Download unit – i investment setting - KV Institute of Management and

BA 7021 SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT
UNIT – I
INVESTMENT SETTING
Financial and economic meaning of Investment - Characteristics and objectives of Investment Types of Investment – Investment alternatives – Choice and Evaluation – Risk and return
concepts.
Contents
UNIT – I INVESTMENT SETTING .................................................................................................. 1
1.1 INTRODUCTION: ................................................................................................................... 2
1.2 FINANCIAL MEANING OF INVESTMENT: .............................................................................. 2
1.3 ECONOMIC MEANING OF INVESTMENT: .............................. Error! Bookmark not defined.
1.4 BASIC INVESTMENT OBJECTIVES .......................................................................................... 3
1.5 SECONDARY OBJECTIVES OFINVESTMENT: .......................................................................... 5
1.6 CHARACTERISTICS OF GOOD INVESTMENT .......................................................................... 6
1.7 DIFFERENT TYPES OF INVESTORS: ........................................................................................ 9
1.8 TYPES OF INVESTMENT: OR VARIOUS INVESTMENT ALTERNATIVES /AVENUES ............... 10
1.9 INVESTMENT RISK AND RETURN CHARACTERISTICS .......................................................... 20
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
1.1 INTRODUCTION:
When a person has more money than he requires for current consumption, he would be
coined as a potential investor. The investor who is having extra cash could invest it in securities
or in any other assets like gold or real estate or could simply deposit it in his bank account. The
companies that have extra income may like to invest their money in the extension of the
existing firm or undertake new venture. All of these activities in a broader sense mean
investment.
Investment is putting money into something with the expectation of profit. The word
originates in the Latin "vestis", meaning garment, and refers to the act of putting things (money
or other claims to resources) into others' pockets.
1.2 INVESTMENT
Investment is employment of funds with the aim of earning additional income or
capital appreciation in future. Investment has two attributes namely time and risk. Present
consumption is sacrificed to get a return in the future. The sacrifice that has to be borne is
certain but the return the future may be uncertain. This attribute of investment indicates the
risk factor. The term "investment" is used differently in economics and in finance.
1.3 ECONOMISTS MEANING OF INVESTMENT - DEFINITION
To the Economist investment is defined “as the net addition made to the nation's
capital stock that consists of goods and services that are used in the production process”. A net
addition to the capital stock means an increase in the buildings, equipment or inventories.
These capital stocks are used to produce other goods and services.
1.4 FINANCIAL MEANING OF INVESTMENT – DEFINITION
Financial investment is the allocation of money to assets that are expected to yield
some gain over a period of time. It is an exchange of financial claims such as stocks and bonds
for money. They are expected to yield returns and experience capital growth over the years.
Financial investment involves of funds in various assets, such as stock, Bond, Real Estate,
Mortgages etc. Investment is the employment of funds with the aim of achieving additional
income or growth in value.
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .

It involves the commitment of resources which have been saved or put away from
current consumption in the hope some benefits will accrue in future. Investment
involves long term commitment of funds and waiting for a reward in the future.

From the point of view people who invest their finds, they are the supplier of
‘Capital’ and in their view investment is a commitment of a person’s funds to derive
future income in the form of interest, dividend, rent, premiums, pension benefits or
the appreciation of the value of their principle capital.
The financial and economic meanings are related to each other because investment is a
part of the savings of individuals which flow into the capital market either directly or through
institutions, divided in ‘new’ and secondhand capital financing. Investors as ‘suppliers’ and
investors as ‘users’ of long-term funds find a meeting place in the market.
1.5 BASIC INVESTMENT OBJECTIVES
The main investment objectives are increasing the rate of return and reducing the risk.
Other objectives like safety, liquidity and hedge against inflation can be considered as
subsidiary objectives.
Return
Tax
Minimization
Safety (Register
under
government
regulations)
Risk
Investment
Objectives
Security
Liquidity
Hedge
against
inflation
Security:
The main objective of investment is to ensure the safety of the principal. One can afford
to lose the returns at any given point of time but s/he can ill afford to lose the very principal
itself. By identifying the importance of security, we will be able to identify and select the
instrument that meets this criterion.
Government Bonds & Bank Deposits are safer than Corporate Bonds
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
For example, when compared with corporate bonds, we can vouch safe the safety of
return of investment in treasury bonds as we have more faith in governments than in
corporations. Hence, treasury bonds are highly secured instruments. The safest investments are
usually found in the money market and include such securities as Treasury bills (T-bills),
Certificates of Deposit (CD), commercial paper or bankers' acceptance slips; or in the fixed
income (bond) market in the form of municipal and other government bonds, and in corporate
bonds
Return: Investors always expect a good rate of return from their investments. Rate of return
could be defined as the total income the investor receives during the holding period stated as a
percentage of the purchasing price at the beginning of the holding period.
Return =
End period value − Beginning period value + Dividend
---------------------------------------------------------------------- x 100
Beginning period Value
Return =
Capital Appreciation + Dividend
----------------------------------------------- x 100
Purchase Price
Capital Appreciation = Selling Price – Purchase Price
Rate of return is stated semi-annually or annually to help comparison among the
different investment alternatives. If it is a stock, the investor gets the dividend as well as the
capital appreciation as returns. Market return of the stock indicates the price appreciation for
the particular stock. If a particular share is purchased in 1998 at Rs.50, disposed at Rs.60 in
1999 and the dividend yield is Rs.5, then the return would be calculated as follows.
Return10+ 5×100 = 30%=50
Risk: Risk of holding securities is related with the probability of actual return becoming less
than the expected return. The word risk is synonymous with the phrase variability of return.
Investments’ risk is just as important as measuring its expected rate of return because
minimizing risk and maximizing the rate of return are interrelated objectives in the investment
management. An investment whose rate of return varies widely from period to period is risky
than whose return that does not change much. Every investor likes to reduce the risk of his
investment by proper combination of different securities.
Liquidity: Marketability of the investment provides liquidity to the investment. The liquidity
depends upon the marketing and trading facility. If a portion of the investment could be
converted into cash without much loss of time, it would help the investor meet the
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
emergencies. Stocks are liquid only if they command good market by providing adequate return
through dividends and capital appreciation.
Hedge against inflation: Since there is inflation in almost all the economy, the rate of return
should ensure a cover against the inflation. The return rate should be higher than the rate of
inflation; otherwise the investor will have loss in real terms. Growth stocks would appreciate in
their values overtime and provide a protection against inflation. The return thus earned should
assure the safety of the principal amount, regular flow of income and be a hedge against
inflation.
Safety: The selected investment avenue should be under the legal and regulatory frame work.
If it is not under the legal frame work, it is difficult to represent the grievances, if any. Approval
of the law itself adds a flavour of safety. Even though approved by law, the safety of the
principal differs from one mode of investment to another. Investments done with the
government assure more safety than with the private party. From the safety point of view
investments can be ranked as follows: bank deposits, government bonds, UTI units, nonconvertible debentures, convertible debentures, equity shares, and deposits with the nonbanking financial companies.
Relationship:


1.6
There is a tradeoff between risk (security) and return (yield) on the one hand and
liquidity and return (yield) on the other.
Normally, higher the risk any investment carries, the greater will be the yield, to
compensate the possible loss. That is why, ‘fly by night’ operators, offer sky high returns
to their investors and naturally our gullible investors get carried away by such returns
and ultimately lose their investment. Highly secured investment does not carry high
coupon, as it is safe and secured.

When the investment is illiquid, (i.e. one cannot get out of such investment at will and
without any loss) the returns will be higher, as no normal investor would prefer such
investment.

All these points – security, liquidity and yield – are highly dynamic in any market and
they are always subject to change and hence our investor has to periodically watch
his/her investment and make appropriate decisions at the right time.

If our investor fails to monitor her / his investment, in the worst circumstances, s/he
may lose the very investment.
SECONDARY OBJECTIVES OFINVESTMENT:
Tax Minimization:
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
An investor may pursue certain investments in order to adopt tax minimization as part
of his or her investment strategy. A highly-paid executive, for example, may want to seek
investments with favorable tax treatment in order to lessen his or her overall income tax
burden. Making contributions to an IRA or other tax-sheltered retirement plan, such as a
401(k), can be an effective tax minimization strategy.
Marketability / Liquidity:
Many of the investments we have discussed are reasonably illiquid, which means they
cannot be immediately sold and easily converted into cash. Achieving a degree of liquidity,
however, requires the sacrifice of a certain level of income or potential for capital gains.
Common stock is often considered the most liquid of investments, since it can usually be
sold within a day or two of the decision to sell. Bonds can also be fairly marketable, but some
bonds are highly illiquid, or non-tradable, possessing a fixed term. Similarly, money market
instruments may only be redeemable at the precise date at which the fixed term ends. If an
investor seeks liquidity, money market assets and non-tradable bonds aren't likely to be held in
his or her portfolio.
1.7 1.6 CHARACTERISTICS OF GOOD INVESTMENT
a. Objective fulfillment

An investment should fulfill the objective of the savers. Every individual has a definite
objective in making an investment. When the investment objective is contrasted with
the uncertainty involved with investments, the fulfillment of the objectives through the
chosen investment avenue could become complex.
b. Safety

The first and foremost concern of any ordinary investor is that his investment should be
safe. That is he should get back the principal at the end of the maturity period of the
investment. There is no absolute safety in any investment, except probably with
investment in government securities or such instruments where the repayment of
interest and principal is guaranteed by the government.
c. Return

The return from any investment is expectedly consistent with the extent of risk assumed
by the investor. Risk and return go together. Higher the risk, higher the chances of
getting higher return. An investment in a low risk - high safety investment such as
investment in government securities will obviously get the investor only low returns.
d. Liquidity

Given a choice, investors would prefer a liquid investment than a higher return
investment. Because the investment climate and market conditions may change or
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
investor may be confronted by an urgent unforeseen commitment for which he might
need funds, and if he can dispose of his investment without suffering unduly in terms of
loss of returns, he would prefer the liquid investment.
e. Hedge against inflation

The purchasing power of money deteriorates heavily in a country which is not efficient
or not well endowed, in relation to another country. Investors, who save for the long
term, look for hedge against inflation so that their investments are not unduly eroded;
rather they look for a capital gain which neutralizes the erosion in purchasing power and
still gives a return.
f. Tax shield

Investment decisions are highly influenced by the tax system in the country. Investors
look for front-end tax incentives while making an investment and also rear-end tax
reliefs while reaping the benefit of their investments. As against tax incentives and
reliefs, if investors were to pay taxes on the income earned from investments, they look
for higher return in such investments so that their after tax income is comparable to the
pre-tax equivalent level with some other income which is free of tax, but is more risky.
1.7 FACTORS TO BE CONSIDERED BEFORE MAKING INVESTMENT OR NATURE OF INVESTMENT
Risk
Capital
Appre
ciation
Stability
of Income
Return
Factors to be
considered
before making
investment
Safety
Securit
y of
Funds
Tax
Benefits
Adequate
Liquidity
a. Risk:
Risk is inherent in any investment. Risk can be defined as the probability that the
expected return from the security will not materialize. Every investment involves uncertainties
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
that make future investment returns risk-prone. Uncertainties could be due to the political,
economic and industry factors.
It may relate to
 Loss of capital
 Delay in repayment of capital
 Non-payment of interest etc.
Some instrument such as Government securities and bank deposits are almost riskless, while
others are highly risky. The risk of an investment depends upon certain factors such as
1. Maturity Period: The longer the maturity period, the greater the risk.
2. Credit Worthiness of the Borrower: The lower the credit worthiness of the borrower,
the higher is the risk.
3. Nature of Investment: The risk varies with the nature of investment. Investment in
ownership securities like equity shares carry higher risk compared to investment in debt
securities such as debentures and bonds.
b. Return:
Return is an important factor, which determines investment decision. Investor will
expects a good rate of return from their investment. The return is of two types namely Yield
and Capital Appreciation.
The dividend or interest received from the investment is known as YIELD, whereas
the difference between the sale price and the purchase price is called CAPITAL
APPRECIATION.
Sale price of the security – Purchase price of the security+ Dividend
Return = ------------------------------------------------------------------------------------- X 100
Purchase price of the security
i.e.
Capital Appreciation + Dividend
Return = ---------------------------------------------------- X 100
Purchase price of the security
c. Safety
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
Safety of an investment is an important factor, which an investor desire of his
investments. It refers to the certainty of return of capital without loss of money or time. Every
investor expects to get back capital on maturity without loss and delay. Therefore an investor
before making investment should carefully review the economic and industry trends.
Diversification of investment is safer one than investing in single securities. Thus most of
the investors tend to invest in a group of securities. Such a group of securities held together is
known as PORTFOLIO. The process of creating such portfolio is known as diversification.
d. Liquidity
An investment is said to be a liquid asset, if it can be converted into cash without delay
at full market value in any quantity. In other words, an investment which is easily saleable
or marketable without loss of money and time is said to possess liquidity.
Highly Marketable Securities
Not Marketable securities
Equity shares, Gold
Company Deposits, Bank
Deposits,
Post Office deposits,
National
Savings
Certificates
An investor generally prefers liquidity for his investment, safety of his funds, a good
return with minimum risk and maximization of return.
1.8 DIFFERENT TYPES OF INVESTORS:
Institutional
investors
Enterprising
investors
Types of
investors
Conservative
investors/
Genuine
investors.
Speculative
investors
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
Institutional investors –




Few in number,
Value of investment & resources are high.
Institutional investors have fund managers to carry out extensive analysis.
Eg. Mutual fund industries, Insurance companies, banking companies.
Conservative investors / Genuine investors.
Conservative Investors buy the securities with a view to invest their savings in profitable
income earning securities. Hold the security for long period of time. They will sell their holding
only when they are assured of a profit.
Speculative investors

Speculative investors are popularly known as speculators. The speculators are not
genuine investors. They buy securities with a hope to sell them in a future at a profit.

They are not interested in holding the securities for a longer period of time. They are
interested in price differentials only.
Enterprising investors
They assume risks very boldly as well as willingly. They aim at earning incomes as well as
capital appreciation.
1.8 INVESTMENT PROCESS
The investment process involves a series of activities leading to the purchase of
securities or other investment alternatives. The investment process can be divided into five
stages (i) framing of investment policy (ii) investment analysis (iii) valuation (iv) portfolio
construction (v) portfolio evaluation.
Investment Process
Investment
Policy
- Investible
Funds
- Objectives
Security
Analysis
is
- Market
- Industry
- Company
Valuation
Portfolio
Construction
- Intrinsic
Value
Diversification
- Future
Value
- Selection &
Allocation
Portfolio
Evaluation
- Appraisal
- Revision
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
- Knowledge
1.8.1 Investment Policy
The government or the investor before proceeding into investment formulates the policy for
the systematic functioning. The essential ingredients of the policy are the investible funds,
objectives and the knowledge about the investment alternatives and market.
Investible funds: The entire investment procedure revolves around the availability of investible
funds. The fund may be generated through savings or from borrowings. If the funds are
borrowed, the investor has to be extra careful in the selection of investment alternatives. The
return should be higher than the interest he pays. Mutual funds invest their owners’ money in
securities.
Objectives: The objectives are framed on the premises of the required rate of return, need for
regularity of income, risk perception and the need for liquidity. The risk taker’s objective is to
earn high rate of return in the form of capital appreciation, whereas the primary objective of
the risk averse is the safety of the principal.
Knowledge: The knowledge about the investment alternatives and markets plays a key role in
the policy formulation. The investment alternatives range from security to real estate. The risk
and return associated with investment alternatives differ from each other. Investment in equity
is high yielding but has more risk than the fixed income securities. The tax sheltered schemes
offer tax benefits to the investors.
The investor should be aware of the stock market structure and the functions of the
brokers. The mode of operation varies among BSE, NSE and OTCEI. Brokerage charges are also
different. The knowledge about the stock exchanges enables him to trade the stock
intelligently.
1.8.2 Security Analysis
After formulating the investment policy, the securities to be bought have to be
scrutinized through the market, industry and company analysis.
Market analysis: The stock market mirrors the general economic scenario. The growth in gross
domestic product and inflation are reflected in the stock prices. The recession in the economy
results in a bear market. The stock prices may be fluctuating in the short run but in the long run
they move in trends i.e. either upwards or downwards. The investor can fix his entry and exit
points through technical analysis.
Industry analysis: The industries that contribute to the output of the major segments of the
economy vary in their growth rates and their overall contribution to economic activity. Some
industries grow faster than the GDP and are expected to continue in their growth. For example
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
the information technology industry has experienced higher growth rate than the GDP in 1998.
The economic significance and the growth potential of the industry have to be analysed.
Company analysis: The purpose of company analysis is to help the investors to make better
decisions. The company’s earnings, profitability, operating efficiency, capital structure and
management have to be screened. These factors have direct bearing on the stock prices and
the return of the investors. Appreciation of the stock value is a function of the performance of
the company. Company with high product market share is able to create wealth to the investors
in the form of capital appreciation.
1.8. Valuation
Intrinsic Value: The valuation helps the investor to determine the return and risk expected
from an investment in the common stock. The intrinsic value of the share is measured through
the book value of the share and price earning ratio. Simple discounting models also can be
adopted to value the shares. The stock market analysts have developed many advanced models
to value the shares. The real worth of the share is compared with the market price and then the
investment decisions are made.
Future value: Future value of the securities could be estimated by using a simple statistical
technique like trend analysis. The analysis of the historical behaviour of the price enables the
investor to predict the future value.
1.8.4 Construction of Portfolio
A portfolio is a combination of securities. The portfolio is constructed in such a manner
to meet the investor’s goals and objectives. The investor should decide how best to reach the
goals with the securities available. The investor tries to attain maximum return with minimum
risk. Towards this end he diversifies his portfolio and allocates funds among the securities.
Diversification The main objective of diversification is the reduction of risk in the loss of capital
and income. A diversified portfolio is comparatively less risky than holding a single portfolio.
There are several ways to diversify the portfolio.
Debt and equity diversification Debt instruments provide assured return with limited capital
appreciation. Common stocks provide income and capital gain but with the flavour of
uncertainty. Both debt instruments and equity are combined to complement each other.
Industry diversification Industries’ growth and their reaction to government policies differ from
each other. Banking industry shares may provide regular returns but with limited capital
appreciation. The information technology stock yields high return and capital appreciation but
their growth potential after the year 2002 is not predictable. Thus, industry diversification is
needed and it reduces risk.
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
Company diversification Securities from different companies are purchased to reduce risk.
Technical analysts suggest the investors to buy securities based on the price movement.
Fundamental analysts suggest the selection of financially sound and investor friendly
companies.
Selection Based on the diversification level, industry and company analyses the securities have
to be selected. Funds are allocated for the selected securities. Selection of securities and the
allocation of funds and seals the construction of portfolio.
1.8.5 Evaluation
The portfolio has to be managed efficiently. The efficient management calls for
evaluation of the portfolio. This process consists of portfolio appraisal and revision.
Appraisal The return and risk performance of the security vary from time to time. The
variability in returns of the securities is measured and compared. The developments in the
economy, industry and relevant companies from which the stocks are bought have to be
appraised. The appraisal warns the loss and steps can be taken to avoid such losses.
Revision Revision depends on the results of the appraisal. The low yielding securities with high
risk are replaced with high yielding securities with low risk factor. To keep the return at a
particular level necessitates the investor to revise the components of the portfolio periodically.
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
1.9 INVESTMENT INFORMATION
In the investment process we have seen that the investor should have knowledge about
the investment alternatives and the markets. He has to analyze the economy, industry and the
company. For all these, he needs adequate flow of information. The source of information
varies with the type of information required.
International affairs: With increasing globalization, international events affect the economy of
the nation. Nations are economically and politically linked with each other. The economic crisis
of one nation has a contagion effect on the other. The depreciation of the peso value in Mexico
affects the trade in Asia. The South-East Asian crisis has affected Asia, United States and
Europe. Indian capital market reacted to the crisis and there was a fall in the sensex for a brief
period. The policies of the IMF and the World Bank also affect the volume of loan for the
development purpose. Not only the economic events but political events and wars also affect
the stock market. U.S. air raids on Iraq affected the Indian economy and the capital market.
Almost all the daily news papers carry the international news. Some foreign journals like
London Economist, Far East Economic Review and Indian magazines like Business World and
Fortune India review the international events. International financial institution like IMF, World
Bank and Asian Development Bank publish their own survey reports periodically.
National affairs: The growth of the national economy and political events within the nation
influence the investment decisions. The political events are provided by the news papers,
magazines like India Today, Out Look, Fortune India, The Week etc. The economic events and
their implication on the securities markets are analysed in Financial Express, Economic Times
and Business Line. RBI Bulletin and annual reports give a wide range of information regarding
macroeconomic indicators like GDP, GNP, inflation, agricultural and industrial production,
capital market, development in the banking sectors and the balance of payment. Center for
Monitoring Indian Economy also publishes reports about the macro economic factors. The
Economic Survey of India and reports of companies also provide information regarding the
economy, industry and other sectors.
Industry information: Information about the industry is required to identify the industries that
perform better than the national economy as a whole. Financial news papers regularly bring
out industrial studies for the benefit of the investors. Experts’ opinions about the industries are
available in Business India, Business Today and Dalal Street. CMIE also publishes data regarding
the industries. Bombay Stock Exchange publishes the Directory of Information that contains
industry and company information.
Company information: A source of company information must be developed to facilitate the
company analysis. The BSE, NSE and OTCEI provide details about the listed companies in the
web sites. Almost all the financial journals carry out the company analysis and even suggest
enter, exit and stay hints for the particular company stock. The Annual Reports of the
companies and the un-audited quarterly and half-yearly results also provide an insight into the
performance of the company. Software companies also sell details regarding the financial
performance of the companies in the floppies.
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
Stock Exchange Directory comes in eighteen volumes. It gives information about all listed public
companies and major public sector corporations. Kothari’s Economic and Industry Guide of
India gives relevant financial information about the public limited companies. Times of India
Directory gives detailed information about many industrial groups and companies.
Stock market information: All the financial dailies and investment related magazines publish
the stock market news. Separate News Bulletins are issued by BSE, NSE and OTCEI providing
information regarding the changes that take place in the stock market. SEBI news letter gives
the changes in the rules and regulations regarding the activities of the stock market. Reserve
Bank of India Bulletin also carries the information about the stock markets.
SECURITIES
Various types of securities are traded in the market. Broadly securities represent
evidence to property right. Security provides a claim on an asset and any future cash flows the
asset may generate. Commonly we think of securities as shares and bonds. According to the
Securities Contracts Regulation Act 1956, securities include shares, scrips, stocks, bonds,
debentures or other marketable like securities of any incorporated company or other body
corporate, or government. Securities are classified on the basis of return and the source of
issue. On the basis of income they may be classified as fixed or variable income securities. In
the case of fixed income security, the income is fixed at the time of issue itself. Bonds,
debentures and preference shares fall into this category. Sources of issue may be government,
semi government and corporate. The incomes of the variable securities vary from year to year.
Dividends of the equity shares of companies’ can be cited as an example for this. Corporate
generally raises funds through fixed and variable income securities like equity shares,
preference
shares
and
debentures.
INVESTMENT ALTERNATIVES OR TYPES OF INVESTMENT
SECURITIES
Various types of securities are traded in the market. Broadly securities represent
evidence to property right. Security provides a claim on an asset and any future cash flows the
asset may generate. Commonly we think of securities as shares and bonds.
Definition of Securities
According to the Securities Contracts Regulation Act 1956, securities include shares,
scrips, stocks, bonds, debentures or other marketable like securities of any incorporated
company or other body corporate, or government.
Securities are classified on the basis of return and the source of issue. On the basis of
income they may be classified as fixed or variable income securities. In the case of fixed income
security, the income is fixed at the time of issue itself. Bonds, debentures and preference
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
shares fall into this category. Sources of issue may be government, semi government and
corporate. The incomes of the variable securities vary from year to year. Dividends of the equity
shares of companies’ can be cited as an example for this. Corporate generally raises funds
through fixed and variable income securities like equity shares, preference shares and
debentures.
TYPES OF INVESTMENT
Direct
Variable principal
securities
Fixed principal
investments
Fixed Deposits
Savings account
Prefere
nce
shares
Indirect
Mutual
Funds
Pension
fund
Provide
nt und
Art
Antique
s
Insuran
ce
UTI
Non-security
investments
Equity
shares
Real estate
Gold
and
Silver
Commo
dities
Savings
certificates
Government
bonds
Corporate bonds
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
1.10
TYPES OF INVESTMENT: OR VARIOUS INVESTMENT ALTERNATIVES /AVENUES
Non-marketable Financial Assets:
A good portion of financial assets is represented by non-marketable financial assets. A
distinguishing feature of these assets is that they represent personal transactions between the
investor and the issuer. For example, when you open a savings bank account at a bank you deal
with the bank personally. In contrast when you buy equity shares in the stock market you do
not know who the seller is and you do not care. These can be classified into the following broad
categories:




Post office deposits
Company deposits
Provident fund deposits
Bank deposits
Equity Shares:

Equities are a type of security that represents the ownership in a company. Equities are
traded (bought and sold) in stock markets. Alternatively, they can be purchased via the
Initial Public Offering (IPO) route, i.e. directly from the company. Investing in equities is
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
a good long-term investment option as the returns on equities over a long time horizon
are generally higher than most other investment avenues. However, along with the
possibility of greater returns comes greater risk. Equity shares are classified into the
following broad categories by stock market analysts:
 Blue chip shares
 Growth shares
 Income shares
 Cyclical shares
 Speculative shares
Bonds:
Bond is a debt instrument issued for a period of more than one year with the purpose of
raising capital by borrowing.
It is certificates acknowledging the money lend by a bondholder to the company. It states it
maturity date, interest rate, and par value.
The Federal
government,
states, cities, corporations,
and
many
other
types
of institutions sell bonds. When an investor buys a bond, he/she becomes a creditor of
the issuer. However, the buyer does not gain any kind of ownership rights to the issuer, unlike
in the case of equities. On the hand, a bond holder has a greater claim on an
issuer's income than a shareholder in the case of financial distress (this is true for all creditors).
The yield from a bond is made up of three components: coupon interest, capital gains and
interest on interest (if a bond pays no coupon interest, the only yield will be capital gains). A
bond might be sold at above or below par (the amount paid out at maturity), but the market
price will approach par value as the bond approaches maturity. A riskier bond has to provide a
higher payout to compensate for that additional risk. Some bonds are tax-exempt, and these
are typically issued by municipal, county or state governments, whose interest payments are
not subject to federal income tax, and sometimes also state or local income tax.
Bonds may be classified into the following categories:






Government securities
Government of India relief bonds
Government agency securities
PSU bonds
Debentures of private sector companies
Preference shares
Money Market Instruments:
Debt instruments which have a maturity of less than one year at the time of issue are called
money market instruments. The important money market instruments are:
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .



Treasury bills
Commercial paper
Certificates of deposits
Mutual Funds:
Instead of directly buying equity shares and/or fixed income instruments, you can participate in
various schemes floated by mutual funds which, in turn, invest in equity shares and fixed
income securities.
A mutual fund is made up of money that is pooled together by a large number of investors who
give their money to a fund manager to invest in a large portfolio of stocks and / or bonds
Mutual fund is a kind of trust that manages the pool of money collected from various investors
and it is managed by a team of professional fund managers (usually called an Asset
Management Company) for a small fee. The investments by the Mutual Funds are made in
equities, bonds, debentures, call money etc., depending on the terms of each scheme floated
by the Fund. The current value of such investments is now a day is calculated almost on daily
basis and the same is reflected in the Net Asset Value (NAV) declared by the funds from time to
time. This NAV keeps on changing with the changes in the equity and bond market. Therefore,
the investments in Mutual Funds is not risk free, but a good managed Fund can give you regular
and higher returns than when you can get from fixed deposits of a bank etc.
There are three broad types of mutual fund schemes:



Equity schemes
Debt schemes
Balanced schemes
Life Insurance:
In a broad sense, life insurance may be viewed as an investment. Life insurance is a contract
between the policy holder and the insurer, where the insurer promises to pay a
designated beneficiary a sum of money (the "benefits") upon the death of the insured person.
Depending on the contract, other events such as terminal illness or critical illness may also
trigger payment. In return, the policy holder agrees to pay a stipulated amount (the "premium")
at regular intervals or in lump sums. The important types of insurance policies in India are:




Endowment assurance policy
Money back policy
Whole life policy
Term assurance policy
Real Estate:
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
For the bulk of the investors the most important asset in their portfolio is a residential house. In
addition to a residential house, the more affluent investors are likely to be interested in the
following
types
of
real
estate:



Agricultural land
Semi-urban land
Time share in a holiday resort
Precious Objects:
Precious objects are items that are generally small in size but highly valuable in monetary
terms. Some important precious objects are:
• Gold and silver
• Precious stones
• Art objects
Financial Derivative:
A financial derivative is an instrument whose value is derived from the value of an underlying
asset. It may be viewed as a side bet on the asset. The most important financial derivatives
from the point of view of investors are:


Options
Futures
Non-financial Instruments
Real estate

With the ever-increasing cost of land, real estate has come up as a profitable investment
proposition.
Gold

The 'yellow metal' is a preferred investment option, particularly when markets are
volatile. Today, beyond physical gold, a number of products which derive their value
from the price of gold are available for investment. These include gold futures and gold
exchange traded funds.
1.9 INVESTMENT RISK AND RETURN CHARACTERISTICS
The chart below provides some examples of common types of investments classified according
to their potential return and investment risk.
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
Potential
Return
Investment Risk
Examples of Common Investments
(Volatility)




High
Moderate
High
Moderate








Convertible bonds
High-yield (junk) bond funds
Large-cap stocks and funds
S&P 500 & Wilshire 5000 stock index funds
Variable annuities invested in large-cap
stock sub-accounts


Fixed annuities
Government agency securities (e.g., Ginnie
Maes)
High quality short- and intermediate-term
municipal and corporate bonds and bond
funds
Money market mutual funds
Treasury bills and notes
U.S. savings bonds (Series I and EE)
Variable annuities invested in high-quality
bond sub-accounts

Low
Very Low
Low
Very Low
Aggressive growth funds
Emerging markets mutual funds
Foreign company stocks
Global, international, sector, and precious
metal mutual funds
Penny stocks
Small cap stocks and funds
Variable annuities invested in aggressive
growth sub-accounts








Certificates of Deposit
Money market deposit accounts
NOW checking accounts
Passbook or statement savings accounts
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
1.10 RISK AND RETURN TRADE OFF:
Investment return and risk are fundamental to understanding market behavior. Return on
investment is essentially profit made by an investor. Profits and losses must be analyzed
carefully, as simple percentage comparisons give misleading answers. Risk refers to the
probability of depreciation as well as its potential magnitude, which can exceed original
invested amount. Risk and return on investment are directly correlated; higher risk begets a
smaller
chance
of
high
return
and
vice
versa.
In the investing world, the dictionary definition of risk is the chance that an investment's actual
return will be different than expected. Technically, this is measured in statistics by standard
deviation. Risk means you have the possibility of losing some, or even all, of our original
investment.
The risk/return tradeoff could easily be called the "ability-to-sleep-at-night test." While some
people can handle the equivalent of financial skydiving without batting an eye, others are
terrified to climb the financial ladder without a secure harness. Deciding what amount of risk
you can take while remaining comfortable with your investments is very important.
Low levels of uncertainty (low risk) are associated with low potential returns. High levels of
uncertainty (high risk) are associated with high potential returns. The risk/return tradeoff is the
balance between the desire for the lowest possible risk and the highest possible return. This is
demonstrated graphically in the chart below. A higher standard deviation means a higher risk
and higher possible return.
A common misconception is that higher risk equals greater return. The risk/return tradeoff tells
us that the higher risk gives us the possibility of higher returns. There are no guarantees. Just as
risk means higher potential returns, it also means higher potential losses.
On the lower end of the scale, the risk-free rate of return is represented by the return on U.S.
Government Securities because their chance of default is next to nothing. If the risk-free rate is
currently 6%, this means, with virtually no risk, we can earn 6% per year on our money.
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
The common question arises: who wants to earn 6% when index funds average 12% per year
over the long run? The answer to this is that even the entire market (represented by the index
fund) carries risk. The return on index funds is not 12% every year, but rather -5% one year,
25% the next year, and so on. An investor still faces substantially greater risk and volatility to
get an overall return that is higher than a predictable government security. We call this
additional return the risk premium, which in this case is 6% (12% - 6%).
Determining what risk level is most appropriate for you isn't an easy question to answer. Risk
tolerance differs from person to person. Your decision will depend on your goals, income and
personal situation, among other factors.
All investments are designed to make a return and are subject to risk. This means that, as well
as making money, there's also a chance that you could lose it. You might also think of risk as the
possibility that your investments don't achieve your financial objectives. As a general rule, the
bigger the potential investment return, the higher the investment risk and the longer the
suggested investment timeframe.
1.11 DETERMINING RISK PREFERENCE
With so many different types of investments to choose from, how does an investor
determine how much can be handled? Every individual is different, and it's hard to create a
steadfast model applicable to everyone, but here are two important things you should consider
when deciding how much risk to take:
Investment Risk Pyramid
After deciding on how much risk is acceptable in your portfolio by acknowledging your time
horizon and bankroll, you can use the risk pyramid approach for balancing your assets.
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
This pyramid can be thought of as an asset allocation tool that investors can use to diversify
their portfolio investments according to the risk profile of each security. The pyramid,
representing the investor's portfolio, has three distinct tiers:



Base of the Pyramid– The foundation of the pyramid represents the strongest
portion, which supports everything above it. This area should be comprised of
investments that are low in risk and have foreseeable returns. It is the largest area
and composes the bulk of your assets.
Middle Portion– This area should be made up of medium-risk investments that offer
a stable return while still allowing for capital appreciation. Although more risky than
the assets creating the base, these investments should still be relatively safe.
Summit– Reserved specifically for high-risk investments, this is the smallest area of
the pyramid (portfolio) and should be made up of money you can lose without any
serious repercussions. Furthermore, money in the summit should be fairly disposable
so that you don't have to sell prematurely in instances where there are capital losses.
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
Personalizing the Pyramid
Not all investors are created equally. While others prefer less risk, some investors prefer even
more risk than others who have a larger net worth. This diversity leads to the beauty of the
investment pyramid. Those who want more risk in their portfolios can increase the size of the
summit by decreasing the other two sections, and those wanting less risk can increase the size
of the base. The pyramid representing your portfolio should be customized to your risk
preference.
It is important for investors to understand the idea of risk and how it applies to them. Making
informed investment decisions entails not only researching individual securities but also
understanding your own finances and risk profile. To get an estimate of the securities suitable
for certain levels of risk tolerance and to maximize returns, investors should have an idea of
how much time and money they have to invest and the returns they are looking for.
1.12
RISK AND RETURN
Risk in holding securities is generally associated with the possibility that realised returns
will be less than that were expected. Some risks are external to the firm & can’t be controlled,
thus affect large number of securities (Systematic Risk). Other influences are internal to the
firm & are controllable to a large degree (Unsystematic Risk).
Market Risk
Systematic
Interest-Rate
Risk
PurchasingPower Risk
Risk
Business Risk
Internal
Business Risk
Unsystematic
External
Business Risk
Financial
Risk
SYSTEMATIC RISK
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
Systematic Risk refers to that portion of total variability in return caused by factors
affecting the prices of all securities. Economic, Political and sociological changes are the sources
of systematic risk.
Market Risk:- This risk is caused due to changes in the attitudes of investors toward equities in
general, or toward certain types or groups of securities in particular. Market risk is caused by
investor reaction to tangible as well as intangible events. The tangible events include political,
social and economic environment. Intangible events are related to market psychology. Market
risk is usually touched off by a reaction to real events leading to emotional instability of
investors.
Interest-Rate Risk:- It refers to the uncertainty of future market values and of the size of future
income, caused by fluctuations in the general level of interest rates. The root cause of interest
rate risk is fluctuating yield on government securities.
Purchasing-Power Risk :- Purchasing power risk refers to the impact of inflation or deflation on
an investment. Rising prices of goods & services are associated with inflation & that falling with
deflation
UNSYSTEMATIC RISK
Unsystematic Risk is the portion of total risk that is unique to a firm or industry. E.g.
Factors such as management capability, consumer preferences, labour strikes etc. It is that
portion of total risk that is unique or peculiar to a firm or industry. Factors such as management
capability, consumer preferences and labour strikes can cause unsystematic variability of
returns for a company’s stock.
Business Risk:- This risk is a function of the operating conditions faced by a firm and the
variability these conditions inject into the operating income and expected dividends. Business
risk can be divided into two broad categories- external & internal.
Internal Business Risk:- This risk is largely associated with the efficiency with which a firm
conducts it’s operations within the broader operating environment imposed upon it.
External Business Risk:- It is the result of operating conditions imposed upon the firm by
circumstances beyond it’s control. Govt. policies with regard to monetary & fiscal matters can
affect revenues thro’ the effect on the cost & availability of funds.
Financial Risk: - This risk is associated with the way in which a company finances it’s activities.
The substantial debt fund, preference shares in the capital structure of the firm creates high
fixed-cost commitments for it. This causes the amount of residual earnings available for
common-stock dividends more stressed.
RETURN
Investors want to maximise expected returns subject to their tolerance for risk. It is the
motivating force and the principal reward in the investment process.
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
Realized Return:- It is the return which is actually earned.
Expected Return:- It is the return from an asset that investors anticipate they will earn over
some future period. Return in a typical investment consists of two components. The basic
component is the periodic cash receipt on the investment, either in the form of interest or
dividends. The second component is the change in the price of the asset – commonly called
capital gains or loss. This element of return is the difference between the purchase price and
the price at which the asset can be sold. Total Return = Income + Price Change= Cash payments
received + Price change over the period Purchase price of asset Total return can be either
positive or negative.
1.13 TYPES OF RISKS:
Personal Risks
This category of risk deals with the personal level of investing. The investor is likely to
have more control over this type of risk compared to others.
Timing risk
It is the risk of buying the right security at the wrong time. It also refers to selling the
right security at the wrong time. For example, there is the chance that a few days after you sell
a stock it will go up several dollars in value. There is no surefire way to time the market.
Tenure risk
It is the risk of losing money while holding onto a security. During the period of holding,
markets may go down, inflation may worsen, or a company may go bankrupt. There is always
the possibility of loss on the company-wide level, too.
Company Risks
There are two common risks on the company-wide level. The first, financial risk is the danger
that a corporation will not be able to repay its debts. This has a great affect on its bonds, which
finance the company's assets. The more assets financed by debts (i.e., bonds and money
market instruments), the greater the risk. Studying financial risk involves looking at a company's
management, its leadership style, and its credit history.
Management risk is the risk that a company's management may run the company so poorly
that it is unable to grow in value or pay dividends to its shareholders. This greatly affects the
value of its stock and the attractiveness of all the securities it issues to investors.
Market Risks
Fluctuation in the market as a whole may be caused by the following risks:
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
Market risk is the chance that the entire market will decline, thus affecting the prices and
values of securities. Market risk, in turn, is influenced by outside factors such as embargoes and
interest rate changes. See Political risk below.
Liquidity risk is the risk that an investment, when converted to cash, will experience loss in its
value. When you want to sell the stock you are currently holding, there is nobody there
to buy your stock, meaning that there is no volume in that stock.
Interest rate risk is the risk that interest rates will rise, resulting in a current investment's loss
of value. A bondholder, for example, may hold a bond earning 6% interest and then see rates
on that type of bond climb to 7%.
Inflation risk is the danger that the dollars one invests will buy less in the future because prices
of consumer goods rise. When the rate of inflation rises, investments have less purchasing
power. This is especially true with investments that earn fixed rates of return. As long as they
are held at constant rates, they are threatened by inflation. Inflation risk is tied to interest rate
risk, because interest rates often rise to compensate for inflation. Return of investment (ROI) is
less
than
the
market
inflation
rate.
e.g. Return of investment (ROI) : 5%; Market Inflation rate (IR) : 8.5%
Exchange rate risk is the chance that a nation's currency will lose value when exchanged for
foreign currencies.
Reinvestment risk is the danger that reinvested money will fetch returns lower than those
earned before reinvestment. Individuals with dividend-reinvestment plans are a group subject
to this risk. Bondholders are another.
National And International Risks
National and world events can profoundly affect investment markets.
Economic risk is the danger that the economy as a whole will perform poorly. When the whole
economy experiences a downturn, it affects stock prices, the job market, and the prices of
consumer products.
Industry risk is the chance that a specific industry will perform poorly. When problems plague
one industry, they affect the individual businesses involved as well as the securities issued by
those businesses. They may also cross over into other industries. For example, after a national
downturn in auto sales, the steel industry may suffer financially.
Tax risk is the danger that rising taxes will make investing less attractive. In general, nations
with relatively low tax rates, such as the United States, are popular places for entrepreneurial
activities. Businesses that are taxed heavily have less money available for research, expansion,
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
and even dividend payments. Taxes are also levied on capital gains, dividends and interest.
Investors continually seek investments that provide the greatest net after-tax returns.
Political risk is the danger that government legislation will have an adverse affect on
investment. This can be in the form of high taxes, prohibitive licensing, or the appointment of
individuals whose policies interfere with investment growth. Political risks include wars,
changes in government leadership, and politically motivated embargoes.
1.14
INVESTORS AND SPECULATORS:
Investors:
The investors buy the securities with a view to invest their savings in profitable income earning
securities. They generally retain the securities for a considerable length of time. They are
assured of a profit in cash. They are also called genuine investors.
Speculators:
The speculators buy securities with a hope to sell them at a profit in future. They do not retain
their holdings for a longer period. They buy the securities with the object of selling them and
not to retain them. They are interested only in price differentials. They are not genuine
investors.
Differences between investors and speculators:
S.No
1
PURPOSE OF INVESTMENT
2
AIM
3
HOLDING PERIOD
4
AMOUNT OF RISK
Investors
Speculators
An investors is interested A speculators is interested in
in safety of his investment appreciation of capital and
earning profits quickly
Seeks income from his Seeks profit from sale and
investment
purchase of securities
Retains holding for longer Tries to sell the securities
period i.e. commitment is quickly ie his commitment is
for longer period of time
for shorter period.
Risk is low
Risk is high
5
INCOME
Stable income
6
ATTITUDE
INVESTOR
OF
Earnings of profit is uncertain
THE An investor is cautious and A speculator is daring and
conservative
careless
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
7
DECISION
Considers
fundamental Considers insider information,
factors and evaluate the market behaviour.
performance
of
the
company.
8
FUNDS
Used his own funds, avoids Use borrowed funds
borrowed funds.
9
TYPE
OF
EXPECTED
RETURN The purpose of investment The purpose of speculation is
is to receive a stable as to enjoy capital gain.
well as regular return.
Speculation:
Speculation refers to the buying and selling of securities in the hope of making a profit
from expected change in the price of securities. Those who engage in such activity are known as
speculators.
A speculator may buy securities in expectation of rise in price. If his expectation comes true, he
sells the securities for a higher price and makes a profit. Similarly a speculator may expect a
price to fall and sell securities at the current high price to buy again when prices decline. He will
make a profit if prices decline as expected. The benefits of speculation are:
1. It leads to smooth change and prevents wide fluctuations in security prices at different
times and places
2. Speculative activity and the resulting effect in the prices of securities provided a
guidance to the public about the market situation.
1.15 DIFFERENCES BETWEEN SPECULATION AND GAMBLING:
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
S.No
Speculation
1
2
It is based on knowledge and It is based on chance of events
foresight
happening.
It is a lawful activity
It is an illegal activity
3
It performs economic functions
4
Gambling
It has no benefits to offer to the
economy
Speculators bears the risk of Gamblers bear the risk of loss on the
loss on the basis of logical basis of blind and reckless
reasoning
expectation.
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .
1. What factors should an investor should consider while making investment decisions?
2. Write down the different types of investment avenues available for investors?
3. List out the major indices and how it helps investors for making investment.
4.
This material is proprietary to KV Institute of Management, a Nationally Ranked BSchool in Coimbatore and cannot be copied or duplicated for use outside of KV.
Violators will face infringement proceedings of copyright laws. .