COMPARATIVE STUDY BETWEEN INVESTMENT IN STOCKS, MUTUAL FUNDS AND ULIPS By Anant Bhushan (082600024) Prateek Pandey (082600126)

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

DEPARTMENT OF COMMERCE, MANIPAL-576104

COMPARATIVE STUDY BETWEEN INVESTMENT IN STOCKS, MUTUAL FUNDS AND ULIPS Conducted for FairWealth Securities Limited, Dehradun Summer Group Project Report Submitted In partial fulfillment of the requirement FOR THE AWARD OF BACHELORS DEGREE BBM [e-BANKING & FINANCE] By Anant Bhushan (082600024) Prateek Pandey (082600126) Karan Gupta (082600188) thth During 12,May 25,June 2010 Under the Guidance of FACULTY GUIDE COMPANY GUIDE Mr. S. SaiSachidhananda, Lecturer Ms.Swati Singh, Territory Head Department of Commerce, Manipal University, Manipal-576104

DECLARATION We, the students of BBM [e-Banking & Finance], Department of Commerce, Manipal University, declare that the Project Report entitled COMPARATIVE STUDY BETWEEN INVESTMENT IN STOCKS,MUTUAL FUNDS AND ULIPS , being submitted to the Department of Commerce, Manipal University, in partial fulfilme nt of the requirements for the award of Degree of BBM [e-Banking & Finance], is our origin al work and the same is / was not earlier submitted to any other Degree, Diploma, Fellow ship or any other similar title or prizes. Anant Bhushan (0082600024) Prateek Pandey (082600126) Karan Gupta (082600188) Date:

ACKNOWLEDGEMENT It gives us immense pleasure to acknowledge and thank all those who have given c onsistent guidance, advice and encouragement in our endeavor. We would also like to thank all those persons who have spent their valuable time to contribute the required informatio n to us and gave us support while preparing this report. We gratefully acknowledge our sincere gratitude to Mr. S. SaiSachidhananda for h is kind guidance and helpful suggestions in every stage of the preparation of this repor t. We are also grateful Mr.Sandeep Shenoy Incharge/Coordinator, Department of Commerce, Manipal University . We wish to extend our deep and sincere gratitude to Mr. Charanjeet Ratan and Mr. Himanshu Singh Bisht who provided us with their guidance from day one in Fairwealth, Dehr adun and also helped us whole heartedly to achieve the ultimate goal of the project. Anant Bhushan Prateek Pandey Karan Gupta

CONTENTS PAGE LIST OF CHARTS Chart1:Equity Brokerage Turnover for period 07-10 1 Chart2:Sample Size Calculator 13 Chart 3: Scatter plot on Regular and steady income and Reasonableness of amount of investment for Bank Deposits. 30 Chart 4: Scatter plot on Provision of premature withdrawal facility and Liquidit y of investment for Bank Deposits. 31 Chart 5: Scatter plot on Higher collateral quality of investment and Low intensity of risk for Bank Deposits. 32 Chart 6: Scatter plot on The Chances of capital appreciation and Liquidity of investment for Bank Deposits 33 Chart 7: Scatter plot on Regular and steady income and Reasonableness of amount of investment for Equity . 34 Chart 8: Scatter plot on Provision of premature withdrawal facility and Liquidit y of investment for Equity . 35 Chart 9: Scatter plot on Higher collateral quality of investment and Low intensity of risk for Equity . 36 Chart 10: Scatter plot on The Chances of capital appreciation and Liquidity of investment for Equity 37 Chart 11: Scatter plot on Regular and steady income and Reasonableness of amount of investment for Life Insurance 38

Chart 12: Scatter plot on Provision of premature withdrawal facility and of investment for Life Insurance 39 Chart 13: Scatter plot on Higher collateral quality of investment and Low intensity of risk for Life Insurance 40 Chart 14: Scatter plot on The Chances of capital appreciation and Liquidity of investment for Life Insurance 41 Chart 15: Scatter plot on Regular and steady income and Reasonableness of amount of investment for Mutual Funds 42 Chart 16: Scatter plot on Provision of premature withdrawal facility and Liquidi ty of investment for Mutual Funds. 43 Chart 17: Scatter plot on Higher collateral quality of investment and Low intensity of risk for Mutual Funds. 44 Chart 18: Scatter plot on The Chances of capital appreciation and Liquidity of investment for Mutual Funds 45 LIST OF TABLES Table 1:Descriptive Statistics on Bank Deposits 22 Table 2:Descriptive Statistics on Equity 24 Table 3:Descriptive Statistics on Life Insurance 26 Table 4:Descriptive Statistics on Mutual Funds 28 Table 5: Chi Square Test on Regular and steady income and Reasonableness of amount of investment for Bank Deposits 30 Table 6: Chi Square Test on Provision of premature withdrawal facility and Liquidity of investment for Bank Deposits 31

Table 7: Chi Square Test on Higher collateral quality of investment and Low intensity of risk for Bank Deposits 32 Table 8: Chi Square Test on Chances of capital appreciation and Liquidity of investment for Bank Deposits 33 Table 9: Chi Square Test on Regular and steady income and Reasonableness of amount of investment for Equity 34 Table 10: Chi Square Test on Provision of premature withdrawal facility and Liquidity of investment for Equity 35 Table 11: Chi Square Test on Higher collateral quality of investment and Low intensity of risk for Equity 36 Table 12: Chi Square Test on Chances of capital appreciation and Liquidity of investment for Equity 37 Table 13: Chi Square Test on Regular and steady income and Reasonableness of amount of investment for Life Insurance 38 Table14: Chi Square Test on Provision of premature withdrawal facility and Liquidity of investment for Life Insurance 39 Table 15: Chi Square Test on Higher collateral quality of investment and Low intensity of risk for Life Insurance 40 Table 16: Chi Square Test on Chances of capital appreciation and Liquidity of investment for Life Insurance 41 Table 17:Chi square test on Regular and steady income and Reasonableness of amount of investment for Mutual Funds 42 Table 18:Chi square test on Provision of premature withdrawal facility and Liquidity of investment for Mutual Funds 43 Table 19:Chi square test on Higher collateral quality of investment and Low intensity of risk for Mutual Funds 44

Table 20:Chi square test on Chances of capital appreciation and Liquidity of investment for Mutual Funds 45 Chapter 1 Introduction 1-11 Chapter 2 Research Design 11-20 Chapter 3 Industry / Company Profile 21 Chapter 4 Data Analysis 22-45 Chapter 5-Findings 46 Chapter 6 Suggestions 47 Chapter 7 Conclusion 48 APPENDIX Annexure 1: Bibliography Annexure 2: Questionnaire 46 Chapter 6 Suggestions 47 Chapter 7 Conclusion 48 APPENDIX Annexure 1: Bibliography Annexure 2: Questionnaire

ABBREVATIONS AMC-Asset Management Company F&O-Futures and Options FY-Financial Year ICRA-Investment Information and Credit Rating Agency of India ICT-Information and Communication Technology IPO-Initial Public Offer NSE-National Stock Exchange Q1-1st Quarter of the Financial Year Q2-2nd Quarter of the Financial Year Q3-3rd Quarter of the Financial Year Q4-4th Quarter of the Financial Year RHS-Right Hand Side SEBI-Securities Exchange Board of India Std. Deviation/S.D.-Standard Deviation ULIPs-Unit Linked Insurance Plans VSAT-Very Small Aperture Terminal

ABSTRACT With the growth of the Indian economy and rise in the wealth of the people, ther e is growing demand for Wealth Management functions. Wealth Management involves understanding the clients financial requirements and accordingly providing financ ial planning services. Wealth Managements professionals emphasize that customer beha viour and psychology play a vital role in successfully building and sustaining a Wealt h Management relationship. Behavioural finance is new emerging science which focus es on understanding how psychology affects investment decision. Investors perceptions a ffect individuals investment decisions. This study investigates how investment choice g ets affected by the demographics and perceptions of the investor. Such knowledge wil l be highly useful to the financial advisors as it will help them advise their client s regarding investments which are appropriate with respect to their demographic profile. The study provides evidence that the investment choice depends on and is affected by the demographic variables and perceptions. Risk is a distinct attribute for each ind ividual for the reason that what is perceived by one person as a major risk may be perceived by another as a minor risk. Risk is a normal aspect of everyone s daily lives; there is no such thing as a judgment with zero risk or without a degree of uncertainty. Risk perc eption is the way people see or feel regarding a potential danger or hazard. The study involved a survey in city of Dehradun under banner name of Fairwealth Securities Limited. Various kinds of perceptions of investors regarding bank dep osits, investment in equity, mutual funds and ULIPs were involved in this survey. The s urvey covered only urban population of the city. All the respondents were investors at least in one of the four avenues if not all .The sample size for the survey of 170 was ca lculated by online calculator of Creative Research Systems for population of 447,808 (Census 2 001 for Dehradun) with a confidence interval of 95%. The inputs were analysed using a

software tool called SPSS 11.5 for Windows. The mathematical models of Standard Deviation, Chi-Square Tests and Scatter Plots were used to interpret the collect ed data. It was observed that most of the investors were unaware of latest investment ave nues and most of them perceive bank deposits as an investment avenue. Most of them were r eluctant to invest in equity market; they associate it with a very high degree of risk an d less return giving avenue. Only few had knowledge about products like Mutual Funds. Many respondents were unaware about different types of insurances use insurances just for tax rebates , their objective is not risk cover or investment for future.

Chapter-1 Introduction Outlook on brokerage industry

Chart1: Equity Brokerage Turnover for period 07-10 Second highest trading turnover reported in Q1 FY09-10; expected to remain range bound, going forward; though intermittent volatility to persist Domestic equity brokerage volume reported a growth of 66% in Q1 FY09-10 on a seq uential quarter on quarter basis (42% on year on year basis) aided by increasing stock p rices, easing of global concerns and a stable government at the Center. In-fact, brokerage tur nover in Q1 FY09-10 was second only to the highest ever volume recorded in Q3 FY07-08. The g rowth in Q1 FY09-10 was not driven by the derivative segment but by the cash segment whic h accounted for 27% of the total turnover, same as that in Q3 FY07-08, while in Q4 FY08-09 cash segment had accounted for only 23% of the total turnover. Equity brokerage turnover in Q1 FY09-10 alone equalled 36% of the total turnover in FY08-09 signalling that F Y09-10

may not be as bad as FY08-09 or may even see some growth during the year. Howeve r, given the prevailing uncertainty in global market which could jeopardise Indian counte rparts as well, ICRA expects high volatility to continue for a while both in terms of stoc k prices and also in trading turnover. Brokerage yield to continue declining, though only marginally ICRA expects brokerage yield to remain under pressure with increasing competitio n and changed dynamics with a few of the players offering a flat fee structure. The av erage broking yields have declined from 7-8 basis points to around 5-6 basis points in the las t few years. However, the fall going forward, is not expected to be as steep and ICRA does no t expect the average broking yields to go below 4 basis points over the medium term. In ICRA s view, post recent market turmoil, traders / investors would be more willing to trade t hrough brokerage houses with sound risk management systems & adequate liquidity in orde r to protect their own capital, even if it means premium brokerage rates. Other non-broking business operations to remain under pressure for a while Other non-broking business operations like merchant banking, distribution of fin ancial products, wealth management services are also expected to remain under pressure in FY09 10. Although stock prices have shown an increasing trend in the first quarter of FY09-10 and many IPOs are also lined up for this financial year, ICRA expects the revenue co ntribution from merchant banking services to remain low as compared to FY07-08. Distributio n income is also expected to be significantly impacted with SEBI abolishing the entry loa d on mutual fund schemes and with the possible shift in insurance products more in favour of non-unit linked plans in the current volatile capital markets. Insurance commission on no n-unit linked products is lesser than on unit linked products. However, arbitrage trading is e xpected to see

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

Equity Most often, investors and asset managers act according to certain guidelines whi ch, however, are not universal and they change over time. For instance, many experts now beli eve that the buy and hold time of equities which prevailed in the decades after World War II is past. Therefore, a portfolio of securities has to be dynamically controlled. Technical and fundamental analysis is a way of providing the needed control information. But a nalysis also requires an inquisitive mind, lots of skill pertinent to investment and a great deal of homework. Doing one s homework as an investor is a better guide than taking wholes ale advice from experts. Still, the experts do matter (more on this later). The seve nth golden rule for traders and investors is that they should always do their homework in a way which is meticulous but not arrogant. When people get a big ego, they acquire a one-track mind, forsake risk control and eventually pay dearly for this failure. The ups and dow ns characterizing different in equities document the wisdom behind the dictum, Do no t invest any more money that you are prepared to lose , as well as of another sound piece o f advice: Do not put all of your investments into one asset class or sector. Every initiativ e the investor takes has an associated execution risk. Hence the need to be always ready to imp lement damage control. Financial history says that, four centuries ago, Dirck Pietsersz Staetmaker, a Dutch citizen, was the first person to receive a formal share certificate. This confirmed he was the owner of 60 guilders (about $900 in today s money) of shares in Verenidge Oost Indische Compagnie (VOC) the United Dutch East India Company. By all accounts, t his was the first initial public offering on record. The equity certificate made Sta etmaker part owner of a company which issued shares to the public, and had them publicly trad ed. The concept of shareholder equity has significantly evolved since that time, to incl ude on the financial side common stock, preferred stock, convertible bonds; concepts associ ated with 4

ordinary capital, reserves and general provisions; profits and losses; market ca pitalization; subordinated liabilities; net unrealized securities; the impact of interest rate risk and foreign currency risk; and exposures associated with derivative financial instruments. Today, an investor informs a broker to place an order on his behalf. The broker enters the order through his PC, which runs under Windows NT (Windows New Technology) and s end signal to the Satellite via VSAT/leased line/modem. The signal is directed to ma inframe computer at NSE via VSAT at NSE's office. A message relating to the order activi ty is broadcast to the respective member. The order confirmation message is immediatel y displayed on the PC of the broker. This order matches with the existing passive order(s), otherwise it waits for the active orders to enter the system. On order matching, a message is broadcast to the respective member. The trading system operates on a strict price time priority. All orders received on the system are sorted with the best priced order getting the first priority for matching i. e., the best buy orders match with the best sell order. Similar priced orders are sorted on time priority basis, i.e. the one that came in early gets priority over the later one. Orders are mat ched automatically by the computer keeping the system transparent, objective and fair .

Mutual Funds Mutual funds are recognized as a mechanism of pooling together the investment of unsophisticated investors and turn in the hands of professional fund managers fo r consistent return along-with capital appreciation. Money collected in this process is then invested in capital market instrument such as shares, debentures and other securities. Final ly, unit holders in proportion of units owned by them share the income earned through these inves tments and capital appreciation. Mutual funds put forward a way out to investors to approac h most schemes and get well-diversified portfolio because investors with small savings neither have sufficient expertise nor have access to required diversification. Mutual funds h ave already entered into a world of exciting innovative products. These products are now tai lor made to suit specific needs of investors. Intensified competition and involvement of pri vate players in the race of mutual funds have forced professional managers to bring innovation i n mutual funds. Thus, mutual funds industry has moved from offering a handful of schemes like equity, debt or balanced funds to liquid, money market, sector specific funds, index fun ds and gilt edged funds. Beside this recently mutual funds have also introduced some special specific funds like children plans, education plans, insurance linked plans, and exchange traded funds. The result is that over the time Indian investors have started shifting towards mutual funds instead of traditional financial avenues. Diversification in mutual funds is com ing up with many new faces and as a result Indian mutual fund industry has been growing exce ptionally well on the back of country s booming economy but still further mutual funds need to create more lucrative solutions to suit investor s expectations. The active involvement o f mutual fund in economic development can be witnessed from dominant presence of mutual f unds in worldwide capital and money market. Although mutual funds industry is responding very quickly to dynamism in investor s perception towards rewards still they are contin uously

following this race in their endeavour to differentiate their products respondin g to sudden changes in the economy. These acts of innovation include both invention and diff usion that persist to address information asymmetries. Mutual funds as blessed with profess ional management use their diligent skills for efficient resource allocation by making markets more efficient, bringing transparency and foremost important risk management. Automat ed approaches designed by new technology and data mining is helping AMC s of mutual f unds in strategic planning and investment decision making by uncovering the hidden pa tterns and predict future trends and behaviour in financial markets. Intensive global compe tition and ICT enabled tools are promoting more demanding investors everyday. To satisfy th e needs of investors mutual funds are designing more lucrative and innovative tools consider ing the appetite for risk taking of individual investors. While designing these innovati ve fund scheme AMCs mainly consider for risk return trade off and after completely evaluating t he various securities on various risk parameters new fund scheme is launched that can satis fy the quest of every investor to maximize the returns. Although risk and return are the two prime concerns for any mutual fund investment but investor s also go for sale charges, f und manager s reputation, fund history, management fees, clarity in disclosure, and recommendation from media. So, whether it is a winner s game or loser s game the tri ck is to access the level of risk that investor wishes to assume and make certain that co llection of assets fulfil their risk expectations. A successful investor is one who strives to achieve not less than rate of return consistent with risk assumed. Thus, it becomes imperati ve for the Mutual funds AMCs to judge the presence of rationality in investment behaviour.

Pros & cons of investing in mutual funds: For investments in mutual fund, one must keep in mind about the Pros and cons of investments in mutual fund. Advantages of Investing Mutual Funds: 1. Professional Management -The basic advantage of funds is that, they are profe ssionally managed, by well qualified professional. Investors purchase funds because they d o not have the time or the expertise to manage their own portfolio. A mutual fund is consid ered to be relatively less expensive way to make and monitor their investments. 2. Diversification -Purchasing units in a mutual fund instead of buying individu al stocks or bonds, the investors risk is spread out and minimized up to certain extent. The idea behind diversification is to invest in a large number of assets so that a loss in any p articular investment is minimized by gains in others. 3. Economies of Scale -Mutual fund buy and sell large amounts of securities at a time, thus help to reducing transaction costs, and help to bring down the average cost of t he unit for their investors. 4. Liquidity -Just like an individual stock, mutual fund also allows investors t o liquidate their holdings as and when they want. 5. Simplicity -Investments in mutual fund is considered to be easy, compare to o ther available instruments in the market, and the minimum investment is small. Most A MC also have automatic purchase plans whereby as little as Rs. 2000, where SIP start wit h just Rs.50 per month basis. 8

Disadvantages of Investing Mutual Funds: 1. Professional Management-Some funds do not perform in neither the market, as t heir management is not dynamic enough to explore the available opportunity in the mar ket, thus many investors debate over whether or not the so-called professionals are any be tter than mutual fund or investor himself, for picking up stocks. 2. Costs The biggest source of AMC income is generally from the entry & exit loa d which they charge from investors, at the time of purchase. The mutual fund industries are thus charging extra cost under layers of jargon. 3. Dilution -Because funds have small holdings across different companies, high returns from a few investments often don't make much difference on the overall return. Diluti on is also the result of a successful fund getting too big. When money pours into funds that ha ve had strong success, the manager often has trouble finding a good investment for all the new money. 4. Taxes -when making decisions about your money, fund managers don't consider y our personal tax situation. For example, when a fund manager sells a security, a cap ital-gain tax is triggered, which affects how profitable the individual is from the sale. It migh t have been more advantageous for the individual to defer the capital gains liability. 9

Platforms of Life Insurance-Unit Linked Insurance Plans World over, insurance come in different forms and shapes. although the generic n ames may find similar, the difference in product features makes one wonder about the basi s on which these products are designed .With insurance market opened up, Indian customer ha s suddenly found himself in a market place where he is bombarded with a lot of jargon as we ll as marketing gimmicks with a very little knowledge of what is happening. This modul e is aimed at clarifying these underlying concepts and simplifying the different products a vailable in the market. We have many products like Endowment, Whole life, Money back etc. All th ese products are based on following basic platforms or structures viz. Traditional Life Universal Life or Unit Linked Policies TRADITIONAL LIFE AN OVERVIEW

The basic and widely used form of design is known as Traditional Life Platform. It is based on the concept of sharing. Each of the policy holder contributes his contributio n (premium) into the common large fund is managed by the company on behalf of the policy hol ders. Administration of that common fund in the interest of everybody was entrusted to the insurance company .It was the responsibility of the company to administer scheme s for benefit of the policyholders. Policyholders played a very passive roll. In the c ourse of time, the same concept of sharing and a common fund was extended to different areas li ke saving , investment etc. ULIP is the Product Innovation of the conventional Insurance product. With the d ecline in the popularity of traditional Insurance products & changing Investor needs in terms of life protection, periodicity, returns & liquidity, it was need of the hour to have an Instrument that offers all these features bundled into one.

An equity share is evidence of ownership in a company. The equity shareholders a re entitled to vote on company resolutions and share the company s prosperity by receiving div idend. Return from investment in shares comes in two forms-capital appreciation and div idends. Capital appreciation takes place when there is increase in the price of shares. Mutual funds collect money from a large group of investors, pool it together and invest it in various securities, in line with their objective. Mutual funds are an alternativ e to investing directly. These popular investment products are offered by institutions with a strong fina ncial strength and professional expertise. As a result, investment market turns itself into hig hly competitive market. The success of each institution offering investment products depends on degree of favourableness they have earned for themselves in the minds of the investors. A Unit Link Insurance Policy (ULIP) is one in which the customer is provided with a life ins urance cover and the premium paid is invested in either debt or equity products or a combinat ion of the two. In other words, it enables the buyer to secure some protection for his fami ly in the event of his untimely death and at the same time provides him an opportunity to earn a return on his premium paid. In the event of the insured person's untimely death, his nominees would normally receive an amount that is the higher of the sum assured or the value of the units (investments). To put it simply, ULIP attempts to fulfil investment needs of an investor with protection/insurance needs of an insurance seeker.

Chapter-2 Research Design Objectives of the Study . To identify the perceptions of individual investors. . To study whether investors prefer investment in stock market , mutual funds or U LIPS . To study the approach of investors towards equity shares, mutual funds ,Life Ins urances & Fixed Deposits Limitations No study is free from limitations. The limitations of this study can be: . Sample size taken is small and may not be sufficient to predict the results with 100% accuracy. . The result is based on primary and secondary data that has it s own limitations. . Reluctance of respondents to disclose data reduced the accuracy . Few respondents could have been biased in their opinion . The study only covers the area of Dehradun that may not be applicable to other a reas.

Sample A sample of 170 respondents / investors has been taken on the basis of simple ra ndom sampling technique from the city of Dehradun. The respondents include businessme n, employees, and house wives who have inclination to invest in shares and other fi nancial instruments. Chart 2: The sample size for population of 447,808 in Dehradun (as per Census 20 01) was 170 with confidence level of 95%. It involved the use of Sample Size Calculator of C reative Research Systems available online (http://www.surveysystem.com/sscalc.htm)

Methodology The study used descriptive research design, particularly survey research. The st udy was completely based on primary data. The personal survey method was used to collect primary data from respondents. For data collection, structured questionnaire was used. T he Lickert Scaling was used. The sampling method used can best be described as a mix of Jud gmental and Non Probabilistic Convenient sampling. The study is based on responses obtai ned from the respondents belonging to a wide cross section in Dehradun and they include b usinessmen, servicemen, professionals, housewives and agricultural. Main focus of questionna ire was to obtain responses of individual investors regarding how they evaluate 4 mentioned investment avenues in terms of return and risk on their investment. To reduce the complexit y of data responses questionnaires were distributed among those investors only who had pri or experience of mutual fund investment. For reliability of questionnaire 170 indiv idual investors were selected from different regions of Dehradun, which included selec tive investors who were assumed to be have some knowledge of financial environment, a nd further they were existing investors in either of the 4 investment avenues. Age constraint considered in this questionnaire was minimum 20 years. Broad objectives of our s urvey include: 1: Evaluate Perception towards risk involved in investment avenues in comparison to each other 2: Identify critical gaps in mutual funds services towards transparency and disc losure practices.

3: Uncovering the hidden problems investors encountered with because of unprofes sional services of brokerage houses 4: Understanding the willingness and ability to assume different levels of risk capacity amongst residents of Dehradun 5: Evaluating investor s perception towards risk volatility involved in investment

Review of Literature Many studies have been carried out to examine the perceptions of the investors a nd the investment preferences with regard to gender, age, education, occupation & incom e. It is not uncommon for most investors to associate risk with bad outcomes such as negative r eturns or, more generally, returns below their expectations. They do not associate risk with large positive returns, returns above their expectations, or upside swings in general. For this reason a common investor s perception of risk is quite at odds with the conventional dispe rsion measures of risk like standard deviation. The importance of accurately gauging a portfolio s exposure to downside risk has been long recognized by the practitioners and acad emicians. The concept of Value at Risk (VaR) as a single risk measure summarizing all sour ces of downside risk was first developed by J. P. Morgan and made available through its RiskMetrics TM software in October 1994 as mentioned in Downside Risk Analysis of Ind ian Equity Mutual Funds: A Value at Risk Approach Few studies are available that focus on investor s objective and considering risk orientation of investors that has been categorized as: 1. Studies pertaining to Investor s Rationality: Risk Return trade off Investors are generally more careful while making investment decision and presen ce of rationality in every investor demands higher return at minimum risk but when mar kets are efficient it is not possible to gain abnormal returns. Risk is generally, associ ated with various applications differently but in common it means negative connotation such as har m or loss or some undesirable action. Risk expressed by Kaplan and Garrick (1981) 1 1Kaplan, S. & Garrick, B. J. (1981). On the quantitative definition of risk. Ris k Analysis, Vol.1, No.1, pp. 11-27

demonstrates that risk involves a factor of uncertainty and potential loss that might be incurred. Elmiger and Kim (2003)2 elucidate risk as .the trade-off that every in vestor has to make between the higher rewards that potentially come with the opportunity and t he higher risk that has to be borne as a consequence of the danger. Although different lit erature available on risk define it variedly but in common the word risk refers to situa tions in which a decision is made whose consequences depend on the outcomes of future events havi ng known probabilities (Lopes,1987)3. Risk from a strategic management perspective has be en defined as one that is often taken as manager s subjective judgment of the personal or org anizational consequences and it may result from a specific decision or action. Beta has been accepted as most appropriate measure of risk that describe the slope of any regression line ,that is, it reveals the volatility of a stock relative to a market benchmark (Sharpe 1966 )4 .Uncertainty in investment decision prevails when investor s skills and knowledge fail to have pro per access of decision relevant information due to complexity of financial markets. This in capacity forces decision makers to adopt a simplified approach where risk is considered t o be exogenous variable. The great trade-off in investing is between risk and return. The main premise is risky investments must offer at least hope of a higher return than ri sk-free investments or extremely safe financial instruments. 2Elmiger, G., & Kim, S. (2003). Risk Grade your investments: Measure your risk & create wealth. John Wiley & Sons: Hoboken, NJ 3Lopes, L. L. (1987). Between hope and fear: The psychology of risk. In L. Berko witz Advances in experimental social psychology, San Diego, CA, US: Academic Press, I nc. pp 255 4Sharpe, W. F. (1966). Security prices, risk and maximal gains from diversificat ion: Reply. Journal of Finance, pp 743-744

Standard financial decision-making makes the assumption that individuals impleme nt extensive analysis to determine whether to accept the likelihood of success, ass ociated with a specific reward (expected return) Ricciardi (2004)5 . 2. Studies relating to investment expectations Huge literature available on predicting stock market returns has proved that gen erally investors think high past stock market return predict high future return (De Bon dt, 1993)6 even though there is no support for such belief in the data (Fama 1988)7. Furthe r, evidence by Fisher and Statman (2000)8 have shown that individual investor s stock market retu rn expectations are positively correlated with past returns. An attempt to relate s tock expected returns and interrelated attributes can be well traced from Asset pricing Model that explains an assets expected return is positively related to its systematic market risk (B lack 1972)9.The crux of these models is that risky portfolio yields higher return. Although majo rity of investors who invest in mutual fund themselves are not clear with the objective and constraints of their investment but in addition to this most important critical gap that exist in this process is lack of awareness about presence of risk elements in mutual fund investment. 5Victor Ricciardi (2004) A Risk Perception Primer: A Narrative Research Review o f the Risk Perception Literature in Behavioural Accounting and Behavioural Finance pp.3-24 6De Bondt, Werner (1993). Betting on trends: Intuitive forecast of financial ris k and return. International Journal of forecasting, 9 (3), pp. 355-371. 7Fama, Eugene F., and Kenneth R. French. (1988). Permanent and Temporary compone nts of stock prices. Journal of Political Economy, 96(2), pp. 246-273 8Fisher, Kanneth, and Meier Statman. (2000). Investor sentiments and stock retur ns. Financial Analyst Journal,March/April, Vol. 56 No.2 pp. 16-23. 9Black, Fischer., Michael, Jensen. & Myron, Sholes. (1972). The Capital Asset Pr icing Model: Some Empirical tests

3. Studies relating to Financial Innovations New financial product and market designs, improved computer and telecommunicatio n technologies and advances in theory of finance during past quarter century have led to dramatic changes in structure of mutual fund industry. Financial innovation is f ighter promoted when the financial authorities recognize the obsolescence of existing s tatutory framework and deregulate the essential part of it (Suzuki 1986)10. 10Suzuki. (1986). A comparative study of financial innovations, deregulation and reforms in Japan and US. Bank of Japan. Monetary Economic Series, 4(10).

Scope of the study 1. Subject matter is related to the investor s approach towards equity shares, mutual funds, Life Insurances &Fixed Deposits 2. People of age between 20 to 60 3. Area limited to Dehradun. 4. Demographics include names, age, qualification, occupation, marital status and a nnual income Assumption Bank deposits and life insurance policies are operationalized as investments alo ng with the equities and mutual fund survey, reasons are as follows: 1. Bank deposits enjoy high liquidity as they can be withdrawn prematurely or loans can be raised against deposits so many respondents mentioned it as an investment avenue . 2. Respondents had knowledge about ULIPs but primarily they don t differentiate betwe en ULIPs and a simple Life Insurance Policy. .

Chapter-3 Company Profile FairWealth Securities Limited is a financial services company which has emerged as a onestop investment solutions provider. The company has a sizable presence in the di stribution of 3rd party financial products like mutual funds, and insurance products. It also provides expert Advisory on Life Insurance, General Insurance, Mutual Funds and IPO s. The distrib ution network is backed by in-house back office support to provide prompt and efficien t customer service. FairWealth Securities Limited is a leading Indian Financial Services firm establ ished in the year 2005 with an objective of becoming a financial powerhouse providing all fin ancial solutions under one roof with dedicated customer service and commitment to provi de value for Money to the clients. FairWealth Group has diversified interests in multiple asset classes including F inancial Services, Currency and Commodities. The company has its network spread over 300 cities and towns comprising 450 Business Associates, 34 Branch Offices across Pan India . In the Financial Services Domain, FairWealth Securities Ltd. and FairWealth Comm odity Pvt. Ltd. provides customer centric services in the areas of Equity and Commodit ies Broking, Currency Broking, Depository Participant Services, Risk and Investment Planning through Insurance, Mutual Funds, Portfolio Management Services and Deposits. After succe ssfully creating a stable platform for dealing in various Financial Products the Company is perfectly poised to launch its Institutional Business and use its experience and exposure in the Financial Markets to add value to the clients who do not have adequate resources in terms of time or research capabilities.

Chapter-4 Data Analysis BANK DEPOSITS Descriptive Statistics N Minimum Maximum Mean Std. Deviation Regular and steady income 170 2.00 5.00 4.0941 .96229 Reasonableness of amount of investment 170 2.00 5.00 4.3471 .88553 Chances of capital appreciation 170 2.00 5.00 3.8353 .91467 Possibility of tax benefits 170 1.00 5.00 3.8588 .96265 Minimum transaction costs 170 1.00 5.00 4.3176 .86636 Liquidity of investment 170 2.00 5.00 3.9529 .81271 Provision of premature withdrawal facility 170 1.00 5.00 3.9235 1.04911 Easy Accessibility to avenues 170 1.00 5.00 3.6882 .92460 Flexibility in timings of investments 170 1.00 5.00 4.0059 1.07416 Benefit of statutory protection to investments 170 1.00 5.00 3.8588 .92504 Moderate length of investment 170 1.00 5.00 3.9176 1.01715 Accessibility of sources of information 170 1.00 5.00 3.8353 1.00704 Appropriate service delivery 170 2.00 5.00 4.1235 .97424 Higher collateral quality of investment 170 2.00 5.00 4.1765 .86587 Low intensity of risk 170 1.00 5.00 4.4412 .88348 Valid N (list wise) 170 Table 1: Descriptive Statistics on Bank Deposits

Regular and steady income-High degree of deviation many respondents don t agree to the mean value Reasonableness of amount of investment-High degree of deviation many respondents don t agree to the mean value Chances of capital appreciation -High degree of deviation many respondents don t a gree to the mean value Possibility of tax benefits -High degree of deviation many respondents don t agree to the mean value Minimum transaction costs-High degree of deviation many respondents don t agree to the mean value Liquidity of investment-High degree of deviation many respondents don t agree to t he mean value Provision of premature withdrawal facility-Very high degree of deviation many re spondents don t agree to the mean value Easy Accessibility to avenues-High degree of deviation many respondents don t agre e to the mean value Flexibility in timings of investments Very high degree of deviation many responde nts don t agree to the mean value Benefit of statutory protection to investments -High degree of deviation many re spondents don t agree to the mean value Moderate length of investment Very high degree of deviation many respondents don t agree to the mean value Accessibility of sources of information-Very high degree of deviation many respo ndents don t agree to the mean value Appropriate service delivery-High degree of deviation many respondents don t agree to the mean value Higher collateral quality of investment-High degree of deviation many respondent s don t agree to the mean value Low intensity of risk-High degree of deviation many respondents don t agree to the mean value Interpretation of Descriptive Statistics of investor perception for Bank Deposit s 23

EQUITY Descriptive Statistics N Minimum Maximum Mean Std. Deviation Regular and steady income 170 1.00 5.00 2.7059 .93358 Reasonableness of amount of investment 170 1.00 5.00 2.3824 1.35032 Chances of capital appreciation 170 1.00 5.00 2.5000 1.26046 Possibility of tax benefits 170 1.00 5.00 2.7941 1.05974 Minimum transaction costs 170 1.00 5.00 2.5706 1.09234 Liquidity of investment 170 1.00 5.00 2.6765 1.05809 Provision of premature withdrawal facility 170 1.00 5.00 2.9059 1.02193 Easy Accessibility to avenues 170 1.00 5.00 2.6118 .99221 Flexibility in timings of investments 170 1.00 5.00 2.9059 1.02193 Benefit of statutory protection to investments 170 1.00 5.00 2.5235 1.01003 Moderate length of investment 170 1.00 5.00 2.8882 1.02881 Accessibility of sources of information 170 1.00 5.00 2.7000 1.09787 Appropriate service delivery 170 1.00 5.00 2.6059 .90558 Higher collateral quality of investment 170 1.00 5.00 2.8353 .98326 Low intensity of risk 170 1.00 5.00 2.2529 .96115 Valid N (list wise) 170 Table 2: Descriptive Statistics on Equity

Regular and steady income-High degree of deviation many respondents don t agree to the mean value Reasonableness of amount of investment-Very high degree of deviation many respon dents don t agree to the mean value Chances of capital appreciation -Very high degree of deviation many respondents don t agree to the mean value Possibility of tax benefits -Very high degree of deviation many respondents don t agree to the mean value Minimum transaction costs-Very high degree of deviation many respondents don t agr ee to the mean value Liquidity of investment-Very high degree of deviation many respondents don t agree to the mean value Provision of premature withdrawal facility-Very high degree of deviation many re spondents don t agree to the mean value Easy Accessibility to avenues-High degree of deviation many respondents don t agre e to the mean value Flexibility in timings of investments Very high degree of deviation many responde nts don t agree to the mean value Benefit of statutory protection to investments -Very high degree of deviation ma ny respondents don t agree to the mean value Moderate length of investment Very high degree of deviation many respondents don t agree to the mean value Accessibility of sources of information-Very high degree of deviation many respo ndents don t agree to the mean value Appropriate service delivery-High degree of deviation many respondents don t agree to the mean value Higher collateral quality of investment-High degree of deviation many respondent s don t agree to the mean value Low intensity of risk-High degree of deviation many respondents don t agree to the mean value Interpretation of Descriptive Statistics of investor perception for Equity 25

LIFE INSURANCE Descriptive Statistics N Minimum Maximum Mean Std. Deviation Regular and steady income 170 1.00 5.00 2.8471 1.04916 Reasonableness of amount of investment 170 2.00 5.00 3.0118 .87021 Chances of capital appreciation 170 2.00 5.00 3.3765 .84232 Possibility of tax benefits 170 1.00 5.00 2.9588 .98723 Minimum transaction costs 170 1.00 5.00 2.9118 .90258 Liquidity of investment 170 1.00 5.00 3.1059 .89738 Provision of premature withdrawal facility 170 2.00 5.00 3.0118 .81399 Easy Accessibility to avenues 170 1.00 5.00 3.3059 1.03802 Flexibility in timings of investments 170 1.00 5.00 3.2294 .88396 Benefit of statutory protection to investments 170 1.00 5.00 3.0294 1.02874 Moderate length of investment 170 1.00 5.00 3.5765 .88881 Accessibility of sources of information 170 2.00 5.00 3.4941 .61776 Appropriate service delivery 170 2.00 5.00 3.0824 .95721 Higher collateral quality of investment 170 2.00 5.00 3.1824 .64975 Low intensity of risk 170 1.00 5.00 3.4529 .72211 Valid N (list wise) 170 Table 3:Descriptive Statistics on Life Insurance

Regular and steady income-Very high degree of deviation many respondents don t agr ee to the mean value Reasonableness of amount of investment-High degree of deviation many respondents don t agree to the mean value Chances of capital appreciation -High degree of deviation many respondents don t a gree to the mean value Possibility of tax benefits -High degree of deviation many respondents don t agree to the mean value Minimum transaction costs-High degree of deviation many respondents don t agree to the mean value Liquidity of investment-High degree of deviation many respondents don t agree to t he mean value Provision of premature withdrawal facility-High degree of deviation many respond ents don t agree to the mean value Easy Accessibility to avenues-Very high degree of deviation many respondents don t agree to the mean value Flexibility in timings of investments High degree of deviation many respondents d on t agree to the mean value Benefit of statutory protection to investments -Very high degree of deviation ma ny respondents don t agree to the mean value Moderate length of investment Relatively low degree of deviation many respondent s agree to the mean value Accessibility of sources of information-Very high degree of deviation many respo ndents don t agree to the mean value Appropriate service delivery-High degree of deviation many respondents don t agree to the mean value Higher collateral quality of investment-Relatively low degree of deviation many respondents agree to the mean value Low intensity of risk-High degree of deviation many respondents don t agree to the mean value Interpretation of Descriptive Statistics of investor perception for Life Insuran ce 27

MUTUAL FUNDS Descriptive Statistics N Minimum Maximum Mean Std. Deviation Regular and steady income 170 1.00 5.00 3.0529 .86525 Reasonableness of amount of investment 170 1.00 5.00 3.0412 .93173 Chances of capital appreciation 170 1.00 4.00 2.8882 .64760 Possibility of tax benefits 170 1.00 5.00 2.9412 .95896 Minimum transaction costs 170 1.00 5.00 2.9294 1.05234 Liquidity of investment 170 1.00 5.00 2.7176 1.00427 Provision of premature withdrawal facility 170 1.00 5.00 2.5529 .77697 Easy Accessibility to avenues 170 2.00 5.00 3.1941 1.00471 Flexibility in timings of investments 170 1.00 5.00 3.1118 .83161 Benefit of statutory protection to investments 170 1.00 5.00 2.8941 .91047 Moderate length of investment 170 1.00 5.00 3.0412 1.02833 Accessibility of sources of information 170 1.00 5.00 3.3059 1.02077 Appropriate service delivery 170 1.00 5.00 2.8353 1.19017 Higher collateral quality of investment 170 2.00 5.00 3.1765 .74859 Low intensity of risk 170 1.00 5.00 3.1765 .97515 Valid N (list wise) 170 Table 4: Descriptive Statistics on Mutual Funds

Regular and steady income-High degree of deviation many respondents don t agree to the mean value Reasonableness of amount of investment-High degree of deviation many respondents don t agree to the mean value Chances of capital appreciation -Relatively low degree of deviation many respond ents agree to the mean value Possibility of tax benefits -High degree of deviation many respondents don t agree to the mean value Minimum transaction costs-Very high degree of deviation many respondents don t agr ee to the mean value Liquidity of investment-Very high degree of deviation many respondents don t agree to the mean value Provision of premature withdrawal facility-High degree of deviation many respond ents don t agree to the mean value Easy Accessibility to avenues-Very high degree of deviation many respondents don t agree to the mean value Flexibility in timings of investments High degree of deviation many respondents d on t agree to the mean value Benefit of statutory protection to investments -High degree of deviation many re spondents don t agree to the mean value Moderate length of investment Very high degree of deviation many respondents don t agree to the mean value Accessibility of sources of information-Very high degree of deviation many respo ndents don t agree to the mean value Appropriate service delivery-Very high degree of deviation many respondents don t agree to the mean value Higher collateral quality of investment-High degree of deviation many respondent s don t agree to the mean value Low intensity of risk-High degree of deviation many respondents don t agree to the mean value Interpretation of Descriptive Statistics of investor perception for Mutual Funds 29

Bank Deposits Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 53.044(a) 9 .000 Likelihood Ratio 57.046 9 .000 Linear-by-Linear Association 19.924 1 .000 N of Valid Cases 170 a. 8 cells (50.0%) have expected count less than 5. The minimum expected count i s .58. Table 5: Chi Square Test on Regular and steady income and Reasonableness of amou nt of investment for Bank Deposits. The two factors are related to each other. 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 Regular and steady income Chart 3: Scatter plot on Regular and steady income and Reasonableness of amount of investment for Bank Deposits, the two factors are related to each other Reasonableness of amount of investment 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5

Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 87.999(a) 12 .000 Likelihood Ratio 44.871 12 .000 Linear-by-Linear Association 8.019 1 .005 N of Valid Cases 170 a.11 cells (55.0%) have expected count less than 5. The minimum expected count i s .19. Table 6: Chi Square Test on Provision of premature withdrawal facility and Liqui dity of investment for Bank Deposits .The two factors are related to each other. 6 5 4 3 2 1 0 Liquidity of investment Chart 4: Provision of premature withdrawal facility and Liquidity of investment for Bank Deposits. The two factors are related to each other. Provision of premature withdrawal facility 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5

Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 109.028(a) 12 .000 Likelihood Ratio 76.657 12 .000 Linear-by-Linear Association 61.146 1 .000 N of Valid Cases 170 a.12 cells (60.0%) have expected count less than 5. The minimum expected count i s .06. Table 7: Chi Square Test on Higher collateral quality of investment and Low inte nsity of risk for Bank Deposits. The two factors are related to each other. 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 Low intensity of risk Chart 5: Scatter plot on Higher collateral quality of investment and Low intensi ty of risk for Bank Deposits. The two factors are related to each other. Higher collateral quality of investment 0 1 2 34 5 6

Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 52.487(a) 9 .000 Likelihood Ratio 56.131 9 .000 Linear-by-Linear Association 7.063 1 .008 N of Valid Cases 170 a.6 cells (37.5%) have expected count less than 5. The minimum expected count is .40. Table 8: Chi Square Test on Chances of capital appreciation and Liquidity of inv estment for Bank Deposits. The two factors are related to each other. 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 Liquidity of investment Chart 6: Scatter plot The Chances of capital appreciation and Liquidity of inves tment for Bank Deposits. The two factors are related to each other. Chances of capital appreciation 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5

Equity Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 155.688(a) 16 .000 Likelihood Ratio 161.052 16 .000 Linear-by-Linear Association 83.909 1 .000 N of Valid Cases 170 a.13 cells (52.0%) have expected count less than 5. The minimum expected count i s .56. Table 9: Chi Square Test on Regular and steady income and Reasonableness of amou nt of investment for Equity. The two factors are related to each other. 6 5 4 3 2 1 0 Regular and steady income Chart 7: Scatter plot Regular and steady income and Reasonableness of amount of investment for Equity. The two factors are related to each other. Reasonableness of amount of investment 0 12345 6

Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 73.172(a) 16 .000 Likelihood Ratio 82.957 16 .000 Linear-by-Linear Association 14.121 1 .000 N of Valid Cases 170 a.13 cells (52.0%) have expected count less than 5. The minimum expected count i s .52. Table 10: Chi Square Test on Provision of premature withdrawal facility and Liqu idity of investment for Equity. The two factors are related to each other. 6 5 4 3 2 1 0 Liquidity of investment Chart 8: Scatter plot Provision of premature withdrawal facility and Liquidity o f investment for Equity. The two factors are related to each other. Provision of premature withdrawal facility 0 12345 6

Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 193.475(a) 16 .000 Likelihood Ratio 147.124 16 .000 Linear-by-Linear Association 18.668 1 .000 N of Valid Cases 170 a.16 cells (64.0%) have expected count less than 5. The minimum expected count i s .33. Table 11: Chi Square Test on Higher collateral quality of investment and Low int ensity of risk for Equity. The two factors are related to each other. 6 5 4 3 2 1 0 Low intensity of risk Chart 9: Scatter plot Higher collateral quality of investment and Low intensity of risk for Equity The two factors are related to each other. Higher collateral quality of investment 0 12345 6

Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 138.072(a) 16 .000 Likelihood Ratio 151.735 16 .000 Linear-by-Linear Association 45.150 1 .000 N of Valid Cases 170 a.13 cells (52.0%) have expected count less than 5. The minimum expected count i s 1.04. Table 12: Chi Square Test on Chances of capital appreciation and Liquidity of in vestment for Equity. The two factors are related to each other. 6 5 4 3 2 1 0 Liquidity of investment Chart 10: Scatter plot Chances of capital appreciation and Liquidity of investme nt for Equity The two factors are related to each other. Chances of capital appreciation 0 12345 6

Life Insurance Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 69.676(a) 12 .000 Likelihood Ratio 77.854 12 .000 Linear-by-Linear Association 20.935 1 .000 N of Valid Cases 170 a.10 cells (50.0%) have expected count less than 5. The minimum expected count i s .59. Table 13: Chi Square Test on Regular and steady income and Reasonableness of amo unt of investment for Life Insurance 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 Regular and steady income Chart 11: Scatter plot on Regular and steady income and Reasonableness of amount of investment for Life Insurance. The two factors are related to each other . Reasonableness of amount of investment 0123456

Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 55.800(a) 12 .000 Likelihood Ratio 59.439 12 .000 Linear-by-Linear Association 34.515 1 .000 N of Valid Cases 170 a.11 cells (55.0%) have expected count less than 5. The minimum expected count i s .05. Table14: Chi Square Test on Provision of premature withdrawal facility and Liqui dity of investment for Life Insurance 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 Liquidity of investment Chart 12: Scatter plot on Provision of premature withdrawal facility and Liquidi ty of investment for Life Insurance .The two factors are related to each other. Provision of premature withdrawal facility 0123456

Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 22.243(a) 12 .035 Likelihood Ratio 18.620 12 .098 Linear-by-Linear Association 3.844 1 .050 N of Valid Cases 170 a.13 cells (65.0%) have expected count less than 5. The minimum expected count i s .07. Table 15: Chi Square Test on Higher collateral quality of investment and Low int ensity of risk for Life Insurance. The two factors are related to each other. 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 Low intensity of risk Chart 13: Scatter plot on Higher collateral quality of investment and Low intens ity of risk for Life Insurance. The two factors are related to each other. Higher collateral quality of investment 0123456

Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 93.623(a) 12 .000 Likelihood Ratio 86.876 12 .000 Linear-by-Linear Association 16.756 1 .000 N of Valid Cases 170 a.9 cells (45.0%) have expected count less than 5. The minimum expected count is .34. Table 16: Chi Square Test on Chances of capital appreciation and Liquidity of in vestment for Life Insurance 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 Liquidity of investment Chart 14: Scatter plot on Chances of capital appreciation and Liquidity of inves tment for Life Insurance. The two factors are related to each other. Chances of capital appreciation 0123456

Mutual Funds Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 103.615(a) 16 .000 Likelihood Ratio 100.484 16 .000 Linear-by-Linear Association 44.140 1 .000 N of Valid Cases 170 a.16 cells (64.0%) have expected count less than 5. The minimum expected count i s .03. Table 17: Chi square test on Regular and steady income and Reasonableness of amo unt of investment for Mutual Funds. The two factors are related to each other 6 5 4 3 2 1 0 Reasonableness of amount of investment Cahrt15: Scatter plot on Regular and steady income and Reasonableness of amount of investment for Mutual Funds. The two factors are fairly related to each other Regular and steady income 0123456

Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 135.091(a) 16 .000 Likelihood Ratio 79.252 16 .000 Linear-by-Linear Association 41.747 1 .000 N of Valid Cases 170 a.16 cells (64.0%) have expected count less than 5. The minimum expected count i s .02. Table 18: Chi square test on Provision of premature withdrawal facility and Liqu idity of investment for Mutual Funds. The two factors are related to each other 6 5 4 3 2 1 0 Liquidity of investment Chart 16: Scatter plot on Provision of premature withdrawal facility and Liquidi ty of investment for Mutual Funds. The two factors are fairly related to each other Provision of premature withdrawal facility 0 12345 6

Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 60.628(a) 12 .000 Likelihood Ratio 68.369 12 .000 Linear-by-Linear Association 9.150 1 .002 N of Valid Cases 170 a.10 cells (50.0%) have expected count less than 5. The minimum expected count i s .16. Table 19: Chi square test on Higher collateral quality of investment and Low int ensity of risk for Mutual Funds. The two factors are related to each other 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 Low intensity of risk Chart17: Scatter plot on Higher collateral quality of investment and Low intensi ty of risk for Mutual Funds. The two factors are related to each other. Higher collateral quality of investment 0123456

Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 83.267(a) 12 .000 Likelihood Ratio 79.831 12 .000 Linear-by-Linear Association 6.548 1 .010 N of Valid Cases 170 a.10 cells (50.0%) have expected count less than 5. The minimum expected count i s .09. Table 20: Chi square test on Chances of capital appreciation and Liquidity of in vestment for Mutual Funds .The two factors are related to each other 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 .5 Liquidity of investment Chart 18:Scatter plot on Chances of capital appreciation and Liquidity of invest ment for Mutual Funds .The two factors are related to each other. Chances of capital appreciation 0 123456

Chapter-5 Findings . Most people were less interested in knowing about any new investment product. . They have the impression that Mutual Funds are not safe, as the money is locked in for a particular period, which is known as the lock in period. . People don t have objectives while investing so they basically take Term Deposits which easiest to understand. . They have very little knowledge about ULIPs. . They consider Bank Deposits and Life Insurance as primary option for investment, in the same order. . Most the respondents had high value term deposits with the banks.

Chapter-6 Suggestions . There should be more awareness made about the investments in Equity and ULIPS . The FairWealth Securities Limited should go for investor education seminars and programs. . Investors should study investment products before they invest into it and must understand the various risks involved

Chapter-7 Conclusion The present study endeavoured to give a look on investor s perceptions towards var ious investment avenues. Understanding of investor s expectations from these avenues ha s become necessary issue to study due to Brokerage houses inability to accelerate the requ ired pace of growth in the studied region. Moreover, volatility influencing stock market move ments is turning most of investors from investment in avenues like Equity and Mutual Fund . Although Mutual Funds can be the most preferred financial avenue provided it is put forth before investors in the desired form. Facts revealed in this study highlight that inves tors in a Dehradun have sufficient fund parked as term deposit with banks but it also requ ire some innovations and added quality dimensions in existing services. The critical gaps identified in the study also provide the key information input regarding the discrepancies in existing framework, more lucrative solutions to suit investor s expectations should be brou ght in by these broking houses and Asset Management Companies.

Appendix-Annexure 1 Bibliography The Management of Equity Investments Capital markets, equity research, investment decisions and risk management with case studies -ByDimitris N. Chorafas Elsevier Butterworth-Heinemann First published 2005 pp.15-22 NCFM Module for Capital Markets 2009 by National Stock Exchange of India Ltd. Investment Analysis and Portfolio Management-By Prasanna Chandra Third Edition,T ata McGraw Hill Publishing Company Limited pp.3-86 ICRA s Outlook on Brokerage Industry 2009-10 International Journal of Business and Management Vol. 4 No.5 May, 2009 Black, Fischer., Michael, Jensen. & Myron, Sholes. (1972). The Capital Asset Pri cing Model: Some Empirical tests De Bondt, Werner (1993). Betting on trends: Intuitive forecast of financial risk and return. International Journal of forecasting, 9 (3), pp. 355-371. Fama, Eugene F., and Kenneth R. French. (1988). Permanent and Temporary components of stock prices. Journal of Political Economy, 96(2), pp. 246-273 Lopes, L. L. (1987). Between hope and fear: The psychology of risk. In L. Berkowitz

Advances in experimental social psychology, San Diego, CA, US: Academic Press, Inc. pp 255-295 Sharpe, W. F. (1966). Security prices, risk and maximal gains from diversification: Reply. Journal of Finance, pp 743-74

Kaplan, S. & Garrick, B. J. (1981). On the quantitative definition of risk. Risk Analysis, Vol.1, No.1, pp. 11- 27. Suzuki. (1986). A comparative study of financial innovations, deregulation and reforms in Japan and US. Bank of Japan. Monetary Economic Series, 4(10). Elmiger, G., & Kim, S. (2003). Risk Grade your investments: Measure your risk & create wealth. John Wiley & Sons: Hoboken, NJ. Fisher, Kanneth, and Meier Statman. (2000). Investor sentiments and stock returns. Financial Analyst Journal, March/April, Vol. 56 No.2 pp. 16-23. Victor Ricciardi (2004) A Risk Perception Primer: A Narrative Research Review of the Risk Perception Literature in Behavioural Accounting and Behavioural Finance pp.3-24 Magazine- Investors India Vol.6 No.9(2008) International Research Journal of Finance and Economics -Issue 23 (2009) EuroJournals Publishing, Inc. 2009(online) http://ccsenet.org/journal.html

http://www.surveysystem.com/sscalc.htm http://www.fairwealth.in/Aboutus/AboutUs.aspx?id=1 http://www.scribd.com/ http://www.cfapubs.org/doi/abs/10.2469/faj.v56.n2.2340 http://en.wikipedia.org/wiki/Dehradun http://business.mapsofindia.com/investment-industry/investment-scenario.html http://www.tax4india.com/comparison-of-ulips-and-mutual-funds.html http://www.dnb.co.in/equitybroking/industry%20insights.asp http://akprabhakar.blogspot.com/2010/04/sebi-vs-irda-ban-on-ulips-impact.html

Appendix-Annexure 2 Questionnaire Personal Profile of the Investor 1. Name and Address: e-mail Address: Contact No. : 2. Sex: a) Male [ ] b) Female [ ] 3. Age: a) Below 25 years [ ] b) 26-35 years [ ] c) 36-45 years [ ] d) 46-55 years [ ] e) Above 55 years [ ] 4. Marital Status: a) Married [ ] b) Unmarried [ ] 5. Education: a) Non-matriculation [ ] b) Matriculation [ ] c) Degree [ ] d) Masters Degree [ ] 6. Occupation:

a) Agriculture [ ] b) Business [ ] c) Service [ ] d) Professional [ ] e) housewife [ ] g) Others(specify) [ ] 7. Number of family members: a) Two [ ] b) Three [ ] c) Four [ ] d) Five [ ] e) More than five [ ]

8. Annual income(Rs.): a) less than 2.5 lakh [ ] b) 2.5-5.0 lakh [ ] c) 5.0-10.0 lakh[ ] d) more than 10.0 lakh [ ] 9. What are different investments avenues in which you have invested? a) Equity [ ] b) Mutual Fund [ ] c) Life Insurance Policy [ ] d) Bank Deposits [ ] e) Other (specify)

Choice of Investment Avenues Among following investment avenues what are your preferences for investment. Using 5 points scale, offer your responses in the following scales: 5=Highly Interested, 4=Interested, uninterested 3=Indifferent, 2=Not interested and 1=Highly Level of Preference Investment Avenues 1 2 3 4 5 a)Equity b)Mutual Funds c)Life Insurance Policies d)Bank Deposits

vi Scaling of PerceptionFollowingare the majorperception which anyone hasbefore inv estment. How much do you consider theseperceptionsbefore investing? Using 5 points scale, offeryour responses in the following scales: 5=StronglyAgree, 4=Agree,3=Neutral,2=Disagreeand1=StronglyDisagreeInvestmentEqui tyMutual FundLife Insurance PolicyBank DepositsAvenuesPerceptions1 23 451 2 3 4 5 12 3 451 2 3 451.Reasonableness of amount ofinvestment2.Regular and steady inc ome3.Chances of capital appreciation4.Possibility of tax benefits5.Minium transa ction costs6.Provision of prematurewithdrawalfacility7.Liquidity ofinvestment8.E asy Accessibility to avenues9.Benefit of statutory protection toinvestments10.Fl exibility in timings ofinvestments11.Moderate length of investmentFollowingare t he majorperception which anyone hasbefore investment. How much do you consider t heseperceptionsbefore investing? Using 5 points scale, offeryour responses in the following scales: 5=StronglyAgree, 4=Agree,3=Neutral,2=Disagreeand1=StronglyDisagreeInvestmentEqui tyMutual FundLife Insurance PolicyBank DepositsAvenuesPerceptions1 23 451 2 3 4 5 12 3 451 2 3 451.Reasonableness of amount ofinvestment2.Regular and steady inc ome3.Chances of capital appreciation4.Possibility of tax benefits5.Minium transa ction costs6.Provision of prematurewithdrawalfacility7.Liquidity ofinvestment8.E asy Accessibility to avenues9.Benefit of statutory protection toinvestments10.Fl exibility in timings ofinvestments11.Moderate length of investment

12.Accessibility of sources of information13.Appropriate servicedelivery14.Higher collateral quality of investment15.Low intensity of risk12.Accessibility of sources of information13.Appropriate servicedelivery14.Higher collateral quality of investment15.Low intensity of risk