Risk and Return Analysis

26155 Words105 Pages
1.1 INTRODUCTION Every investment is characterised by return and risk. The concept of risk is intuitively understood by investors. In general, it refers to the possibility of incurring a loss in a financial transaction. But risk involves much more than that. The word ‘risk’ has a definite financial meaning. The possibility of variation of the actual return from the expected return is termed risk. Corporate securities and government securities constitute important investment avenues for investors. These are traded in the securities market. The securities market is one of the most important sectors in the financial system of our country. And also contributes much for the economic development. So…show more content…
In India 99.9% of the trades, according to National Securities Depository, are settled in dematerialized form. With the sweeping economic changes witnessed globally towards more market oriented economies, the government of India too has adopted radical economic policy measures to revitalise its economy. The Indian capital markets, which have attained a remarkably high degree of growth in the last decade, are on the brink for a further leap forward over the next ten years. With the opening of the economy to multinationals and the adoption of more liberal economic policies, the economy is driven more towards the free market economy. 1.2.1 SECURITY MARKET Security markets are markets that deals in financial assets or instruments. These instruments are issued by business organisations, corporate units and central and state governments. They issue securities to mobilise financial resources for making investment and to meet current expenditure. As per the provisions of the Indian Companies Act both private and public companies can be incorporated. The private companies cannot transfer their shares freely and hence cannot offer their shares and securities to the public for trade. However all public companies are allowed to raise finance from the public through issue of their securities. A security is an instrument of
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