A study on Investors Preferences towards various investment avenues in Capital Market with special reference to Derivatives. by Dr. K. RAVICHANDRAN, READER,
Bharathidasan Institute of Management, (School of Excellence of Bharathidasan University), Tiruchirapalli.
Introduction:
In India, generally all capital market investment avenues are perceived to be risky by the investors. But the younger generation investors are willing to invest in capital market instruments and that too very highly in Derivatives segment. Even though the knowledge to the investors in the Derivative segment is not adequate, they tend to take decisions with the help of the brokers or through their friends and were trying to invest in this market. This study was
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Findings – The findings indicate that analysts’ forecast accuracy increased and that
unexpected earnings were incorporated into subsequent earnings forecasts to a greater extent subsequent to disclosure of sustained hedging activity. Additionally, the findings indicate an increase in the earnings-return relation in the hedging activity period.
OBJECTIVES OF THE STUDY:
PRIMARY OBJECTIVE
To Study the various investment avenues and the investors risk preference towards it.
SECONDARY OBJECTIVES
To find out the general demographic factors of the investors dealing in capital market. To find out the preference level of investors on various Capital Market instruments. To find out the type of risk which are considered by the investors To find out the ways through which the investors minimizes their risk To find out the preferences of Investors in derivatives market.
RESEARCH METHODOLOGY
Research Design A Research design is purely and simply the framework of plan for a study that guides the collection and analysis of data. The study is intended to find the investors preference towards cash market and derivatives. The study design is descriptive in nature. TYPE OF RESEARCH- DESCRIPTIVE RESEARCH Descriptive study is a fact-finding investigation with adequate interpretation. It is the
A research design can be understood as the planning of any scientific research from the first to the last step. In this sense it is a program to guide the researcher in collecting, analyzing, and interpreting facts (Bless and Higson-Smith, 1995:63).
Analyze the derivatives market and determine the use of derivatives to efficiently manage investment risks in an investment portfolio.
Through the understanding of the elements involved in a research paper, a person can obtain the ability to complete good research. In research there are two questions asked; what is going on for descriptive research and why is it going on for explanatory research. The research design is simply the theory building approach to research. Although research design is the hardest part of research it is vital for research to be guided.
It is the structure of any scientific work. It gives direction and any systematic approach to the research. Like any other phenomenon, no research design is perfect on itself. Different type of research design has different advantages and disadvantages (Blakstad 2015). Thus research design is defined as an overall plan for research undertaking. Research design provides the solution that holds the research project together
There are two main types of research designs that are seen with the quantitative research methodology. These designs are the survey design and the experimental design. When using these types of research methods, it is helpful to understand how these design types are organized for the data analysis and components of the research plan.
Higher use of derivatives corresponds to greater systematic risk, there is a positive relationship between the derivatives and risk in trading as well as hedging. The figures below shows that this positive relationship is stronger for the large business holding companies (BHC) than for small BHC. This indicates that the large BCH with operations in brokerage, asset management and trading primarily uses derivatives to derive their gains further exposing them to systematic risk. The small BCH results indicate that they use derivative to a larger extent to hedge against the systematic risk.
Not many years back, the dimension of the international stock market was marked at about less than 50 trillion dollars! The accrued worldwide derivatives bazaar has been retorted to be at about twenty times that number! This
In the process of my work, I will try to give a notion regardless advantages and disadvantages for retail investors in considering investment of their money into the hedge funds.
Investment world has become in a very competitive arena where every penny if battled. Financial analyst need different tools to scrutinize the market and identify the most succulent securities available for their clients, to accomplish this objective they utilize different mathematical and statistical calculations like arithmetic mean, geometric mean and standard deviation, this paper shows how to perform these calculations and how they could be used to identify a good investment. Additionally, provides an overview in formulating and
The use of derivatives has increased over the recent years because they are an integral part of the economy. They help firms to manage financial risks that threaten revenue, cost of goods sold and various expenses. Derivatives have existed long for centuries and their recorded history dates back to the sixth century, B.C. (Donohoe, 2015). During this time, goods and services were used in the exchange, however, this proved to be difficult because it was hard to coordinate harvest times for different goods all year round. During the 1800s futures were used in the London exchange to protect against price fluctuations. In this paper, I will examine derivative securities, discuss their roles in the financial market and discuss the role of
This study has provided simulation of investment and process of establishing a portfolio. According to Markowitz (1952:77), the rule of portfolio selection is investors should maximize the value of the future profits. Therefore, researchers utilized various analysis techniques to monitor performance of the portfolio selected
Research design is a process to make the framework and the show the flow of the research from beginning steps until end which are detailed. The Figure 1 shows the steps of the research design.
This paper will examine two basic types of investments; stock and bonds, from an investor’s perspective highlighting the advantages and disadvantages between common stock (equity) and corporate bonds (debt).
Derivatives emerged as a 'hedging ' device against the fluctuation in prices of commodities & financial instruments. Derivatives can be used in two ways, one to mitigate economic loss, i.e. 'Hedging ' & the other to increase the profit of underlying asset, if the value of asset moves in the direction of investor 's expectation .i.e. 'Speculation. '
During the last 30 years, derivatives have become increasingly important and widely used in the field of finance all around the world. Their increasing values made them impossible to be ignored because they have become much bigger than the stock market when measured in terms of underlying assets in so much that Global corporations and financial intermediaries trade billions of dollars of derivative contracts on a daily basis across a range of products and markets (Batten and Wagner, 2012).