real estate, 3 Debt securities.
 It was found that the From risk and return ratio which options respondents choose
in which 10% respondents said Intraday Trading, 11% Delivery Trading, 11%
Option Trading, 12% Margin Trading, 21% IPO Trading , 15% Future Trading
19% For Long Time Investment , 1% Other.
 It was found that the use any stock market app for collecting information about
stock in which 13% respondents said Money control, 11% said 5 paisa, 12% said
Stock Edge, 21% said Mint, 14% said Zerodha, 11% said Angel broking, 16%
said Upstock and 2% said Others.
 It was found that the Since how long respondents are investing in a stock market
in which 15% respondents said 3 months, 30% 6 Months, 26% 1 year, 25% More
than 1 year, 4% Upto 5 years.
Page 83
 It was found that the how much of amount should be invest in stock market in
which 25% respondents said 0 to 20000, 20% respondents said 20000 to 40000,
23% respondents said 40000 to 60000 , 21% respondents said 60000 to 80000,
11% respondents said 80000 or More.
 It was found that the share respondents prefer most in which 10% respondents
said High dividend payout share, 14% Capital appreciation share, 32% Depend
upon bull/bear market conditions, 11% Suggested by broker/friend, 5% More
volatile share, 13% Market sentiment, 11% Company brand, 4% Other.
 It was found that the what attracts respondents towards stock market in which
12% respondents said Reward, 20% Speculation,39% High return, 27% liquidity
of investment fund, 2% Other
 It was found that the the respondents motive to invest in stock market in which
23% respondents said To gain more income, 22% To do because interest in it,
30% It gives high return of investment than banks, post or other things 22% For
Learning Stock Market 3% As a Modern Type of Investment.
 It was found that the share market is best income source for everyone in which
20% respondents are Strongly Agree, 29% respondents are Agree, 31%
respondents are Neutral, 17% respondents are Disagree, 3% respondents are
Strongly Disagree.
 It was found that the respondents consider points when they choose stock for
investment in which 18% respondents said Investment amount of investor, 27%
Market capitalization of company, 27% Past performance of company, 16%
liquidity of stock, 12% financial statement of company.
 It was found that the risk respondents can take in which 20% respondents said
10% portfolio , 26% respondents said 20% portfolio, 27% respondents said 30%
portfolio, 18% respondents said 40% portfolio, 9% respondents said Other.
 It was found that the in which stock respondents mostly invest their money in
which 11% respondents said Penny stocks, 21% Blue chip stock, 28% Growth
stock, 14% Speculative stock, 12% Value Stock, 7% Cyclic stock, 7 Income
Stock.
 It was found that the what type of investor respondents are in which 16%
respondents said Risk Avoider, 15% Risk Embrace, 31% Risk Mitigator, 25%
Risk Averse, 13 % Risk Manager.
Page 84
 It was found that the suggestions to the investors who are freshers in the field of
stock market in which 25% respondents said Portfolio Making, 23% Regarding
Holding Period, 25% Technical Analysis, 22% Fundamental Analysis, 5% Chart.
 It was found that the respondents risk to reward ratio in which 21% respondents
said 1:1, 24% respondents said 1:2, 26% respondents said 1:3, 20% respondents
said 1:4, 9% respondents said 1:5.
 It was found that the how often do respondents indulge in risk reward analysis in
which 12% respondents said Always, 20% Rarely, 43% Sometimes, 20% Never,
5% Can't Say.
 It was found that the how often respondents take help of risk and reward ratio to
manage their risk of losing money on trades in which 14% respondents said
Always, 21% Never,36% Sometimes, 23% Can’t say, 6% Rarely.
 It was found that the how often do respondents face risk reward dilemma in
which 9% respondents said Always, 23% Never, 35% Sometimes, 23% Can’t
say, 10% Rarely.
 It was found that the analyze risk and reward component of potential investment
alternative in which 16% respondents said Always, 29% Sometimes, 32%
Rarely,5% Never, 18% Can’t say.
 It was found that the thing should respondents know when invest in stock market
in which 20% of the respondents said Detailed knowledge of stock market, 26%
To get more reward and return, 19% Invest in top companies share to get more
return of investment, 30% To get more money invest in stock market, 5% of the
 It was found that the suggestion for beginners who are interested to invest in
stock market in which 20% respondents said Learn each and every concept before
invest, 12% Decide your risk reward ratio, 11% Trade with stop loss facility,
12% Do not greedy, 11% Do not trade with speculation or gambling, 14% Invest
if you like to take risk, 15% respondents said Invest small amount,5 There is risk,
do not invest.
Page 85
5.2 CONCLUSIONS
 Most of the respondents having age between 21-30
 Most of the respondents are male having Marital Status are marrie
 Most of the respondents having Educational Qualification are UG.
 Most of the respondents save between 20% -35%.
 Maximum respondents prefer in risk and return point of view are Stock.
 Most of the respondents choose IPO trading as a risk and return ratio.
 Many of the respondents use Mint stock market app for collecting information
about stock.
 Majority of the respondents investing in a stock market since 6 Months.
 Maximum number of respondents invest 0 to 20000 amount in stock market.
 Most of the respondents prefer shares Depend upon bull/bear market conditions.
 Majority of the respondents said High return attracts them towards stock market
 Maximum number of respondents motive to invest in stock market is It gives
high return of investment than banks, post or other things.
 Most of the respondents are neutral that share market is best income source for
everyone.
 Majority of the respondents consider Market capitalization of company and Past
performance of company.
 Most of the respondents can take portfolio risk.
 Majority of the respondents mostly invest their money in Growth stock.
 Majority of the respondents are Risk Mitigator type of investor.
Page 86
 Majority of respondents want to give suggestions to the investors who are
freshers in the field of stock market for Portfolio Making, and Technical
Analysis.
 Most of the respondents risk to reward ratio is 1:2.
 Maximum number of respondents Sometimes indulge in risk reward.
 Majority of the respondents sometime take help of risk and reward ratio to
manage their risk of losing money on trades.
 Most of the respondents sometime face risk reward dilemma and analyze risk and
reward component of potential investment alternative.
 Maximum respondents invest in stock market To get more money invest in stock
market.
 Most of the respondents want to give suggestion for beginners who are interested
to invest in stock market is to Invest small amount.
Page 87
5.3 SUGGESTIONS
 Better analysis tools should be used to make better predictions

 It is recommended that investors decision should be based on their broker advice
 Risk and return should be evaluated before making an investment decision
 There should be a regular SMS updates to the investors regarding their
investment
 Those investors who want to avoid risk should invest in treasury notes or high
rated municipal bonds and debenture etc.
 Company should also provide knowledge about the growth rate and the expected
growth rate of investment in share market
 Most of people aware of life insurance, NSC and PPF for tax saving so, company
should market various tax saving schemes through share market and their
benefits.
 The interface among the investors and the share market is the broker, so the
broker should have proper knowledge about investment schemes as well as
market so that they can help investors in their investment decisions. The quality
of agents performance and investors trust on them can be improved only if they
are permanent in nature.
 For new investors who wish to invest in the capital market, it is better to invest
for long term as the sexsex is experiencing the huge fluctuations. Also the market
is highly volatile.
 The stock market is characterized by the trade-off between risk and return. The
higher the risk the investor is willing and able to take, the higher the potential
rewards from the investment. Therefore, if a particular investment offers you high
returns, it is an indication that it will come with a high risk burden.
 As part of the selection process, investor should determine the risk level of the
stock as well as their risk tolerance. If they are looking for high returns they
should be able to meet high potential losses as well.
 There is no safe investment that will provide investors with high returns over a
short period of time. Therefore, investor should direct their resources toward
long-term Investments that are more likely to reward you for the patience with
high returns.
Page 88
APPENDICES
BIBLIOGRAPHYY
BOOKS:
1. The Intelligent Investor- Benjamin Graham
2. Stock to reaches- Parag Parik
3. Guide to Indian Stock Market- Jitendra Gala
ARTICLES:
Factors Influencing Individual Investor Behaviour
JOURNAL:
 Syndey C. Ludvigson, Serena Ng “The empirical risk return relation: a factor
analysis approach” National bureau of economic research 1050 Massachusetts
Avenue, Cambridge, MA 02
 Mitchell M,Pulvino T.characteristics of risk and return in risk arbitrage.the journal

of finance.2001;56(6):2135-75
 Ross S. Arbitrage,Risk Return in Finance ed.I.Friend and J

Bicksler,Cambridge,MassBallinger.1976
.
 Flannery M J, Hameed AS, Harjes RH. Asset pricing,time-varying risk premia and
interest rate risk.Journal of Banking & Finance.1997;21(3):315-35.
 Lajeri F, Dermine J.Unexpected inflation and bank stock returns:The case of france
1977-1991.Journal of Banking & Finance.1999;23(6):939-53.
 Amihud Y, Christensen BJ,Mendelson H. Further evidence on the risk-return

relationship: Graduate School of Business, Stanford University;1992.
 Salman F.Risk-return-volume relationship in an Emerging Stock Market. Applied

Economics Letters 9.2002:549-52
 Fama EF, Cooper GM. Risk-Return classes of New York stock exchange common
stock,1931-1967.Financial Analysts Journal.1972;28(2):46-54.
Page 89
 Tang GY, Shum WC. The relationships between unsystematic risk,skewness and
stock returns during up and down market.International Business
Review.2003;12{5}:523-41
 Dr.S. Krishnaprabha and Mr.M vijayakumar (2015),” Astudy on Risk and Return
Analysis of Selected Stock in India”,International Journal of Scientific Research and
Mangement,Vol./3,Issue/4,Page/2550-2554.
 Ackermann,Carl,Richard McEnally,and David Ravenscraft,1999,the performance of

hedge funds:Risk,return,and incentives,The Journal of Finance 54,833-874.
 P.V.V. Kumar and P.K.Singh,”A study of return,liquidity of sectoral indices, market

index return of Indian financial market (BSE),” International Journal of Research in
Commerce & Mangement, vol. 2,no.6,pp.1-8,2011.
 Gangan Deep Sharma et.al,(2012). Rewards and Risk in stock Markets: A Case of
South Asia.The International Journal of Applied Economics and Finance,6(2), 37-
52.
 Ghysels,Eric,Pedro Santa-Clara, and Rossen Valkanov.(2005).”There is a risk-return

tradeoff after all.” Journal of Finance Economics 76.3:509-548
 Campbell, John Y., and Viceira,L.(2005),the term structure of the risk-return

tradeoff.No. w11115.National Bureau of Economic Research
 . Frey and A. J. McNeil (2005). Quantitative risk management: concepts, techniques

and tools. Princeton: Princeton University Press
 . Santa - Clara, and R. Valkanov (2005). There is a risk-return trade-off after all.
Journal of Financial Economics 76, 509–52
WEBSITE:
1. https://www.thebalance.com/understanding-risk-3141268
2. https://www.investopedia.com/articles/stocks/11/calculating-risk-reward.asp
3. https://finance.zacks.com/advantages-investing-stock-market-2054.html
4. https://in.stockinfinities.com/tutorial/1576239521/advantages-and-disadvantages-
investing-stock-market46f13460
5. https://www.moneycrashers.com/risks-investing-stock-market-volatility-timing-
overconfidence/
Page 90
QUESTIONNAIRE
I the undersigned Monika Apale is the bonafied student of Department of Business

Administration and Management, Sant Gadge Baba Amravati University, Amravati of MBA
Program (2019-2021) and has Undertaken the dissertation titled- “ A study of The Risk And
Reward of Stock Market Investors”. I am colleting the data for the above Dissertation
through the questionnaire.
Kindly complete the questionnaire and oblige me. The data so collected shall be only
used for the academic purpose.
Thanking you !
Monika Apale
MBA 2nd Year
(2019 – 2021)
Personal Information
1) Name :
2) Age
a) Up to 20 b) 21-30
c) 31-40 d) 41-50
e) Above 50
3) Gender
a) Male b) Female
c) Transgender
4) Marital Status
a) Married b) Unmarried
c) Divorced d) Widow
5) Contact No.
6) Education Qualification
Page 91
a) Below SSC b) SSC

c) HSC d) UG
e) PG
7) What percent of your monthly salary do you save?

a) less than 20% b) over 50%
c) between 20% -35% d) between 35% -50%
e) More than 50%
Topic Related Question :-

1] Which option do you prefer from the following risk and return point of view?
A] Debenture B] Bank Nifty
C] Stock D] Mutual Fund
E] Gold F] Bank fix deposit
G] Real estate H] Debt securities
2] From risk and return ratio which options do you choose from following?
A] Intraday Trading B] Delivery Trading
C] Option Trading D] Margin Trading
E] IPO Trading F] Future Trading
G] For Long Time Investment H] Other
3] Do you use any stock market app for collecting information about stock?
A] Money control B] 5 paisa
C] Stock Edge D] Mint
E] Zerodha F] Angel broking
G] Upstock H] Others
4] Since long you are investing in a stock market?

A] 3 months B] 6 Months
C] 1 year D] More than 1 year
E] Upto 5 years
Page 92
5] As per your experience, how much of amount should be invest in stock market?
A] 0 to 20000 B] 20000 to 40000
C] 40000 to 60000 D] 60000 to 80000
E] 80000 or More
6] Which share do you prefer most?

A] High dividend payout share B] Capital appreciation share
C] Depend upon bull/bear market conditions D] Suggested by broker/friend
E] More volatile share F] Market sentiment
G] Company brand H] Other
7] What attracts you towards stock market?

A] Reward B] Speculation
C] High return D] liquidity of investment fund
E] Other
8] What is your motive to invest in stock market?

A] To gain more income
B] To do because interest in it
C] It gives high return of investment than banks, post or other things
D] For Learning Stock Market
E] As a Modern Type of Investment
9] Can share market is best income source for everyone?

A] Not for everyone but for limited / knowledgeable people
B] Other options are available, it is better than stock market
C] Related to other options, stock market gives rapid growth
D] The more you know the more you grow
E] Other
Page 93
10] When you choose your stock for investment then which stock of point you consider?
A] Investment amount of investor
B] Market capitalization of company.
C] Past performance of company
D] liquidity of stock
E] financial statement of company.
11] How much risk you can take?

A] 10% portfolio B] 20% portfolio
C] 30% portfolio D] 40% portfolio
E] Other
12] In which stock you mostly invest your money?

A] Penny stocks B] Blue chip stock
C] Growth stock D] Speculative stock
E] Value Stock F] Cyclic stock
G] Income Stock
13] What type of investor you are?

A] Risk Avoider B] Risk Embrace
C] Risk Mitigator D] Risk Averse
E] Risk Manager
14] What will you suggest to the investors who are freshers in the field of stock market?
A] Portfolio Making B] Regarding Holding Period
C] Technical Analysis D] Fundamental Analysis
E] Chart
15] What is your risk to reward ratio?

A] 1:1 B] 1:2 E] 1:5
C] 1:3 D] 1:4
Page 94
16] How often do you indulge in risk reward analysis?

A] Always C] Rarely
B] Sometimes D] Never
E] Can't Say
17] How often you take help of risk and reward ratio to manage your risk of losing money on
trades?
A] Always B] Never
C] Sometimes D] Can’t say
E] Rarely
18] How often do you face risk risk reward dilemma?

A] Always B] Never
E] Rarely
19] Do you analyze risk and reward component of potential investment alternative?
A] Always B] Never
E] Rarely
20] Clarify the relation between risk and return for individual investor?
A] Risk high, Return high B] Risk low, Return low
C] Moderate Risk D] Moderate Return
E] Ratio of Risk and Return
21] What thing should we know when invest in stock market?

A] Detailed knowledge of stock market.
B] To get more reward and return
C] Invest in top companies share to get more return of investment
D] To get more money invest in stock market
E] Other
Page 95
22] What is your suggestion for beginners who are interested to invest in stock market?
A] Learn each and every concept before invest
B] Decide your risk reward ratio
C] Trade with stop loss facility
D] Do not greedy
E] Do not trade with speculation or gambling
F] Invest if you like to take risk
G] Invest small amount
H] There is risk, do not invest
Page 96

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A Study of the Risk and Reward of Stock Market Investors

Under the guidance of

In partial fulfillment of the requirements

SANT GADGE BABA AMRAVATI UNIVERSITY

Under the Guidance of

In partial fulfillment of the requirements For

MASTER OF BUSINESS ADMINISTRATION

SANT GADGEBABA AMRAVATI UNIVERSITY, UNIVERSITY CAMPUS, AMRAVATI - 444 602

This is to certify that the research entitled,

A Study of the Risk and Reward of Stock Market Investors

In partial fulfillment of the conditions for the award of degree of Master of

one academic year.

ii) The dissertation is of sufficiently high standard to warrant its

presentation for examination.

Date: Prof. A. S. Lasankar

It is my pleasure to place on record my sincere

I deem it a great pleasure and privilege to offer

SR NO CHAPTER NO CONTENTS PAGE NO

7 III Research Methodology 43

8 IV Data Interpretation & Data Analysis 50

9 V Finding, Conclusion & Suggestions 83

Sr No Chapter No Contents Page No

2 1.1 What is Risk 3

3 1.2 what is Reward 5

4 1.3 Risk and Reward Ratio 6

5 1.4 How does risk reward work. 6

6 1.5 Important of Risk Reward Ratio 7

7 1.6 How is Risk Reward Ratio calculate 7

8 1.7 Limitations of Risk reward ratio 10

9 1.8 Relationships between Risk and Reward stock 10

10 1.9 Concept of Stock market 18

11 1.10 Historical Evolution of Indian stock market 20

12 1.11 Objective of study 26

15 2.2 why do we write literature reviews 27

17 2.4 literature review 28

18 III RESEARCH METHODOLOGY 43 – 49

20 3.2Research problem Definition 44

22 3.4 objective of Research 45

23 3.5 Hypothesis of Research 45

24 3.6 Research Methodology 46

26 3.8 Scope and Limitations 49

27 3.9 limitations of Research study 49

28 IV DATA INTERPRETATION AND DATA 50 - 82

30 V FINDINGS, CONCLUSIONS AND 83 - 88

14 4.14 Share Market Is Best Income Source 65

14 4.14 Share Market Is Best Income Source 66

The completion of research involved three phases :

1. First Phase : collection of secondary and primary dada. Secondary were

Limitations of the study :

 Research is limited to one year only.

 The survey is conducted only in Amravati city

 The study is based on academic proposes only.

Many studies argue the importance of risk-return relationship in a stock market.

1.1 What is Risk?

Inflation is a general upward movement of prices. Inflation reduces purchasing power,

Interest rate risk:

Is there any Guarantee?

the U.S. Government. Securities Investors Protection Corporation (SIPC) – Securities

1.2 What is Reward ?

1.3 Risk and Reward Ratio :

1.4 How does Risk Reward work :

1.5 Importance of risk and reward ratio :

1.6 How is risk reward ratio calculated :