INVESTMENT PATTERN ON THE BASIS OF RISK PROFILE OF INVESTORS

Introduction
Of
Topic
INVESTMENT PATTERN ON THE BASIS OF RISK PROFILE
OF INVESTORS
What is Investment?
Investment is the purchase of an asset or item with the hope that it will generate
income or
appreciate in the future and be sold at the higher price.
Investment Risk Profile
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All investors have differing attitudes towards risk. When it comes to investing, it
is important to consider your risk profile or tolerance carefully, including how
comfortable you are with the possibility of losing money, or that returns on your
investments could vary widely from year to year.
Understanding your personal risk tolerance will help you choose an appropriate
asset allocation - the following points can help you to determine an investment
mix that's appropriate for your needs.
Investment Experience
How would you describe your investment experience and understanding of
financial markets?
 Just started investing in the last year
 You understand the basics of investing
 You have been investing on your own for several years and are reasonably
confident of your knowledge of financial markets
 Your knowledge of financial markets is well above average and you make
investment decisions confidently
What is Risk?
The word “Risk has a definite financial meaning. It refers to possibility of‟
incurring a loss in a financial transaction. In a broad sense, investment is
considered to involve limited risk and is confined to those avenues where the
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principal is safe. Speculation is considered as an involvement of funds of high‟
risk.
Type Of Risk
1. Systematic Risk
2. Unsystematic Risk
Systematic Risk
Systematic risk refers to that portion of the total variability of the return caused
by common factor affecting the prices of all securities alike through economic,
political and social factors.
Unsystematic Risk
Unsystematic risk refers to that portion of the total variability of the return caused
due to unique factors, relating that firm or industry, through such factors as
management failure, labor strikes, raw material scarcity etc.
Risk Tolerance
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To establish investment strategies that suit your profile of risk and will be
comfortable with, you need to consider the possibility that the value of your
investment may decline even though this may be temporary. Are you prepared to
accept the possibility of a negative return at any time in exchange for potentially
higher long term returns? What percentage of your money would you be prepared
to invest in higher-risk investments?
Which of the following is important to you:
 Avoiding any short-term losses
 Receiving regular income from investments
 Long-term growth in the value of investments
 Protection against inflation
In 2018 Though not classified as a crash, the BSE and NSE fell sharply on 2nd
and 5th February 2018, sparked by the Finance minister's proposal in the budget
speech to introduce a 10% long term capital gains tax (LTCG) on equity shares
sold after 12 months, The BSE Sensex fell by 600 points in two days, and the
Nifty 50 fell by about 400 points to 10,676 on 5th. Earlier, the BSE sensex had
fallen by 570 points to 35,328 on 2nd February and the NSE Nifty by 190 points
to a low of 10,826.
 Sell all of the remaining investment (Conservative)
 Sell a portion of the remaining investment (Conservative to Balanced)
 Hold the investment and sell nothing (Balanced or Aggressive)
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 Buy more of the investment (Aggressive)
Investment Goals and Objectives
Why are you investing? Is it for something in the near future (new car, buying
new house) or something farther off (a young child's education or your own
retirement)? If you’re investing goals are short terms you want your money to be
there - with interest - when you need it. Therefore you will need to focus on
relatively short term investments like term deposits or a cash management trust,
Liquid funds. If on the other hand, you are investing for the long term, you may
be able to afford to take some risk in pursuit of a higher return. Shares, property,
and growth orientated managed which historically have provided higher returns
than fixed interest or cash over time, may be more appropriate.
Investment Timeframe
When do you expect to need to access all or part of your investments
 Less than 1 year (immediate access)
 Less than 2 years (short term)
 2 to 5 years (short to mid-term)
 6 to 10 Years (mid to long term)
 Over 10 Years (long term)
Liquidity / Cash Requirements
How much money do you need to keep available for emergencies such as house
repairs, a
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Medical emergency or damage of car? These emergencies can be a serious
setback if you
are not prepared. The amount of your emergency fund will depend on your
current lifestyle
and expenses. As a general rule you should have about 3 months of income set
aside to meet emergencies without needing to rely on credit cards. A cash
management trusts that
Pays high interest can be a good place to keep emergency funds.
Age and Income
Your age and your income - particularly the stability of your income - are
important factors to consider when determining your investment profile. If you
are young you can afford to take a longer term view and any short-term losses
may have minimal effect. If your income or employment is unstable you will
need to take this in to account when setting your investment goals.
Risk Profile Investment Style
Conservative
Your primary investment goal is capital protection. You require
stable growth and/or a high level of income, and access to your
Investment within 3 years.
Cautious Your primary investment goal is capital protection. Investors in
this risk profile require fairly stable growth and/or a moderate
level of income. Your investment term is 3 years or more
Moderate Your primary investment goal is capital growth. You can tolerate
some fluctuations in the value of your investment in the
anticipation of a higher return. You don't require an income and
you are prepared to invest for 5 years or more.
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Moderately
aggressive
Your primary investment goal is capital growth. Investors in this
risk profile can tolerate a fair level of fluctuations in the value of
you investment in anticipation of possible higher returns. You
don't require an income and you are prepared to invest for 5 to 10
years.
Aggressive Your primary investment goal is long-term capital growth. You
can tolerate substantial fluctuations in the value of your
investment in the short-term in anticipation of the highest
possible return over a period of 10 years or more.
Executive
Summary
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EXECUTIVE SUMMARY
Individuals invest their money for generating return on their investment, since
being investment generate return it has certain amount of risk factor. Every
investor has a different approach towards the risk. When it comes to investing, it
is important to consider your risk profile or tolerance carefully, including how
comfortable you are with the possibility of losing money, or that returns on your
investments. The risk profile of investors depends upon their demographic
structures or characteristics.
The project deals with the analyzing investment pattern of the investor on risk
profile
at Nirmal Bang Securities Pvt Ltd and what are the risk factors that influence the
type of investment made by individuals . As we all know that every person who
wants to gain better returns in future they must have to invest their money in
stock market or anywhere else. This study describes the investment pattern use
by different persons while doing investment in stock market keeping different
risk in mind.
The main reason to choose this research is to find out the investment pattern
behavior in respect of their risk bearing capacity and this research helps the
company to target the investors according to their risk ability. The research
process chosen by me is qualitative and quantitative research. Questionnaires in
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part help me a lot in finding the actual position of the market under the survey
method.
A sample size of about 96 respondents which includes individual investors as
well as corporate investors was taken for purpose from various parts of Mumbai.
After the survey was completed, the data was first stored and then analyzed on
the chosen parameters. This analyzed data was later on converted into graphs.
Such as pie chart, bar graphs, etc this was to make result easily comprehensible
by any one going through the report. Later on, all this information was compiled
in the form of a presentable and highly comprehensible report.
After analyzing the data, the problem which has been identified that most of the
investors are ready to bear risk in expectation of higher returns. There is a strong
relationship in investment pattern and risk bearing capacity of investors while
doing investment. For analyzing the data we used chi- square and phi-Cramer V
test in SPSS V 19.0 and use MS Excel 2007 for making graphs
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Nirmal Bang Securities Pvt Ltd
Introduction
Nirmal Bang Securities Pvt Ltd. (Nirmal Bang) is amongst the top full-service
broking house, offering various financial products and services. The Nirmal Bang
group of companies was founded by Nirmal Bang, Dilip Bang and Kishore Bang
was running
successfully since 1986 in the country. It is the retail broking arm of the Mumbai-
based, which has over five decades of experience in the stock broking business.
Nirmal Bang offers its customers a wide range of equity related services
including trade execution on BSE, NSE, Derivatives, depository services, online
trading, investment advisory, Mutual Fund Advisory etc.
Nirmal Bang offers trading in equities, derivatives, commodities and currency.
Equity trading is offered to retail clients through multiple channels including
online trading in the BSE and the NSE, for cash & derivatives segments. In
addition to those services they also offers wide range of financial products like
mutual funds, IPOs, fixed deposits & bonds, dedicated desk for NRIs and
institutional clients, insurance broking(both life & general), clearing services,
margin financing, investment banking, portfolio management, wealth advisory &
research. Live quotes, market commentary and major news are also offered
through its Website.
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The Nirmal Bang headed by Shri.Dilip Bang and Shri.Kishor Bang who bring
forward industry expertise and strong business acumen.
The group company is a member of India’s premier exchanges, namely, Bombay
Stock Exchange Limited (BSE), National Stock Exchange of India Limited
(NSE), Multi Commodity Exchange of India Limited (MCX), National
Commodity & Derivatives Exchange Limited (NCDEX), National Multi
Commodity Exchange of India Limited (NMCE) and MCX Stock Exchange
Limited and is also depository participants of NSDL and CDSL.
Mission
“ To Work together with integrity and make our customer feel valued ”
Vision
To Create valuable relationship and provide the best financial service most
professionally.
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Shri. Dilip Bang Shri. Kishor Bang
Co-Founder and Director of Company Co-Founder and Director of
Company
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Ethos & Values
The company strives to maintain ethical standards at all times and lays strong
emphasis on honesty, integrity and confidentiality. It speaks and acts to ensure
transparency at all levels and in everything it does, since at Nirmal Bang, it’s a
relationship beyond broking.
16

Nirmal Bang's Trading Platforms
1. ODIN Diet
Nirmal Bang is using ODIN Diet trading platform which is one of the
well known and famous platform. It also works great on low bandwidth.
ODIN Diet is an application-based trading front office solution enabling
clients to connect to Nirmal Bang servers via the Internet. It is a light-
weight easily downloadable application which facilitates efficient trading
and incorporates many appealing features required by active clie nts.
2. Beyond
Beyond is stock trading mobile application provided by Nirmal Bang. It
allows their clients to connect to the stock markets to track and trade in
Indian Equity, Derivatives, Commodities and Currency markets. Using
this application one can trade in NSE, BSE, NSEFO, MCX & NCDEX.
This platform offers all the features like Live Reports, Place After Market
17

Orders (AMO), Intraday and Historic charts, Customized and Multiple
Market Watch etc.
18

Benefits
 Free Depository A/c
 Secure Order by Voice Tool Dial-n-Trade.
 Automated Portfolio to keep track of the value of your actual purchases.
 24x7 Voice Tool access to your trading account.
 Personalized Price and Account Alerts delivered instantly to your Cell
Phone & E-mail address.
 Special Personal Inbox for order and trade confirmations.
 On-line Customer Service via Web Chat.
 Anytime Ordering.
 NSDL/CDSL Account
 Instant Cash Transformation.
 Multiple Bank Option.
 Enjoy Automated Portfolio.
 Buy or sell even single share.
Head Office
38-B / 39, Khatau Building, 2nd Floor
Alkesh Dinesh Mody Marg
Fort Mumbai, 400 001
Maharashtra
Corporate Office
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B-2, 301/302, Marathon Innova,
Nr. Peninsula Corporate Park,
Lower Parel (W),
Mumbai, Maharashtra 400013
Product and Services
Equity & Derivatives Trading
"Shares are the most Commonly known form of investment in the world. It gives
you part of ownership or share in Business. An equity investment generally refers
to the buying and holding or trading of shares to gain income from daily price
movements, dividends and capital gains, as the value of the stock moves. The
tenure of investors varies from few minutes (for day Trader's/ arbitrageurs-Short
term) to multiple years (for long term investors). In today’s equity markets
provide modern, fully computerized trading systems designed to offer investors
to invest in easier way"
Nirmal Bang Provides Quality of services whose functions is beyond mere
execution of Buying & Selling. Our Wide range of daily, weekly and special
Research reports with in-depth analysis on markets Wide array of products
including Technical, Fundamental, Derivatives, Macroeconomic and Mutual
Fund research undertaken by Expert Sector Analysts with professional industry
experience helps you assimilate massive amount of Information.
Purpose is to Simplify investing for you and provide long term Values to our
Customer's, with suitable Trading solutions
22

Nirmal Bang can enhance your investing experience with :
 Multiple market watch facility with streaming quotes (Live Market
Rates*)
 Seamless (2– in – 1) trading experience (Demat & Trading A/C)
 Instant Fund transfer facility
 Inclusive research reports & well-timed advisory services
 24X7 access to back-office
 Low bandwidth option for anywhere access
 View critical market information such as Market Depth, Most Active
Scrips, Top Gainers/ Losers etc.
 Online real time advice/ recommendations on your trading platform
 Review your Margin Status, Holding Report, Order and Trade Book on a
real time basis
 After Market Order (AMO) facility
 Single window order entry with instant confirmation
 128 bit encryption security certified by Entrust SSL
 Telephonic Assistance through centralized Helpdesk
Value Added
 Access your ledger balances and account information over the internet
and at the branches help desk
 Browser and application based platforms can also be made available for
commodity trading
 Free research report subscription will help in better decision making
23

 SMS services for research advice to keep you abreast with your
investments
 Regular news and updates on market
 Allows you to choose from several customized/multiple brokerage plans
to suit your trading needs
Forex Trading
Trading in currency derivatives or Forex trade as it is better known is a very
lucrative investment option in India. Nirmal Bang provide our services as the
retail Forex brokers to our esteemed clients on a personalized level. Extensive
research based speculations help the clients to choose the right currency to trade
with and help them secure maximum benefit from the investment. Online
brokerage services are committed to provide better and faster execution of this
difficult trade on behalf of the investors in the simplest manner.
Nirmal Bang take a personalized approach to guide the investors in currency
trade to ensure the maximum investment profits with the least risk. Guiding the
investor from the upward/downfall in the currency market keeping in mind his
personal interest is guaranteed through the recommendations made by our
competent research team. Team of technical analysts ensures continuous hedging
of the investment risk in the trade involving currency futures. Our membership at
NSEC, BSEC and MCXC helps our clients in dealing currencies to derive
immense benefits by hedging their requirements
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Benefits for Forex Trading
 Small orders can be executed up to 1 contract or 1000 USD without any
additional cost.
 Transparency of Quotes, Market Price and Price Determination.
 Trade in the currency futures require Less Margin
 Synchronization with International Market.
 Less Fluctuation.
 Low Margins.
Value Add for Forex Trading
commodity trading
investments
25

Commodity Trading
Nirmal Bang offers to clients commodity Trading in the commodity markets
involving Grains, metals, oil, crude, etc. Our personalized services in commodity
trade and investment through our competent and knowledgeable team of
professionals involve trading of commodity derivatives in terms of futures and
options.
At Nirmal Bang aim to providing clients with options to diversify their wealth
management portfolios with low investment and best market prices. The
commodity trade in terms of futures and options generally takes place through
commodity exchanges. Services through MCX, NCDX & NMCE as well as our
nationwide network and powerful research team are capable of catering to the
investors with the services uniquely fitted to the requirements of exchange based
commodity trades.
trust based and ethical personalized services and guide them through the huge
investment opportunities available in commodity market related to grains, metals,
oil, crude, etc."
Mission is to help clients in making informed investment decisions in commodity
trade. Services are aimed at assisting clients in their wealth creation through
continuous research, innovation and providing the clients with phenomenal
growth opportunities
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A future trading eases the hassles and costs of settlements and storage for traders
who do not want custody. The most lucrative element of futures trading is that it
allows investors to participate and trade at nominal costs.
a) You no longer need to put the whole amount for trading, only the margin
amount is required.
b) Traders can earn from short selling.
Trade in Commodity Futures
Market - Trading in commodities provides a lucrative market opportunity for
investors, arbitragers, hedgers, traders, manufacturers, exporters and importers.
The listed commodities include Bullion, Metals, Energy and Agri products
Exploitable fundamentals - Commodity trading operates on the simple principle
that “Price is a function of Demand and Supply”. This makes things really easy to
understand and exploit
Portfolio diversifier
Commodity Futures derive their prices from the underlying commodity and
commodity prices cannot become zero. Commodity has a global presence and
hence, it''s a good portfolio diversifier.
Extended trading hours
Indian commodity market operates for 14 hours a day covering timings of all
major international commodity exchanges, thus giving traders ample time to earn
profits
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Option of trading in Demat form
Now, one does not need to hold commodities physically in warehouses. Now-a-
days depositories offer to hold your commodities in a Demat form.
Benefits Of Commodity Trading
commodity trading
investments
Portfolio Management Services
"Nirmal Bang Securities Pvt Ltd is a SEBI licensed Portfolio Manager, who
endeavors to provide Investment solutions to HNIs clients through PMS
Platform. Portfolio Managers are equipped to create a basket of customised
investment products across a wide spectrum of traditional and Alternate Asset
classes across various investment avenues like Equities, Fixed Deposits, Mutual
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Funds, Bonds etc. to meet unique needs that is best suited for you in the current
market scenario."
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Process of Account Opening
LEAD MANAGEMENT SYSTEM (LMS) / REFERENCES
CONTACT
TELEPHONE AND PRESONAL VISIT
APPOINTMENT
DEMONSTRATION
AGREE DISAGREE (CLOSE)
DOCUMANTATION
FILLING THE FORM
SUBMISSION THE FORM
LOGIN OF THE FORM
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SENDING THE ACCOUNT OPENING KIT TO THE CUSTOMER FOR
TRADING
Nirmal Bang Brokerage
 Trading Account Opening Charges (One Time): Rs 0
 Trading Annual maintenance charges (AMC): Rs 0
 Demat Account Opening Charges (One Time): Rs 0
 Demat Account Annual Maintenance Charges (AMC): Rs 200 /Yr
Basic Plan
In this plan the brokerage is charged in % of the transaction. The brokerage
charged in this plan is as below:
 Equity Delivery: 0.2%
 Equity Intraday: 0.02%
 Equity Future: 0.02% of Turnover
 Equity Options (Each Lot): Rs 35
 Currency Future: 0.02%
 Currency Options (Each Lot): Rs 20
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 Commodity: 0.01% of Turnover
Charges EQUITY Delivery EQUITY Intraday
STT 0.01% on both Buy and Sell 0.025% on the Sell Side
Transaction
Charges
0.0039% 0.0039%
Goods and Services
Tax (GST)
18% on Brokerage +
Transaction Charge
18% on Brokerage +
Transaction Charge
SEBI Charges 15 Rs/Crore 15 Rs/Crore
Stamp Duty 0.01% subject to a maximum of
Rs 50 - Varies by State
0.01% subject to a maximum of
Charges Futures Options
STT 0.01% on Sell Side 0.017% on Sell Side(on
Premium)
Transaction
Charges
0.0024% 0.057% on premium
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Goods and Services
Tax (GST)
18% on Brokerage +
Transaction Charge
18% on Brokerage +
Transaction Charge
SEBI Charges 15 Rs/Crore 15 Rs/Crore
Stamp Duty 0.01% subject to a maximum of
0.01% subject to a maximum of
Charge Structure Explanation:
 STT: This is charged only on the sell side for intraday and F&O trades. It
is charged on both sides for Delivery trades in Equity.
 Stamp Duty: Charges based on the state the customer is located in.
 Goods and Services Tax (GST): This is charged at 18% of the total cost
of brokerage plus transaction charges.
 SEBI Turnover Fees: This is charged at Rs 15 per Crore.
 Transaction Charges: This is charged at Rs 325/crore for Equity, Rs
230/crore for Futures, Rs 5500/crore on premium for options.
Depository Service Charges
For Resident Retail Customers and Corporates
Particulars Charges
Account Opening Nil
Closure of Account Nil
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First Year AMC Rs 200
Annual Maintenance Charges Rs 200 (Pro Rata)
Demat Charges (Market & off
Market)
0.03% with Rs 25 minimum per debit instruction
Dematerialisation Charges Rs 40 (For every 50 certificate)
Rematerialisation Charges Rs 15 per certificate or 0.04% of value of securities
whichever is higher
Pledge Creation Rs 100 or 0.02% whichever is higher
Pledge Closure Rs 100 or 0.02% whichever is higher
Pledge Invocation Rs 100 or 0.02% whichever is higher
Rejection / fails Nil
SWOT Analysis at Nirmal Bang
Strengths
1. Big client base
2. In-house research house
3. online as well as offline trading
4. Online IPO/ MF services
5. Share shops
6. Transparent
7. User friendly tie ups with 10 banks
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8. Excellent order execution speed and reliability
Weakness
1. Lack of awareness among customer
2. Less focus on customer retention
3. Less Exposure
Opportunities
1. Diversification
2. Product modification
3. Improve Web based trading
4. Provide competitive brokerage
5. Concentrate on PMS
6. Focus on Institutional investors
7. Concentrate on HNI s (high net worth investor)‟
Threats
1. Aggressive promotional strategies by close competitor like Religare, Angel
Broking, Sharekhan and India bulls.
2. More and more players are venturing into this domain, which can further
reduce the earning of Nirmal Bang.
3. Stock market is very volatile, risk involves is very high.
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 To understand the risk profile of investors.
 To study risk bearing capacity on the basis of gender,
education, occupation, age, family income and number of
dependents
 Analysis of Trading platform and Operations of Nirmal Bang
from Client perceptive
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Research Methodology
Research methodology is way to systematically solve the research problem.
Research, in
common terms refers to a search for knowledge. Research methodology consists
of different steps that are generally adopted by a researcher to study the research
problem along with the logic behind them.
Research Design
 Research design is the plan, structure and strategy of investigation
conceived so as to obtain answers to research question.
 There are two types of research design. One is exploratory research and
other is descriptive research
Exploratory Research
 We studied the company report, talked to the customers and employee of
the company. We identified that in spite of providing various
opportunities customers may not be aware of derivative and commodity
products.
Descriptive Research
Survey method was adopted for this research
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Data Sources
The study is mainly based on the data collection from primary as well as
secondary
sources.
Primary data: Data collected for specific purposes in the form of questionnaire
Secondary data: Data existing in the form of Books, Internet, Catalogues etc.
Research Methodology
Research design : descriptive in nature.
Data source : data collected from primary and secondary sources.
Primary data : primary data is collected from the respondent through these
structured questionnaires.
Sampling Design
Sample size : 96
Sampling procedure : Convenience sampling
Statistical tool : Percentage method, mean, chi-square test.
Statical Tools
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For the purpose of analysis, Mean and percentage methods are used for the
calculation
and the result was interpreted. This test was used to minimize the error of the data
collected.
Statical Tools Used
1. Cross tab method
2. Chi square test
3. Phi and Cramer V test
Null hypothesis (HO) states: the two attributes are independent of each other.
Alternative hypothesis (HI) states: the two attributes are dependent of each
other
Data Analysis
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& Interpretation
To understand the risk profile of investors
Q - What do you expect when you invest ?
CHART-1
Interpretation:- This chart-1 shows, out of 96 respondents 40 people are ready
to bear nominal risk and 36 people don t want to take any risk. This shows that‟
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around 79% respondents are conservative in terms of taking risk and only 21%
respondents are ready to bear risk and out of these 21 % only 3% are ready for
high risk situation.
Q : How long do you normally hold investment?
CHART -2
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Interpretation:- As per Chart-2,most of the respondents invest for a longer time
period i.e.
around 32% and rest of the respondents have very less variability regarding
holding of
investment as all other respondents are equally interested in daily, weekly or
monthly holding of investment i.e. around 20% go for each kind of investment
holding
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Q : If your investments were to fall in value by 15 per cent over a one-year
period,
you will?
Chart -3
Interpretation:- Chart-3 is giving the overview regarding respondents reaction
related to their investment, if market falls in value. We can see here the
respondents /investors are neither very conservative nor aggressive in market
condition i.e. only 15% investors are willing to withdraw all money or invest
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more money in such situation. Most of the respondents are aware & ready for
such condition. They want to be in the market in expectation of money of market.
Q: You are ready for limited losses in expectation of higher long-term
returns?
Chart-4
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Interpretation:- Chart-4 is about that whether investors are ready to bear limited
loss in
expectation of high returns we find that only around 30% investors are not agree
for this but around 70% are considering the idea i.e. most of the respondents are
aware about the ups & downs of stock market & ready for risks involved in it in
expectation of getting higher returns.
Q.. I am willing to experience the ups and downs of the market for the
potential of
greater returns.
Chart-5
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Interpretation:- Chart-5 is about that whether investors are ready to experience
ups and downs of market we find that only around 16% investors are not agree
for this but around 84% are considering the idea i.e. most of the respondents are
aware about the ups & downs of stock market & want to experience that.
48

Q: My main concern is security; keeping money safe is more important than
earning
high returns.
Chart-6
Interpretation:- This chart -6 shows the investors are aware about the highs and
lows of
security market and want to experience that also they are quite positive towards
market as they expect after a low market will recover & give them higher return
still the safety is major concern of investors. Out of total 96 respondents only less
than 10% disagree with the fact.
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Q: I am fairly experienced in investment.
Chart-7
Interpretation:- As we can see in the chart-7, most of the respondents i.e.
around 50% are not sure about their investment capabilities. They are not very
sure that their expectation of decision is fair enough. Here I want to mention that
the market is so volatile in India that very less investors find themselves fairly
enough experienced & don t bear losses.‟
50

Q: I am very secure related to my future income (such as from salary,
pension or other investments)?
Chart-8
Interpretation:- Chart-8 shows that most of people involve in security market
are quite secured related to their future income. We can also understand the
statement that the people who have fair enough income resources, comes in
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security investment as they consider all the pros. & cons. Of the market they
know that the market is good place to get better returns but it also contain risk so
losses bearable only in the case of secured future returns.
Q: To study risk bearing capacity on the basis of gender, education,
occupation, age, family income and number of dependents.
To fulfill this objective I used cross tabs & chi-square test
The results are compiled in a sheet which shows the significance value & chi-
square values of all the cross tabs. Here I am providing 2 null hypothesis & 2
alternative hypothesis conditions as sample.
Sample- Null Hypothesis
Gender in respect of expectation from an investment
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Interpretation: - As the chi-square shows the value of P is higher than .05, we
will accept null hypothesis i.e. there is no significant relationship in between the
expectation from investment with change in gender. Males and females are
equally risk averse & conservative related to taking risk in stock market.
Gender in respect of holding time of investment
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Interpretation :- As the chi-square shows the value of P is higher than .05, we
will accept null hypothesis i.e. there is no significant relationship in between the
investment holding with change in gender. Males and females are equally risk
averse & conservative in holding the investment.
Sample- Alternate Hypothesis
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Family income in respect of risk bearing capacity
Interpretation :-As the chi-square shows the value of P is higher than .05, we
will accept
alternative hypothesis i.e. there is a significant relationship in between the
expectation from
investment with change in family income. Investors are balanced & aggressive
related to taking risk in stock market.
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Education in respect of holding time period for investment
Interpretation :- As the chi-square shows the value of P is higher than .05, we
will accept null hypothesis i.e. there is a significant relationship in between the
investment holding with change in education. Investors are risk averse &
conservative related to holding the investment.
56

As from the above crosstabs the table- 1 is drawn in reference with the chi-
square values and the significance values on different parameters and fills the box
with yellow color who gives the best alternative hypothesis value. Then after
interpret that value which is come under that yellow box and show their cross
tabs.
57

Expectation of risk from an investment
From the Table-1 we can see that the all respondents views are indifferent in‟
terms of
expectation of risk from investment irrespective of their gender, occupation, age,
education, income, No. of dependent in the family and the percentage of total
income they invest as most of the respondents wish to tale either no risk or
nominal risk. This defines the conservatism related to risk profile of the
respondents. But on the basis of Family income it shows a significant relationship
as p-value is less than .05, which suggests accepting alternate hypothesis. The
relationship is defined as follows:
Table-2
Family income in respect of expectation of risk from an investment
60

Here from Table -2, it is clear that all the respondents belong to the family
income group of < 5 Lakh and 5-15 Lakh are willing to take only nominal or no
risk. In this situation as the income level increases the risk taking ability is shifted
towards the bearing the more risk.
This chart shows that most of the respondents lie in the income level group of <5
lakh want to go for no risk situation but as the income level increases to 5-15
lakh people get shifted from no risk to nominal risk situation. In the chart it is
shown that out of 43 respondents who lies between the income level group
of<5lakh around 50% respondents do not want any risk in their investments. are
go for no risk and only 2% are going for high risk investments. Out of 49
respondents who lies in between income group of 5-15 lakh 46% are go for
moderate risk ,30% are for no risk . So it defines that there is direct relationship
between income and risk bearing capacity of persons.
62

People belong to the income group of 15-25 Lakh as are more towards taking
moderate risk. But the strength of relationship is very low as the value of
Cramer s‟ V is .338.
Investment holding
terms of
expectation of risk from investment irrespective of their gender, occupation, age,
education, income, No. of dependent in the family and the percentage of total
income they invest as most of the respondents wish to hold investments either for
a week or for a year. This defines the conservatism related to risk profile of the
respondents. But on the basis of Education it shows a significant relationship as
p-value is less than .05, which suggests accepting alternate hypothesis.
The relationship is defined as follows:
Table-3
Education in respect of their investment holding
63

Here from Table -3, it is clear that all the respondents belong to the education
group of
64

graduates are willing to hold investments for a week or for a year.
This chart shows that most of the respondents lie in the education level group of
graduate wants to go for week or a year trading but as the education level
increases to post graduates people get diversify their investment holding period.
In the chart it is shown that out of 51 respondents who lies between the education
level group of graduates around 33% respondents go for a year based investment
holding. And only 7% are going for a day investment holding. Out of 26
respondents who lies in between education group of post graduates 35% are go
for month investment holding, 15% are for year investment holding. So it defines
that there is direct relationship between education and investment holding tenure.
People belong to the education group of graduates are more towards the holding
investment for a week or a year . But the strength of relationship is very low as
the value of Cramer s V is .266.‟
Limited losses in expectation of higher long term returns
terms of bearing limited losses in the expectation of higher long term returns
irrespective of their gender, occupation, age, education, income, No. of
dependent in the family and the percentage of total income they invest as most of
the respondents wish to tale either agree or neither agree or disagree in respect of
bearing losses in expectation of higher long term returns. This defines the
65

balanced approach related to risk profile of the respondents. But on the basis of
Education it shows a significant relationship as p-value is less than .05, which
suggests accepting alternate hypothesis. The relationship is defined as follows:
Table-4 ( Education in respect of bearing limited losses in
expectation of higher long term returns)
66

Here from Table -4, it is clear that all the respondents belong to the education
group of
graduate are willing to take limited losses in expectation of higher returns.
This chart shows that most of the respondents lie in the education level group of
graduate and under graduates wants to bear limited losses in expectation of
higher returns but as the education level decreases to under graduates people is‟
more concern about bearing limited losses in expectation of higher returns. In the
chart it is shown that out of 51 respondents who lies between the education level
group of graduates around 33% respondents are agree with bearing limited losses
67

in expectation of higher returns . And only 13% are not agree with it. Out of 26
respondents who lies in between education group of post graduates 58% are
agree, 12% are strongly agree with it. So it defines that there is direct relationship
between education and bearing limited losses in expectation of higher returns.
People belong to the education group of graduates as are more towards in taking
the limited losses in expectation of higher returns. But the strength of relationship
is very low as the value of Cramer s V is .313.‟
Income in respect of limited losses in expectation of higher long
term return’s
income it shows a significant relationship as p-value is less than .05, which
suggests accepting alternate hypothesis. The relationship is defined as follows:
Table -5 Income in respect of limited losses in expectation of higher long
term return’s
68

Here from Table -5, it is clear that all the respondents belong to the income group
of <3 lakh and 3-5 lakh are willing to take limited losses in expectation of higher
returns.
This chart shows that most of the respondents lie in the income level group of <3
lakh are agree for taking limited losses in expectation of higher returns but as the
income level increases to 10- 20 lakh more people get shifted towards agree for
taking limited losses in expectation of higher returns. In the chart it is shown that
out of 41 respondents who lies between the income level group of 3-5lakh around
32% respondents are agree in taking limited losses in expectation of higher
returns. and only 2% are strongly agree with it.But if the income increases to 10-
20 lakh most of the persons are move towards strongly agree situation. So it
defines that there is direct relationship between income and limited losses in
expectation of higher returns.
70

People belong to the income group of <3 lakh and 3-5 lakh as are more towards
in taking the limited losses in expectation of higher returns. But the strength of
relationship is very low as the value of Cramer s‟ V is .274.
TABLE-6 (No. of dependents in family in respectof limited losses in
expectation of
higher long term return’s)
71

Here from Table -6, it is clear that all the respondents belong to the no. of
dependents group of 3-4 and 5-7 members are willing to take limited losses in
This chart shows that most of the respondents lie in the No. of dependents level
group of 3-4 are agree for taking limited losses in expectation of higher returns
but as the No. of dependents level increases to >7 more people get shifted
towards disagree for taking limited losses in expectation of higher returns. In the
chart it is shown that out of 51 respondents who lies between the No. of
dependents level group of 3-4 around 37% respondents are agree in taking
limited losses in expectation of higher returns. and only 4% are strongly agree
with it. But if the No. of dependents increases to >7 most of the persons are move
towards disagree situation. So it defines that there is direct relationship between
income and limited losses in expectation of higher returns.
People belong to the income group of 3 -4 and 5-7 members as are more towards
Family income in respect of limited losses in expectation of higher
long term return’s
73

family income it shows a significant relationship as p-value is less than .05,
which suggests accepting alternate hypothesis. The relationship is defined as
follows:
TABLE-7 ( Family income in respect of limited losses in expectation of
higher long term return’s)
74

Here from Table -7, it is clear that all the respondents belong to the family
income group of < 5 Lakh and 5-15 Lakh are willing to take limited losses in
75

This chart shows that most of the respondents lie in the family income group of
5-15 lakh are agree for taking limited losses in expectation of higher returns but
as the family income level increases to 15-25 lakh no. of people are decreases
towards disagree for taking limited losses in expectation of higher returns. In the
chart it is shown that out of 49 respondents who lies between the family income
level group of 5-15 lakh around 47% respondents are agree in taking limited
losses in expectation of higher returns. and only 16% are strongly disagree with
it. But if the family income increases to 15-25 lakh no. of the persons are
decreased in disagree situation. So it defines that there is direct relationship
between income and limited losses in expectation of higher returns.
People belong to the income group of <5 lakh and 5-15 lakh as are more towards
Percentage of total investment in respect of limited losses in
expectation of long term return’s
the respondents wish to take either agree or neither agree or disagree in respect of
76

percentage of total investment it shows a significant relationship as p-value is
less than .05, which suggests accepting alternate hypothesis. The relationship is
defined as follows:
TABLE -8 (Percentage of total investment in respect of limited losses in
expectation of
long term return’s)
77

Here from Table -8, it is clear that all the respondents belong to the percentage of
total income in investment group of < 20% and 20%-40% are willing to take
limited losses in expectation of higher returns.
This chart shows that most of the respondents lie in the percentage of total
investment group of below 20% are neither agree or disagree for taking limited
losses in expectation of higher returns but as the percentage of total investment
level increases to 40%-60% no. of people are increases towards agree for taking
limited losses in expectation of higher returns. In the chart it is shown that out of
52 respondents who lies between percentage of total investment level group of
below 20% around 38%respondents are neither agree or disagree in taking
limited losses in expectation of higher returns and only 26% are agree with it. But
if the percentage of total investment increases to 40%-60% no. of the persons is
increased in agree situation. So it defines that there is direct relationship between
income and limited losses in expectation of higher returns.
78

People belong to the income group of <20% and 20%-40% as are more towards
relationship is very low as the value of Cramer s V is .288.‟
79

Findings
&
Conclusions
Findings and Conclusions
 Most of the respondents are ready to take either no risk or nominal risk
while doing the investment.
 Most of the respondents are generally go for longer time horizon.
 There is a situation of investment fall by 15% then most of the
respondents are neither conservative nor aggressive.
80

 Most of the respondents are agree to take limited losses in expectation of
higher returns.
 Most of the respondents are give their opinion in the favor of
experiencing the ups and downs of the market.
 Most of the respondents are agreeing with this there main concern is
safety.
 Most of the respondents are said that they are not sure about fairly
experienced in investment.
 Most of the respondents are in favors of they are very much concern with
security related to future income.
 This study shows most of the respondents either go for conservative risk
profile or balanced risk profile.
 This study helps in describing the risk profile of investors.
 This study describes the strong relationship between demographic data in
respect of different parameters.
81

Bibliography
 www.google.com
 www.wikipedia.com
 www.ebscohost.com
 www.sharekhan.com
 www.chittorgarh.com
 www.nirmalbang.com
 www.bloomberg.com
 Financial derivatives and risk management by L.C.GUPTA
82

Questionnaire
Investment Pattern on the basis of Risk profile of Investors
I am a final year student currently pursuing my Post Master of Management
Science (MMS) at RAJEEV GANDHI COLLEGE OF MANAGEMENT
STUDIES Navi Mumbai under Mumbai university. I am conducting a research
study on “An analysis on investor behavior on various investment avenues”. This
research (project) is taken as a partial requirement for the completion of my
MMS. I seek your kind assistance in completing the attached questionnaire which
would take few minutes from your valuable time. Your responses will be treated
as Strictly Confidential.
Personal Information
84

1. Gender
a) Male b) Female
2. Occupation
i) Business ii) Service iii) Students iv) House wife
3. Age
i) 20-30 ii) 30-40 iii) 40-50 iv) Above 50
4. Education
i) Under Graduate ii) Graduate iii) Post Graduate iv) Ph. D.
5. Income
i) < 3 Lakh ii) 3-5 Lakh iii) 5-10 lakh iv) 10-20 Lakh v) >
20 Lakh
6. No. of dependents in Family
i) No dependent ii) 1-2 iii) 3-4 iv) 5-7 v) >7
7. Family Income
i) <5 Lakh ii) 5-15 lakh iii) 15-25 Lakh iv) > 25 Lakh
8. How much percentage of total income he/she invests?
i) Below 20% ii) 20 % - 40 % iii) 40 % - 60% iv) > 60 %
85

The risk-profile questionnaire
1. What do you expect when you invest?
a) no risk
b) nominal risk
c) moderate risk
d) higher risk
2. How long do you normally hold investments?
a) For a day
b) For a week
c) For a month
d) For a year
3. If your investments were to fall in value by 15 per cent over a one-year
period, you will
a) withdraw all money from share market
b) Take out some money and move it to a safer investment.
c) Wait until market recovers the loss and then consider other investments.
d) Stick to the investment.
e) Invest more money in the same investment as it is 15 per cent cheaper
4. You are ready for limited losses in expectation of higher long-term
returns?
a) Strongly disagree
b) Disagree
c) Neither agree nor disagree
d) Agree
e) strongly agree
86

5. I am willing to experience the ups and downs of the market for the
potential of greater returns.
a) Strongly disagree
b) Disagree
c) Neither agree nor disagree
d) Agree
e) Strongly agree
6. My main concern is security; keeping money safe is more important than
earning high returns.
a) Strongly disagree.
b) Disagree.
c) Neither agree nor disagree.
d) Agree.
e) Strongly agree.
7. I am fairly experienced in investment.
b) Disagree.
d) Agree.
e) Strongly agree.
8. I am very secure related to my future income (such as from salary,
pension or other
investments)?
b) Disagree.
d) Agree.
87

INVESTMENT PATTERN ON THE BASIS OF RISK PROFILE OF INVESTORS

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