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INTRODUCTION
1.1 INTRODUCTION
Selection of securities
Portfolio Execution
Portfolio Revision
Performance Evaluation
But this investment decision of the investors does not remain rigid
for a long period and the composition of the portfolio keeps changing due to
various reasons. The main reason for changing the investment decision is
fluctuation in prices of stock. This is mainly influenced by goodwill of the
company, the returns it gives to the investors etc. but in recent times various
scam and rift in family business have shaken the stock market and the crises is
yet to be overcome. Such incidents induce the investors to reconsider their
investment decisions. This study is an attempt to find out the factors that are
considered to make investment decision and the factors that cause the changes
in the investment decision.
and satisfaction.
1.11 HYPOTHESIS
satisfaction.
The purpose of the pilot study was to test the validity of the variables in the
questionnaire and to confirm the feasibility of the study. Preliminary
investigation was conducted in different parts of Chennai. The Cronbach
alpha method was applied. This method is useful to measure the reliability
and validity of the questionnaire through the coefficient which depends upon
the variance in the perception of investors. The Cronbach alpha value was
found to be 0.924 which is statistically significant at 5 per cent level. It was
oint scale of the questionnaire are
highly reliable and the samples satisfy the normal distribution rationally. Thus
the research instrument proved valid for further study.
The data collection started with segregating the region of study viz.,
Chennai into North Chennai, South Chennai, East Chennai and West Chennai.
This was done to ensure better region coverage and to receive quality data
from sample with diverse characteristics. North Chennai and South Chennai
comprises of predominantly high number of potential investors, owing to the
development it has witnessed during the last decade. On the other hand, East
Chennai and west Chennai has not grown comparatively and the hence the
proportion of potential investors is relatively less. In addition, more number
of banks and mutual fund institutions are established in North and South
Chennai, enhancing the availability of products to customers. As such, the
data collection segregated on the basis of region ensured that the random
sample has quality sample data to arrive at meaningful conclusions.
Sample Size
Data Analysis
The study takes into consideration only five asset types, which
find a prominent place in the portfolio of any investor. Any
additional asset type might alter the results.
CHAPTER SCHEME
CHAPTER 2
REVIEW OF LITERATURE
their own past realized stock portfolio performance and that experienced investors are
better able to do so. In general, we can conclude that we find evidence that investor
experience lessens the simple mathematical error of estimating portfolio returns, but seems
not to influence their 'behavioral' mistakes pertaining to how good (in absolute sense or
relative to other investors) they are.
Jasim Y. Al-Ajmi (2008) indicate that Men are less risk averse than
women, Less educated investors are less likely to take risk. Wealthy investors
are more risk tolerant than the less-
declines when they have more financial commitments as well as when they
are approaching towards their retirement age or are retired..
also stated that the numer of trading activity is more for men, people who
have higher income and those who use internet for trading. The job type also
determines the trading decisions. Self-employed individuals make more
trading transactions.
risk tolerance level. The individual investor still prefers to invest in financial
Portfolio preference
Elroy Dimson, and Mike Staunton (2003) state that Equities has an
important role in long-term portfolios. Though he risk is high, equity
outperforms bonds, bills in terms of returns. To maximize the probability of
favorable real returns, equities should be held within a diversified portfolio.
Investment decisions
creation of the organized financial markets. Five factors that influence the
least are: expected losses in other local investments, minimizing risk,
expected losses in international financial markets, family member opinions
and gut feeling on the economy.
strategies impact the portfolios they select and the returns they earn. It is
found that investors driven by objectives related to speculation have higher
aspirations and turnover, take more risk, judge themselves to be more
advanced, and underperforms relative to investors driven by the need to build
a financial buffer or save for retirement. Investors who rely on fundamental
behavior. Studies also reveal that the influence of professional advice is much
less than what is assumed. Internationalization of financial information
encourages foreign investments. Risk tolerance in investment decision is not
much influenced by gender differences. The psychological factors influence
the investment decisions of a person. Better educated investors exhibit greater
investment skills. Investment decision is also effected by genetic composition
and family environment. The investment decisions are taken to satisfy the
expectations of the investors.
satisfaction for which, at times, the investors indulge into over diversification.
The composition of portfolio aims at satisfy the various needs of the investors
which could be maximum returns, security of funds, social security or a
combination of any of these. The studies below show the investors
expectation and factors influencing their satisfaction:
GAP IN RESEARCH