 Research Problem

 Women in India are now actively participating in all activities such as education,
politics, media, science and technology & becoming financial independent. With this
changing scenario, women have started actively participating in investing their
surplus money. The main focus of this study is to find the awareness level and
preferences of a women investors towards various investment avenues with reference
to the Surat city.

 Research Objective

 To identify awareness and preference of women investors towards various investment

avenues.
 To identify the risk level of women investor in Surat city.
 To identify factors which affect the women investors while choosing the investment
avenues.
 To study the impact of demographic characteristics on the preferences of women
investors.
 Literature review

Meenakshi Chaturvedi & Shruti Khare (2012) analyses that there is rapid increase in the
earnings of middle-class families due to double income as there is increase in number of
working women. Investment houses should make an effort to attract working women
investors through advertising and awareness programmes. Information about existing market
and guidance for channelizing savings into productive investment will lead towards economic
development of the country.

Barber & Odean (2001) stated that men are more competent and confident than women
when it comes to taking financial decisions. Females give importance to opinion of father’s
and husbands while investing. We can say that men will generally be more confident and feel
superior about their ability to take financial decisions than women.

Rethnasamy & Sebastian (2010) concluded on the basis of survey conducted in

Tiruchirappalli city that the marginal tendency to save in the city was 0.41. Nearly 40 percent
of the women respondents save for the education of their children and the 30 percent save in
order to purchase property.

Dr. Sarita Bahl (2012) concluded that younger women are focused about their investment
plan. Women like to invest their money when they earn and become independent. Majority of
working women are aware about various investment avenues and have invested their money.
Working women prefer to invest their money in risk free security.

Gaurav Kabra (2010) concluded that the modern women investor is aware about various
investment avenues. In spite of the phenomenal growth and good return from security market,
investors invest as per his demographic characteristics. So, it becomes very important to
understand the psychology of investor.

Puneet Bhushan & Yajulu Medury (2013) indicated that women are more traditional and
take less risk and significant gender differences occur in investment preferences for
insurance, fixed deposits and market investments among employees.

Shobhana et al. (2006) have carried out a study on women investor’s awareness and
preferences. They examined the level of women investor awareness regarding investment
choice and investment risks. The study discovered that the investment in real estate is
preferred by most of women investor.
Sellappan et al. (2013) further suggest that married women are highly interested in making
investment than the unmarried. As well as the younger are significantly interested to invest in
stock market, insurance and bank fixed deposits as the elder women. The middle age women
wish to invest in real estate source of investment.

Priya Vasagadekar (2014) on working women she concluded that because of the education,
now days’ women are getting the best job offers with high remuneration. It has become the
present day need for working women in India to increase their wealth. As most of the women
are low in financial literacy, it becomes hardly possible for them to manage their investment
activities on their own. Also, the risk-taking level of working women in India is low. This is
due to shortage of sound financial knowledge.

Rajeshwari Jain (2014) finds that working women have a preference to invest fixed deposit
in bank a safe investment option & for tax saving purpose who also indicated that women
also select gold as good investment alternative to bank deposit. Study on Perception of
Women Investors towards Investments Kanagaraj et al. (2014) concludes, occupation and
educational level does not influence awareness of women investors in Coimbatore city.

Bahl (2012) “A study on Investment behaviour of working women of Punjab” concluded

that 33 % of the women have a well-developed plan for investment. It also infers that 48 % of
the working women think that one should start to invest whenever they find a new job or
occupation. 18 % of the working women have invested in shares & stocks.

Dev Prasad & M. R. Sholapur (2014) highlighted that the Indian Women Investors as
Emotional Decision Makers, this study expects to contribute to the literature by focusing on
the investment behaviour of Indian women investors in what is predominantly still a male
dominated market, whether the human emotions of greed, fear, love, and disbelief influence
the decision-making process of women investors considering investment opportunities in the
Indian stock market.

G. Shanthi & R. Murugesan (2006) analysed about the investment preferences of salaried
women employees having different avenues of investments as well as the factors while
selecting the investment and they analysed that salaried woman consider the safety as well as
high return on investment on regular basis.

Bhatt (2013) made an attempt to measure the perception of working women for making
investment in stock market. The findings indicated that working women make their
investment in various avenues. It was observed that there is no significant relationship
between the education level and investment decision and there was found significant
relationship between the age of the women and income level.

Shukla & N. S (2016) conducted to know the investment preferences of working women
in north Gujarat region and factors that affect their investment decision and found
that investments are greatly affected by the age and the investment option chosen by the
women are based on various needs and requirements.

Atchyuthan & Yogendra rajah (2017) conducted research on working women belongs
to Jaffna district of Sri Lanka to know their awareness and preferences for various investment
avenues and found out that the women’s have awareness about various investment avenues
but they have a least preference for tax saving and high return as they prefer safety and
security of their investments over any return.

Dr. Katherine Phillips (2014) Women are getting empowerment through literacy and
employment. The biggest motivation of the working women is need the sheer economic
necessary with growing rate of inflation. To help the family by adding some eager resources
women are working, which facilitate to meet the financial needs and reduces the financial
stress. But it is the best aid only to solve the temporary problems. Women are aware of
financial services offered by both governments are private financial institutions to Save their
hard-earned income.

Kumar & Mankani (2017) attempted to test the awareness level regarding investment
avenues among educated working women. This study expressed that awareness on various
investment avenues is highly important to make perfect investment decision in order to suit
different needs of life. This study also emphasised that investors have wide range of
investment avenues such as deposits, provident funds, insurance, post office savings, and
gold and silver. Moreover, other options include equity shares, mutual funds, real estates,
debentures and so on for making investments. Results also revealed that financial behaviour
of working women is highly dependent on low risk and high return investments. Similarly,
they prefer to buy loans with minimal rate of interest and option with the pre-closure of loans.
This study concluded that women have enough awareness on the investment avenues and are
able to manage their portfolios in a realistic manner.

Syal & Walia (2017) analysed the investment decision of women with respect to different
investment avenues. This study revealed that investment is made with the anticipation of
positive return in the near future. Usually, investment is made with two types of objectives
such as annual income in the form of rent, dividend, interest, and capital appreciation in the
end. Women investors are keen to take the right decisions such as where to invest the money
so as to attain maximum returns. Results revealed that investment decisions of women
depend on own decisions, financial plan, advice from analyst, and diversification of
investment. Results also stressed that financial decisions of women are formed under four
factors such as hedging, judgement, confidence, and influence of investments. It was
concluded that investment decisions of women were found to be at a satisfactory level.

Jothi lingam et al. (2013) conducted the research study based on the available literature and
questionnaire i.e., both primary and secondary data were used for the study. It was to study
the investors attitude towards different investment avenues. At present the women investors
invest in gold and that they need to explore other avenues like mutual funds, shares, currency,
etc. The study showed that investors were in for investment avenues which are less risky.
They were keen on avoiding risks by choosing to invest in gold, mutual funds and bank
deposits.

Kansal & Zaidi (2015) focuses on investment behaviour of women in India. This paper
discusses that women are more risk averse than men; they are less confident about their
investment decision as compare to men. This paper reveals various factors which effect
women investment decision like return, long-term growth, risk, liquidity and retirement
income. Mostly, women invest in bank deposits, post office deposits, gold, silver and
government securities, which are comparatively safer instruments.

Sharma & Douglas (2017) in their paper discussed about factors influencing women’s
preference in investment decision-making. According to study, investment decision is being
affected by various factors like psychographic and demographic factors. Investors can be
same in all aspects but their perception can be dissimilar towards different investment plans.

Dr. R. Sellappan, Ms. S. Jamuna & Ms. Tnr. Kavitha (2013) find out that married women
are more curious in making investment than the unmarried. As well as the younger are mostly
like to invest in shares mutual funds, insurance and fixed deposits than the older women. The
middle age persons prefer to invest in real estate source of investment. So, the government,
Bankers and Financial institutions can introduce lot of schemes of investment based on
segmentation of the age and marital status factors to acquire more funds.
Srinivasan & Chopra (2011) also evaluated the financial awareness of working women in
India. The financial awareness among the women investors is very important as it has a
significant impact on their preferences and choices. The awareness also influences the risk
perception. Financial awareness is a huge substantial concern as it dissuades and deforms the
investment behaviour thereby affecting the risk-taking ability of the women investors. As there
are numerous financial services available, it is important that the women who are to receive the
services may first need to be made aware of their benefits. The current study aims to study the
awareness and risk perception about financial services with special reference to the women
investors of Punjab. As per the study the respondents showed significant awareness in matters
concerning investment and personal financial planning and were willing to take investment
decisions relating to personal finance

Fish (2012) also studied the risk aversion in females in comparison to males. The study found
females to be more risk averse and even when controlling for financial knowledge and
experience, females were more risk averse.
INTRODUCTION OF TOPIC

Since ancient time human beings are engaged in the business activities. When people started
doing business they started earning in form of money or in any other form of incentives
which boosted their will to engage themselves in more business activities. They understood
the valve of earning from business. They got to a conclusion that to keep going on the
business activities smoothly they have to re-invest their profit. Expenses started coming and
more funds were required to meet day-to-day activities of business.

People started to learn the art of balancing their investments and expenses. Some of them lost
their investment in form of expenses or losses, while others started gaining in the form of
profit. People started saving and doing investment in order to gain more and more profit.
Sometimes people had more money than they actually wanted to spend or on the other side
some people have less money to purchase. Therefore, to meet this deficiency people started
borrowing and investing their money to meet the future needs

When people earn more, they start purchasing several things. If they had excess amount left
with them then they start to bury in the backward for future. When a hard time comes, they
utilize this source which was saved in the past. Through this way they started to know the
importance of saving. After a long period of time, people started recognizing that only saving
is not enough for meeting future demand. They started to seek for people who were in want
for money to meet their desires, and in exchange they demanded for more money after a
period of time. This system builds relation between borrowers and investors. New
relationship was formed between lenders and borrowers. Lenders got new name as investors.
Many people started engaging themselves in these activities. Many scholars started their
study and observation on this activity. After a long period of study, they realized that a proper
system should be framed to carry out this task smoothly. They focused on both sides of the
coin, lenders and borrowers. People started designing a proper system for the development of
these activities. New Page tools and techniques were introduced to boost this activity. Then
they gave this system a proper name as “Investment”. People engaged in investment started
to be known as “Investors”. An investment is the commitment of monetary instrument for a
period of time in order to deserve future gains or some value which is higher than the
principal amount which compensates the investors for:

1) The time period of investment

2) The expected rate of inflation

3) The uncertainty of the future payments

 Investment Fundamentals:

Once the nature of investment is understood, it is necessary to know the investment

fundamentals. Some of the fundamentals are discussed below:

1. Start early – retire rich. One must invest whatever he/she can immediately and move
steadily towards a secured tomorrow.

2. Invest regularly – invest regularly and methodically.

3. Ensure higher returns on investments – regular investment in investment avenues that

provide the magic of compounding.

4. Never time market – one should be a smart investor. One must always invest in time, but,
never try to time the market. Timing the market is mastered by none and is beyond one’s
control.

5. Be patient – investments have to be dealt with patience. For long term wealth creation, one
needs to be patient. The longer the investment horizon, the lesser the risk and greater are the
returns.

 Investment Avenues

Now-a-days a wide range of investment opportunities are available to the investor. These are
primarily bank deposits, corporate deposits, bonds, units of mutual funds, instruments under
National Savings Schemes, pension plans, insurance policies, equity shares etc. All these
instruments compete with each other for the attraction of investors. Each instrument has its
own return, risk, liquidity and safety profile. The profiles of households differ depending
upon the income-saving ratio, age of the household’s head, number of dependents etc. The
investors tend to match their needs with the features of the instrument available for
investment. They do have varying degrees of preferences for savings vehicles.
Every investor tends to keep some cash balance and maintain a certain amount in the form of
bank deposit to meet his/her transaction and precautionary needs. In the case of salaried
people, contributions to Employees Provident Fund become compulsory. Life Insurance is
widely preferred to meet situations arising out of untimely deaths of the bread earner. Besides
these needs, the surplus income (savings) awaits investment in alternative financial assets.
Investors have to take decisions relating to their investment in competing assets/ avenues.

 Types of Investment avenues

1) Shares: A share is a document issued by a company, which entitles its holder to be the
owner of the company. Owning a share means you are a partial owner of the company
and get voting rights. Investment in stock can generate returns through dividends and
bonus, even if the price falls. An equity share is total equity capital of a company which is
divided into equal parts of small denominations, each called a share. For example, in a
company the total equity capital of Rs. 20000000 is divided into 2000000 units of Rs. 10
each. Each such unit of Rs. 10 is called share. There is general assumption regarding the
share that, the investment in it is very complicated, it carries lots of risk. Speculators are
always changing the mode of market situation and many more myths. But now days it has
become very easy to access this investment option. Any investment after doing proper
study and research will always yield good result and returns. With the help of modern
technology, it has become very easy to access the markets.

 The stock market:

It is divided into two segments where stock or share is traded. Followings are the two

segments of stock market:

a) Primary market: The primary market provides the channel for sale of new securities.

Primary market provides opportunity to issuers of securities; government as well as corporate

to raise resources to meet their requirements of investment and or discharge some obligation.

They may issue the securities at face value or at a discount/ premium and these securities may

take a variety of forms as equity, debt etc. They may issue the securities in domestic market.
The only thing they do in either IPO (Initial Public Offering) or FPO (Further Public

Offering) is to sell the shares or debentures to investors. By this process share is listed on

stock exchange (Ravichandran, 2007).

In India we have 2 major stock exchanges situated at Mumbai:

A) NSE (National Stock Exchange)

B) BSE (Bombay Stock Exchange)

b) Secondary market: Secondary market refers to a market where securities are traded after

being initially offered to the public in the primary market or listed on the stock exchange.

Majority of the trading is done in the secondary market. Secondary market comprises of

equity market and the debt markets. For the general investor, the secondary market provides

an efficient platform for trading of the securities. For the management of the company

secondary equity market serves as a monitoring and control conduit by facilitating value

enhancing control activities, enabling implementation of incentives based management

contracts and aggregating information that guides management to take decisions

(Ravichandran, 2007). The role of stock exchange in buying and selling shares in India is

under the overall supervision of the regulating authority. The Securities and Exchange Board

of India (SEBI) provides a trading platform, where buyers and sellers can meet to transact in

securities. The trading platform provided by the exchanges is in an electronic form and there

is no need of buyers and sellers to meet at a physical location for trading. The internet based

real time trading facility is provided to the investors.

• Various forms of shares traded in secondary market:

There are many types of share which can be invested as per investor’s financial position, risk

taking capacity, and investment goals. Listed below are several types of shares which are
 very important with the point of view of the general investors. They help in the maximization

of the wealth. They are commonly traded in the stock market:

1) Blue chip share: Blue chip share are stocks of well-established companies that have stable

earnings and no extensive liabilities. They have a track record of playing regular dividends,

and are valued by investors seeking relative safety and stability. The name comes from the

blue-colored chip in the game of poker, which is typically the most valuable .

2) Penny share: Penny share are low-priced, speculative and risky securities which are traded

over-the-counter (OTC); that is outside of one of the major exchanges. These shares mostly

attract the short term investors. They have high risk taking capacity.

3) Income share: Income shares offer a higher dividend in relation to their market price. They

are especially attractive to investors who are looking for current income that will gradually

grow over the years as a way to offset inflation.

4) Growth share: Growth shares are securities which appreciate in value and yield a high

return. Their profits are typically re-invested to expand the business. Investors gain because

the stock prices increase as the business grows, thus increasing the value of the investment.

5) Value share: Value shares are securities which investors consider to be undervalued. They

feel that the stock is being traded below market value, and they believe in the longterm

growth of the issuing company.

Apart from these types, there are also other forms of the share depending upon the companies

which want to have different share classes to attract investment, to push dividend income in

certain directions, to remove voting powers of certain investors, and to motivate staff

involvement in profit sharing of company. Depending upon these factors’ shares are further

divided into following categories:

a) Ordinary shares

b) Deferred ordinary shares

c) Non-voting ordinary shares

d) Redeemable shares

e) Preference shares

f) Cumulative preference shares

g) Redeemable preference shares

• Advantages of investing in share:

1. Inflation rate is higher than commercials banks interest rate but lower than equity price.

2. Investment in share is away from eyes of the public as compared to real asset which is

visible to others.

3. The rate of growth is higher than other investment options.

4. The cash reward can be obtained in form of dividends, bonus and premium pricing.

5. Cash appreciation is more in share investments. Easy to invest with comforts of electronic

mediums. Earning option on the day-to-day bases.

• Disadvantages of investing in share:

1. Crash in share prices. Due to many reasons share prices drop so much.

2. Sometimes the companies going into the liquidation thereby erode the investments of the

share’s holders.

3. Fraudulent stock brokers.

4. Sometimes changing government and regulating body policies towards the investments
 2) Debentures and bonds: Debt instrument represents a contract where by one party lends

money to another on predetermined terms with regards to rate and periodicity of interest,

repayment of principal amount by the borrower to the lender. The word ‘debenture’ has been

derived from a Latin word ‘debere’ which means to borrow. Debenture is the

acknowledgement of the debt. It is a loan capital raised by company from the general public.

A person or a holder of such written acknowledgement is called ‘debenture holder’. Bond is

similar to debentures in terms of texture and contents. In the Indian securities Market, the

term ‘bond’ is used for debt instruments issued by the Central and State Governments and

Public Sector organizations and the term ‘debenture’ is used for instruments issued by private

corporate sector. The only difference is with respect of issue conditions, bonds can be issued

without predetermined rate of interest while debenture can’t be issued. According to section

2(12) of the Companies Act 1956, ‘debenture’ includes debenture inventory, bonds and any

other securities of a company whether constituting a charge on the assets of the company or

not.

 Types of debentures: Depending upon the general factors of investment debenture and

bonds are divided into five forms. Detail study of each factor and type is done.

Types of debentures and bonds

Security Tenure Convertibility Coupon Rate Registration

Secured Unsecured Redeemable Irredeema Discount Specific Regist Unre

ble Rate Rate ered giste
Debenture Debenture
red

Convertible Non-convertible
A. Type of debenture according to security factor:

a) Secured debenture: Secured debentures are those debentures on which charge is created
on the asset of the company for the purpose of payment in the case of default. The charge
may be fix or floating.

b) Unsecured Debenture: Unsecured debentures are those debentures on which there is no

specific charge on the assets of the company. Floating charges may be created on the
debenture by default.

B. Type of debenture according to tenure factor:

a) Redeemable Debenture: Redeemable debenture are those debentures which are payable
on the expiry of the specific period either in installments or in lump sum amount in the life
time of the company.

b) Irredeemable Debenture: Irredeemable debenture is also known as perpetual debenture.

In this type of debenture company does not give any undertaking for the repayment of the
money borrowed by such debenture. These debentures are repayable at the time of winding of
the company.

C. Type of debenture according to mode of convertibility factor:

a) Convertible Debenture: Debentures which are convertible into share or any other
securities at the option of company or debenture holder are called convertible debentures.
These debentures are fully or partially paid depending upon the decision of the board of
directors of the company.

b) Non-convertible Debenture: Debentures which are not convertible into shares or any
other securities at the option of company neither debenture holder is called non-convertible
debenture. Most of the debentures fall in this category.

D. Type of debenture according to coupon rate:

a) Discounted rate Debenture: These debentures do not carry any specific rate of interest. It
is also known as zero rate coupon debentures. In order to compensate the investors these
debentures are issued in discount rate. Difference between nominal value and the issue price
is treated as the amount of the interest.
b) Specific rate Debenture: The debentures are issued with the specific rate of interest,
which is called coupon rate. The specified rate may be fixed or floating. The floating rate is
same as bank rate.

E. Type of debenture according to registration factor:

a) Registered Debenture: Registered debentures are those debentures whose detail

information regarding the holder is kept or maintained by the company. Details such like
address, number of issues, etc. a separate register is maintained by the executive.

b) Unregistered or Bearer Debenture: Bearer debentures are those debentures which are
transferred by way of delivery and the company does not keep any record of the debenture
holders. The interest is paid only to that debenture holder who has coupon.

3) Mutual Fund: Mutual funds also offer good investment opportunities to the investors.
Like all investment alternatives mutual fund also carry certain risks. The investors should
compare the risks and expected yields after adjustment of tax on various instruments while
taking mutual fund investment decisions. The investor may seek advice from experts and
consultants including agents and distributors of mutual funds schemes while making
investment decisions. Mutual funds are portfolio of stock market and other financial
instruments built with funds collected from small investors whose primary concern is security
of instrument. These funds are run by government trusts, banks and now private financial
institutions as well. Mutual fund is an investment alternative that pools money from
shareholder or investors and invest in a variety of securities, such as stocks, bonds and
money market instruments. Mutual funds invest pooled cash of many investors to meet the
fund’s stated investment objectives. Mutual funds stand ready to sell and redeem their shares
at any time at the fund’s current net asset value; total assets divided by shares outstanding. In
simple words, mutual fund is a mechanism for pooling the resources by issuing units to the
investors and investing funds in securities in accordance with objectives as disclosed in offer
document. Investments in securities are spread across a wide cross-section of industries and
sectors and this risk is reduced. Diversification reduces the risk because all stocks may not
move in the same direction in the same proportion at the same time. Mutual fund issues units
to the investors in accordance with quantum of money invested by them. Investors of mutual
funds are known as unit holders. The profit or loses are shared by the investors in proportion
to their investments. The mutual funds normally come out with a number of schemes with
different investment objectives which are launched from time to time. In, India mutual fund is
required to be registered with securities and exchange board of India (SEBI) which regulates
securities markets before it can collect funds from the public. In short, a mutual fund is a
common pool of money in to which investors with common investment objectives place their
contributions that are to be invested in accordance with the stated investment objectives of
the scheme. The investment manager would invest the money collected from the investor in
to assets that are defined/ permitted by the stated objective of the scheme. For, example an
equity fund would invest equity and equity related instruments and a debt fund would invest
in bonds, debentures, gilts etc. Mutual fund is a suitable investment for the common man as it
offers an opportunity to invest in a diversified, professionally managed basket of securities at
a relatively low cost. Unit Trust of India (UTI) was the first mutual fund set up in India in the
year 1963. In early 1990’s government allowed public sector banks and institutions to set up
mutual funds. UTI has an extensive marketing network of over 40000 agents all over the
country. In the year 1992, Securities and Exchange Board of India (SEBI) Act was passed.
The objectives of the SEBI are to protect the interest of investors in securities and to promote
the development and to regulate the securities market. In 1995, the RBI permitted private
sector institutions to set up Money Market Mutual Funds (MMFs). They can invest in
treasury bills, call and notice money, commercial paper, commercial bills accepted/co-
accepted by banks, certificates of deposit and dated government securities having unexpired
maturity up to one year. As far as mutual funds are concerned, SEBI formulates policies and
regulates the mutual funds to protect the interest of the investors. SEBI notified regulations
for the mutual funds in 1993. There after mutual funds entities were allowed to enter the
capital market. The regulations were fully revised in 1996 and have amended thereafter from
time to time.

Types of Mutual Fund schemes:

1) Mutual fund schemes according to maturity period: A mutual fund scheme can be
classified into open-ended scheme or close-ended scheme depending on its maturity period.
a) Open-ended fund: An open-ended mutual fund is on that is available for subscription and
repurchase on a continuous basis. These funds do not have a fixed maturity period. Investors
can conveniently buy and sell units at NAV related prices which are declared on a daily basis.
The key feature of open-ended schemes is liquidity.
b) Closed-ended fund: A close-ended mutual fund has a stipulated maturity period for
example 5 to 7 years. The fund is open for subscription only during a specified period at the
time of launch of the scheme. Investors can invest in the scheme at the time of the initial
public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges
where the units are listed. In order to provide an exit route to the investors, some close ended
funds give an option of selling back the units to the mutual fund through periodic repurchase
at NAV related prices. SEBI regulations stipulate that at least one of the two exit routes is
provided to the investor that is either repurchase facility or through listing on stock
exchanges. These mutual fund schemes disclose NAV generally on weekly basis .

2) Mutual fund schemes according to investment objectives: A scheme can also be

classified as growth fund, income fund, or balanced fund considering its investment
objectives such schemes may be as follows:

a) Growth/equity-oriented schemes: The aim of growth funds is to provide capital

appreciation over the medium to long-term. Such schemes normally invest a major part of
their corpus in equities. Such funds have comparatively high risk. These schemes provide
different options to the investors like dividend option, capital appreciation, etc. and the
investors may choose an option depending on their preference. The investors must indicate
the option in the application form. The mutual funds also allow the investors to change the
option at a later date. Growth schemes are good for investors having long-term outlook
seeking appreciation over a period of time.

b) Income/Debt oriented scheme: The aim of income funds is to provide regular and steady
income to investors. Such schemes generally invest in fixed income securities such as bonds,
cocorporate debenture government securities and money market instruments. Such funds are
less risky compared to equity schemes. These funds are not offered because of fluctuations in
equity markets. However, opportunities of capital appreciation are also limited in such funds.
The NAVs of such funds are affected because of change in interest rates in the economy. If
the interest rates fall, NAV of such funds are likely to increase in the short run and vice versa.
However, long term investors may not bother about these fluctuations (Alexander Gordon).

c) Balanced Fund: The aim of balanced funds is to provide both growth and regular income
as such schemes invest both in equities and fixed income securities in the proportion
indicated in their offer documents. These are appropriate for investors looking for moderate
growth. They generally invest 40-605 in equity and debt instruments. These funds are also
affected because of fluctuations in share prices in the stock markets. However, NAV’s of
such funds are likely to be less volatile compared to pure equity funds (Alexander Gordon).

3) Mutual fund schemes according to money market and liquidity: These funds are also
income funds and their aim is to provide easy liquidity preservation of capital and moderate
income. These schemes invest exclusively in safer short-term instruments such as treasury
bills, certificate of deposit, commercial paper and inter-bank call money, government
securities etc. Returns on these schemes fluctuate much less compared to other funds. These
funds are appropriate for corporate and individual investors as a means to park their surplus
funds for short periods. Followings are the mutual funds schemes according to money market
and liquidity.

a) Gilt fund: These funds invest exclusively in government securities. Government securities
have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and
other economic factors as is the case with income or debt-oriented schemes.

b) Index funds: Index funds replicate the portfolio of a particular index such as the BSE
sensitive index, S & P NSE 50 indexes, etc. These schemes invest in the securities in the
same weight age comprising of an index. NAVs of such schemes would rise or fall in
accordance with the rise or fall in the index, though not exactly by the same percentage due to
some factor known as “trading error” in technical terms. Necessary disclosures in this regard
are made in the offer document of the mutual fund scheme. There are also exchange traded
index funds launched by the mutual funds which are traded on the stock exchanges.

4) Post office: In India, there are many small saving investors present. Taking this fact in to
consideration, there is need for an institution which will provide better aid for the
development of this class. The financial service offered by post includes savings and postal
life insurance and rural postal life insurance. The Indian post is 59 years old institution and
has reached in every corner of the country. Post office has served country with its full
potential; it has become the milestone in the socioeconomic development of country. Many
small saving investors in rural areas have easy access to invest in post office schemes. The
post office savings scheme provides a secure, risk free and attractive investment option for
the small investors and offers the savings products across its 155000 Post Offices. The post
office savings bank is the oldest and by far the largest banking system in the country, serving
the investment need of both urban and rural clients. These services are offered as an agency
service for the Ministry of Finance, government of India.
Different types of Schemes in the post office are discussed as follow:

a) Savings Bank Account (SB): Post office saving account is similar to a saving account in a
bank. It is a safe investment alternative to park those funds, which an individual investor
might need to cash fully or partially at very short period of time. This account suits for those
people who live in rural and semi-rural areas where bank facilities are very less. This account
can be opened with minimum of Rs.50 and maximum of Rs.1, 00,000 by an individual. For a
joint account the upper limit is Rs.2, 00,000 but there is no limit for group, institutional or
official capacity account. Withdrawal from the account is by cheque and there are no
restrictions on withdrawals, unlike commercial banks. Accounts have to maintain minimum
balance. The rate of interest is defined by the central government from time to time.

b) Recurring Deposit Account (RD): Recurring deposit account is a systematic way of

saving money. The scheme is meant for those investors who want to deposit a fixed amount
regularly on monthly basis in order to get lots of sum after 5 years on the maturity of the
account. The recurring deposit account can be opened at any post office. Period of maturity
of account is 5 years. Sixty equal monthly deposits shall be made in an account in multiples
of Rs.5 subject to a minimum of Rs.10. The scheme covers Page | 60 free life insurance cover
after receiving contributions for 24 months on account of denomination of Rs. 5, Rs. 10, Rs.
15 or Rs. 20. In the event of death of the depositor after a minimum period of two years from
the date of opening account, the heir nominee will get the full maturity value of the account
provided the depositor’s age was between 8 and 53 years and there have been no withdrawals
or defaults during the first two years and the account remains current at the time of death. The
benefits of cover are not available for an extended period of deposit beyond five years.
Premature closure of account is permissible after expiry of three years. In case of premature
closure of account, the interest at the rate applicable to post office saving account shall be
payable .

c) Monthly Income Scheme: Monthly Income Scheme (MIS) provides for monthly
payment of interest income to investors. It is meant for investors who want to invest a lump-
sum amount initially and earn interest on a monthly basis for their livelihood. The scheme is
therefore, good for retired persons. The account can be opened by a single adult or 2-3 adults
jointly. Period of maturity of an account is six years. Only one deposit can be made in an
account. Minimum deposit limit is Rs.1000. Maximum deposit limit is Rs.3 lacks in case of
single account and Rs.6 lacks in case of joint account. Interest 8% per annum is payable
monthly. In addition, bonus equal to 10% of the deposited amount is payable at the time of
repayment on maturity. Premature closure facility is available after one year subject to
condition. Income tax relief is available on the interest earned .

d) Public Provident Fund (PPF): Public Provident Fund, popularly known as PPF, is a
saving cum tax saving instrument. It also serves as a retirement planning tool for many of
those who do not have any structured plan covering them. Public Provident Fund account can
be opened at designated Post Offices throughout the country and at branches of Public sector
banks throughout the country. The account can be opened by an individual in his/her own
name, on behalf of minor of whom he/she is a guardian, or by a Hindu undivided family.
Minimum deposit required in PPF account is Rs.500 and maximum deposit limit is Rs.70,
000 in a financial year. The account matures for closure after 15 years. Account can be
continued with or without Page | 61 subscription after maturity for block periods of five
years. Premature withdrawal is permissible every year after completion of 5 years from the
end of the year of opening the account. Loan from the account at credit in PPF account can be
taken after completion of one year from the end of each financial year of opening the account
and before completion of the 5th year. Interest at the rate notified by the central government
from time to time is calculated and credited to the account at the end of each financial year.
Presently, the rate of interest is 8% per annum. Income tax rebate is available on the deposit
made under section 88 of Income Tax Act, as amended from time to time . Interest credited
every year is tax-free .

e) Time Deposit (TD): Fixed deposit option for period ranging from one, two, three to five
years with facility to draw yearly interest offered at compound rates. Automatic credit facility
of interest to saving account is given. Rate of interest varies accordingly to the period of
deposit and is decided by the central government time-to- time. They are suitable for capital
appreciation in the sense that money grows at a predetermined rate. In this return
commensurate with the risk, the rate of growth is also high, and time deposits return a lower,
but safer investment. The investors can borrow against this time deposit .

f) Senior citizens savings scheme (SCSS): Senior citizens savings scheme offers fixed
investment option for senior citizens for a period of five years which can be extended, at a
higher rate that are paid in quarterly installments. g) National Savings Scheme: National
Saving Scheme (NSS) offers an assured return and tax rebates under section 88 of the Income
Tax Act, 1961. National Saving Schemes units are issued in various denominations with the
minimum investment being Rs.100. There is no prescribed upper limit on investment.
However, the scheme offers a coupon of 9 percent as compared to 9.5 percent offered by
NSC. Moreover, the interest is compounded annually as against semi-annually in NSC. NSS
has duration of four years as compared to NSC, which has duration of six years. The investor
can extend the duration of NSS units thereafter if the investors so desire. The NSS does not
offer the benefits of liquidity. There is no premature withdrawal facility except in case of the
death of the holder. However, the interest accrued on NSS can be withdrawn at any point.
The deposit (principal) withdrawn only on maturity of the instrument at the end of four years
and the account can be closed at the discretion of the investo.

h) National Saving Certificates: National Saving Certificates, popularly known as NSC, is a

time-tested tax saving instrument that combines adequate returns with high safety. National
Saving Certificate can be purchased by an adult in his/her own name or on behalf of a minor,
a trust, two adults jointly, Hindu undivided family etc. National Saving certificates are
available in the denominations of the Rs. 100, Rs. 500, Rs. 1000, Rs. 5000 and Rs.10,000.
There is no maximum limit on the purchase of the certificates. Period of maturity of
certificates is six years. Presently, maturity value of a certificate of Rs. 100 denomination is
Rs. 160.10. Maturity value of a certificate of any other denomination is at proportionate rate.
Premature encashment of the certificates is not permissible except at a discount in the case of
death of the holder(s), forfeiture by a pledge and when ordered by a court of law. Interest
accrued on the certificates every year is liable to income tax but deemed to have been
reinvested. Income tax rebate is available on the amount invested and interest accruing under
section 88 of Income Tax Act, as amended from time to time. Income Tax relief is also
available on the interest earned as per limit fixed vide section 80L Income Tax, as amended
from time to time.

i) 10 Years Social Security Certificates: These certificates can be purchased by person in

the age group of 18-45 years. The minimum investment amount is Rs. 500. The maturity
period of these instruments is 10 years and the rate of interest is compounded annually. The
interest qualifies for deduction up to a maximum of Rs. 7000 under section 80L of the
Income Tax Act. These certificates can be withdrawn premature after 3 years of the date of
issue. In case of the death of the certificate holder before expiry of 2 years from the date of
issue due to non-natural causes (excepting suicide), the legal heir/nominee are entitled to
receive an amount equal to 3 times the face value of the certificates.
j) National Saving Certificates (VIII Issue) Such certificates are available in denominations
of Rs. 100, Rs. 500, and Rs. 1000, Rs. 5000 and Rs. 10000. The interest on it is compounded
half-yearly. The term of deposit is 6 years and premature encashment is not generally
possible. The amount invested in this scheme qualifies from tax rebate of 20% up to a
maximum of Rs. 50,000. The interest accrued is exempt from tax up to Rs. 7000 under sec.
88 and is paid back at the time of maturity. The National Saving certificates can be purchased
from the Post Office can be pledged as security for loan and provide nomination facility.

k) Twelve Years National Saving Annuity Certificates: This scheme provides a retirement
plan. The rate of interest is the same as in NSCI Issue, though the manner of payment of
interest is different. The annuity certificates are available only in higher denominations of Rs.
3200 and Rs. 6400. The deposits amount can be made either in lump sum or in periodic
installments spread over a period of two years. From the 61st month onwards, the depositor
starts receiving a monthly annuity (Rs. 50 for certificates of Rs. 3200 and Rs. 100 for
certificates of Rs. 6400) for seven Years at the end of which the holder gets Rs. 4320 and Rs.
8640 respectively. In case of any default in payment of installments, either the period is
extended by one year, till the installments have been paid, or the defaulter installments are
paid in a lump sum along with simple interest at a fixed percent per annum. The amount
deposited is also refunded, if required during the Period of deferment with simple interest.
The payments received in respect of these certificates are liable to income tax .

l) Kisan Vikas Patra: Kisan Vikas Patra (KVP) is a saving instrument that provides interest
income similar to bonds. Amount invested in Kisan Vikas Patra doubles on maturity after 8
years and 7 months. Kisan Vikas Patra can be purchased by an adult in his/ her own name, on
behalf of a minor, a minor, a trust, two adults jointly. Kisan Vikas Patras available in the
denominations of Rs. 100, Rs. 500, Rs. 1000, Rs. 5000 and Page | 64 Rs. 10,000 and Rs.
50,000. There is no maximum limit on purchase of KVPs. Premature encashment of the
certificate is not permissible except at a discount in the case of death of the holder(s)
forfeiture by a pledge and when ordered by a court of law. No income tax benefit is available
under the Kisan Vikas Patra scheme. However, the deposits are exempt from tax deduction at
source (TDS) at the time of withdrawal.

m) Indira Vikas Patra: These instruments are available at post office and can be purchased
by any person. Minimum investment in Indira Vikas Patra is Rs. 100 and there is no
maximum limit. These are available in the maturity denomination of Rs. 200, Rs. 500, Rs.
1000 and Rs. 5000 and the investor has to pay half the face value. The initial amount is
doubled in 5 years and these Patras cannot be enchased premature. The interest of Indira
Vikas Patra is compounded annually, is payable on maturity only and is taxable. These
instruments are like bearer-bonds and hence have to be carefully preserved .

5) Public deposit: In India, Companies’ Act 2013 provides that companies can accept deposit
directly from the public. It is one of the best alternatives in investment as this mode of the
raising funds is very popular among the companies in India which helps to boost the
investment environment and provide better opportunities for the investors. As per the
provisions of the Companies Act, a company cannot accept deposits for a period of less than
6 months and more than 36 months. The acceptance of public deposits is an important
technique for meeting the financial requirement of company. Bank credit is easily available to
the companies but they charge high rate of the interest which sometimes is a huge expense for
the company’s balance sheet. Also there are chances of increasing the bank rate depending
upon the Reserve Bank of India’s polices. Apart from this, the bank rate is always costlier to
the industries as they need lots of fund for working capital. Another important factor is credit
control and taxation polices attached with it. To reduce all such factors public deposit is the
best option for the industries. As per investors’ point of view, this is good option to utilize the
surplus amount of investment in such industries. Companies need huge number of funds to
manage the working capital. The internal sources tend to dry up gradually with inflation. In
such conditions the company may raise fund through shares, debentures, bonds, long term
loans, bank loans, trade creditors and public deposit. In these funds, public deposit is a
cheaper way of raising funds. The regulatory measures of the government and the Reserve
Bank of India in the direction of credit control have seriously affected the availability of the
funds to meet the requirements of the companies. In such a situation, financial managers of
the private companies have opted to the public deposit to meet the requirement of the funds
on daily basis. In this run many companies have introduced new schemes to attract the public
deposit with high rate of interest. Section 58A of the Companies Act provides that "deposit"
means "any deposit of money with, and includes any money borrowed by, a company, but
shall not include such categories of amount as may be prescribed in consultation with the
Reserve Bank of India." Rule 2(b) of the Companies (Acceptance of Deposit) Rules, 1975,
defines "deposit" as meaning "any deposit of money with, and includes any amount borrowed
by a company," and enumerates some categories of loans or deposits, as stated in sub-clauses
(0 to (x), which are not treated as deposits for the purpose of the Rules. Thus certain types of
borrowings/deposits are treated as 'exempted borrowings', to which the restrictive provisions
of these Rules do not apply. Such exemption can be given by Rules, as contemplated by the
definition of "deposit" in Section S8A mentioned above. Thus, the term "deposit" connotes
deposits other than exempted borrowings. In the Reserve Bank of India Act, 1934 (as
amended by the Amendment Act of 1974) the term "deposit" is defined as including "any
money received by a non-banking company by way of deposit or loan or in any other form,
but shall not include amounts raised by way of share capital. Under the directions issued by
the Reserve Bank to non-banking institutions in exercise of its powers under Sections 45-J,
4S-K and 45-L of the Reserve Bank of India Act, 1934, certain categories of amounts have
been excluded from the definition of the term "deposit" . Thus after understanding the various
terms and conditions applied to the public deposit this investment alternatives is very
attractive to the short term investors and is also good for tax exemption. It is also considered
as safe investment option. Proper knowledge about the company and the sector in which
company is present is very important from the point of view of investors. Companies should
always aim and ensure in gaining the confidence of the investors. On maturity, the depositor
has to return the deposit receipt to the company and the company pays back the deposit
amount. The depositor can renew his deposit for further period of one to three years at his
option. Many companies are now supplementing their fixed deposit scheme by cumulative
time deposit scheme under which the deposited amount along with interest is paid back in
lump sum on maturity

 Merits of public deposit:

1) It is very easy to acquire finance from the investors in form of deposit as it is

rewarding for the investors too.

2) In public deposit scheme investors get tax reduction on the interest paid.

3) Administrative cost of issuing a public deposit is lower and is fixed in comparison

to the share and debentures.

4) Since the rate of the interest paid on the public deposit is fixed it helps to attract
the investor.

5) The risk involved is limited particularly when money is deposited with the reputed
company.
 Demerits of public deposit:

1) Public deposits are uncertain and unrealistic forms of financing.

2) Public deposit is available for the short period of time.

3) There are chances that management may misuse the fund which is raised from public
deposit.

6) Bank deposit: Banks play an important and pivotal role in the financial system. Bank
deposit is quite popular among the investors as investment of surplus money is done into it.
Banks also need working capital. Bank collects their working capital for their business
through bank deposit. The deposit is given by the investors or customer for the specific
period of time on which bank pays the interest. In India all banks provide interest on the
deposit. Deposit can be accepted from an individual, financial institution, any organization,
and government. The profitability of the banks depends upon the deposit collected. Banks
mainly mobilize fund for short term and medium term finance purpose. In recent times
commercial banks also provides long term investment option to the investors. The main
factor which helps in the formation of capital is the accumulation of capital. Banking system
is the integral part of investment system productive sector. When investors deposit money in
the bank, it must invest the money in the new ventures that will increase the deposited
money. The interest rate on the fixed deposit differs from bank to bank, but traditionally
Reserve Bank of India use to regulate it and so every bank had same interest rate. Now the
conditions are different. Present trend indicates that the private sector and foreign banks give
more interest on the deposit and so investors are attracted towards it. Again there is risk
involved in dealing with these banks. Investor should invest after taking into consideration all
aspects of risk. Fixed deposit amount is paid with interest on maturity. One can go for loan
against fixed deposit. Interest can be transferred to bank account of the investor. To do any
type of transaction with the bank investors needs to open an account with that particular bank.
As per the requirements of the investors the bank account can be opened . There are different
types of bank accounts as discussed individually below:

 Types of bank account:

1) Savings Account: As a person does not know what will happen in the future, money
should be saved for unexpected events and emergences. Without savings uncertain events can
become large financial burden. Therefore, savings helps an investor become financially
secure. These accounts are one of the most popular among the individual investors. These
accounts not only provide cheque facility but also have lots of flexibility for deposit and
withdrawal of funds from the account. Most of the banks have rules for the maximum number
of withdrawals in a period, Page | 68 maximum amount of the withdrawal. This type of
account is the most useful one for the small investors in India. However, banks have every
right to impose restriction on the misuse of this account as current account. Banks are free to
decide the interest rate on the savings account (Pathak).

2) Current Deposit Account: Current accounts are basically used by Businessman and
usually are not used for investments and savings purpose. This deposit is the most liquid
deposits and therefore there is no limitation for the withdrawals. Most of these accounts are
opened in the name of firm or company. No interest is paid by bank on these accounts
(Pathak).

3) Recurring Deposit Account: These are popularly known as RD accounts and are special
kind of the term deposits and suitable for the people who do not have savings, but are ready
to save small amount of money on monthly basis. In this type of account the interest is earned
on the amount already deposited at the same rate as applicable on fixed deposit. This option
is the best for investors who are interested in the savings for children education, marriage as
it is long term in nature. A fixed amount has to be deposited monthly without failure.
Premature withdrawals of accumulated funds are allowed however penalty is applied by some
of the banks .

4) Fixed Deposit Account: These facilities are offered by every bank as it proves to be a
source for the working capital of banks. Fixed deposit schemes with a wide range of tenures
for periods from 7 days to 10 years are present in the banks. In some countries it also known
as term deposits or bonds. The term “fixed” in fixed deposit denotes the period of maturity or
tenor. Therefore, the depositors are supposed to continue such deposits for the length of time
for which the depositors decides to keep the money with bank. In case of emergence,
investors has two options regarding withdrawal of these funds, one by taking loan against the
deposit and second by paying penalty. The rate on these deposits keep on changing frequently
as market goes up rates goes up and vice versa. While in some schemes, interest rate is
constant till maturity. Private sector banks provide good rate of interests.2

 Merits of bank deposits:

1) Any individual of major age can open accounts in the bank.

 2) Deposit in the bank is secure and safe.

3) Money can be deposited at any time in the account with many options and modes
available.

4) Interest paid on the bank deposit helps to low the burden of expense on the investors.
Interest is paid as monthly, quarterly, 6 monthly and yearly. Senior citizens are offered
little higher rate of interest.

5) Bank deposits have high liquidity for the fund invested by the investors.

6) Banks even gives loan on the fixed deposit receipts.

7) Procedures and formalities involved in the bank investment are limited, simple and
quick.

8) Banks offer various services to its customers and investors.

9) Banks offer reasonable return on the investment made that too in regular manner.

 Demerits of bank deposits:

1) The rate of return on the investments is very low in comparison to other alternatives of the
investments.

2) The returns on the investment sometimes are so low that it’s even hard to meet the present
day of inflation.

3) Terms and conditions on the investments are very complicated and not easy to be
understood by any investors.

4) Government and regulatory bodies are a hindrance in the growth of banks with more
potential.

5) Delay of the payments due to system problems is a major problem now-adays in bank
transactions

7) Real Estate: The land is limited on the earth but the population is increasing day by day.
With this the prices of real estate are also increasing day by day. Investments in real estate
includes properties like building, flats, row house, land, agriculture land, plots near cities,
tourist place, famous spots etc. Real estate transactions can be done by sales, leasing and
exchanges. Real estate investment alternative requires huge funds. It is most profitable as
well as good investment alternative today. It gives highest rate of return in comparison to
other investment alternatives. The theory of demand and supply is applicable in the real
estate, as the demand for the land is high but the supply is limited so the price is increasing.
In short period of time, more profit can be made in real estate.

 Types of Real Estate:

1) Commercial Property: Commercial property is one of the best investment alternatives

now a day. Long term planning may result in good future gains. Commercial property
includes N.A. plots, residential buildings, malls, urban land and flats. It gives reasonable
returns on the investment. There is low risk but also no liquidity. The interest paid on
borrowing of commercial property is exempted from the tax. This type of property is also
used as security for raising loans. There is quick appreciation in the value of the asset.
The risk in the investment is very high in comparison to investment in banks, mutual
funds and shares. Despite of availability of more rationally priced options, investing in
the real estate is not so easy. Thus property is purchased taking into consideration of
business purpose. It is very hard for common investor to afford such huge investment
option. The only purpose is to make huge profit out of such property.

2) Residential property: Residential property now a days have become a necessity. This
option is safe from the point of view of retirement. It acts as one useful family asset with
saleable value. It is a long term investment and so needs proper planning and execution
from investors. The government provides tax incentive to an individual for Page | 71
investing in the residential properties. In India Prime Minister has introduced a new
scheme for the people without house known as Pant Pradhan Aawas Yojana. The interest
is paid by government on the loan of 6 lakhs. The investment is also safe and secure.

 Merits of investment in Real estate:

1) It is a profitable investment avenue.

2) In short time more chances of profit.

3) Can raise loan against the real estate at hard times.

4) The prices of real estate are increasing day by day.

 5) It is one of the attractive investment options for affluent investors.

 Demerits of investment in Real estate:

1) The risk is more in comparison to other investment alternatives.

2) This alternative requires huge funds and cannot be affordable by common investors.

3) The government rules and regulations regarding buying and selling of the property are
troublesome in case of real estate.

4) Stamp duty, registration and legal formalities are complicated.

5) There is also chance of getting cheated during purchases and sale of property.

6) The amount of investment is huge and therefore the benefits of diversification are not
available.

8) Investment in Gold and Silver: Since ancient times gold and silver is supposed to be
the best option for investment by investors. Even old coins were made of gold and silver.
They both are precious metal. It is the most liquid asset. Gold and silver rates are
increasing day by day. Gold stock in the world is very limited. Everyone is attracted
towards collecting gold and silver ornaments or coins. As gold is present in very less
quantity so there is a great demand for it. Silver is also known for its volatile rate. The
prices of these metals depend upon the demand and supply. Gold and silver is also used
as a store of wealth. They also act as secret assets. The return on investment is increasing
with the price fluctuation. The investment in gold and silver is always more safe and
secure. The advantage of capital appreciation is always present in gold and silver
investment. The only threat with this metal is of robbery. This risk factor is always
attached with it. It can be long-, medium- and short-term investment depending upon the
needs of investors. Income on regular basis is not present in this investment. Investment
in gold and silver can be present in physical or non-physical form depending upon
convenience of investors. The physical form includes bullion, coins, and jewellery. The
nonphysical form includes futures contract, units of gold exchange traded funds and
shares of gold and silver mining companies. Gold ETF’s were permitted in India since
March 2007. By studying the figure below one can understand the price history of 10gms
of gold for the last 86 years .

 Merits of investment in Gold and Silver:

 1) Gold and silver have been good hedges against inflation.

2) They are highly liquid with very low trading commission.

3) Gold and silver provide good diversification option for the investors.

4) They are also present in the electronic form and can be traded from anywhere.

5) The investment is safe and secure.

 Demerits of investment in Gold and Silver:

1) The purity is very hard to detect of gold and silver.

2) They do not provide regular income for investors.

3) Tax benefit is not present in this investment alternative.

4) Storage of these metals is very risky.

9) Derivatives: Derivative is a product whose value is derived from the value of one or
more basic variables, called underlying. The underlying asset can be equity, index, Forex,
commodity or any other asset. Derivatives products initially emerged as hedging devices
against fluctuations in commodity prices and commodity linked derivatives remained the
sole form of such products for almost three hundred years. The financial derivatives came
into spot light in post 1970 period due to growing instability in the financial markets.
However, since their emergence, these products have become very popular and by 1990’s
they accounted for about two third of total transactions in derivative products.

Types of Derivatives:

1) Forwards: A forward contract is a customized contract between two entities, where

settlement takes place on a specific date in the future at today’s pre-agreed price.

2) Futures: A future contract is an agreement between two parties to buy or sell an asset
at a certain time in the future at a certain price. Future contracts are special types of
forward contracts in the sense that the former are standardized exchange traded contracts,
such as futures of the Nifty Index.

3) Options: An option is a contract which gives the right, but not an obligation, to buy or
sell the underlying at a stated date and at a stated price. While a buyer of an option pays
the premium and buys the right to exercise his option, the writer of an option is the one
 who receives the option premium and therefore obliged to sell/ buy the asset if the buyer
exercises it on him. Options are of two types Calls and Puts options.

4) Calls: Calls give the buyer the right but not the obligation to buy a given quantity of
the underlying assets, at a given price on or before a given future date.

5) Puts: Puts give the buyer the right but not the obligation to sell a given quantity of the
underlying asset at a given price on or before a given future date.

9) Commodities: In economics, a commodity is generic term for any marketable item

produced to satisfy wants or needs. Economic commodities comprise goods and services.
Commodities are unprocessed physical goods that result from mining, drilling, and
agriculture. For investors, commodities offer attractive potential returns and
diversification and are often used as a tool to hedge against inflation. Commodities are
raw materials that are used to create products which are consumed in everyday life around
the world. Commodities have played a major role in shaping the global economy.
Commodities are products that can be brought, sold and traded in various markets.
Hedging is essentially done by investors with an underlying risk in a commodity. It may
be either done by producers or consumers who want to transfer the price risk onto the
market. Participants in the commodity markets are producers, traders, commission agents,
brokers, importers, exporters and consumers. Commodities in Indian markets play a vital
role, as 60% of the people in India are engaged in the business of agriculture.
Commodities help in the economic development and growth of India. Investment in
commodities needs constant watch on the markets. It is also good diversification tool in
the investment. The rate of return in commodities is good in comparison to other
investment tools. More research and study regarding the changes in demand and supply of
the goods with globally changing market is required. The import and export of the
particular product is to be observed to predict the price in commodities. In India there are
national and regional exchanges present . National exchanges are NCDEX, MCX and
NMCE whereas regional exchanges are ICEX, NBOT and others.

▪ In the global markets there are four categories of commodities in which trading
takes place: 

• Energy (example crude oil, heating oil, natural gas and gasoline) 
• Metals (example precious metals such as gold, silver, platinum, base metal such as
aluminium, copper, lead, nickel, tin and zinc, industrial metal such as steel) 

• Livestock and meat (example lean hogs, pork bellies, live cattle and feeder cattle)

• Agriculture (example corn, soybean, wheat, rice, coffee, cotton, and sugar).

▪ There are main two types of commodities:

1) Soft Commodities: Soft commodities consist of agricultural products such as corn,

soybean, wheat, rice, coffee, cotton, and sugar.

2) Hard Commodities: Hard commodities consist of mined products such as crude oil,
gold, and silver.

 Factors affecting commodity price movement

▪ Fundamental Factor

1. Weather

2. Domestic production and use

3. Reserves inventories

4. Imports and Exports

5. Interest rate

6. Dock and Trucker strikes

7. C.P.I and P.P.I data

8. Valve of currency

9. Actions of other countries

10. Inflation

11. Government policies.

 Technical Factors

1. Trends and patterns

2. Chart formations
 3. Cycles

4. Seasonal odds

5. Human error

6. Human emotions

7. Strategic planning

8. Lack of data

9. Lack of data processing tools.

 Merits of investment in commodities:

1) It gives direct exposure to global economic growth.

2) Both the returns and risk involved in commodities largely depend on those of bond and
equities. This makes it possible to improve return-risk profile.

3) Commodities can use to hedge against inflation, currency and geopolitical risk.

4) Gold plays an important role when it comes to diversification in times of volatile and
uncertain market.

5) There is no counterparty risk involved in investments that are physically deposited.

 Demerits of investment in commodities:

1) Commodity investment may be subject to market fluctuations in value.

2) Physical settlements may result in high cost.

3) Liquidity may be limited under the extreme market conditions.

4) Analysis of some commodities becomes very difficult due to lack of transparency.

 Industry profile
1. Equity mutual funds (especially comprising blue chip companies)

In India though the market has gone down, there is not much downside in blue chip
companies and mutual funds comprising of these companies. The government is clear about
manufacturing and is providing faster clearances for factories to be set up, production to start,
and energy to be given to the industry. Due to this reason the trend of blue-chip companies
are upside. The projects that were in wait for the last couple of years have started getting
approved. This will create significant momentum and wealth for large firms and their
investors. This may take a few months to operationalize, but the trend is clear.
  Company Profile

 About FCN training academy

FCN Training Academy is now a big name in the training industry in the segment of
financial market training products like Equity Market, Commodity Market and
specially the Currency Market Training Programme. On June 6, 2013, Vijay
Kanpariya (Founder of FCN Training Academy) starts his dream job to educate all
the traders, investors, technical analysts, and fundamental analysts for better trading
and better earnings from the different markets. The company gives a boost to traders
for better trading options and technology to understand the markets. Now more than
2500 people got trained without any charges or fees. They built their knowledge
pillar with FCN Training Academy for last 4 years and the company just starts his
first branch in Surat for different kind of courses in trading and investing business.
 Founder’s message

• The winds of change are blowing all over the world. The transformation from
regulation to liberalization, from protection to integration with international
markets and from central planning to free market economies demands new
thinking, new approaches and new skills to accelerate the momentum of
growth and ensure success.

• FCN Training Academy aims to provide an education system that looks

beyond employment and concentrates on foundation for lifetime of
professionals as well as personal development.
• It is my privilege to invite people to join the FCN Training Academy who
share our vision, goals and purpose to join hands in our efforts to build a new
cadre of capital market professionals who will participate actively in the
growth of this era of economic liberalization and globalization.

Mission of FCN training academy

 "Our mission is to inform, inspire, and empower people to be their best --

both personally and professionally."

Vision of FCN training academy

 "We will be premier financial education community for people who seek
an enriched lifestyle."

Courses provided by FCN training academy

Foundation of Stock Interest rate

derivative
Foundation of Commodity Commercial Banking in India
Foundation of Forex Debt Market
Technical Analysis Security Market
Fundamental Analysis Capital Market-International
Delta Hedging Investment Analysis and Portfolio
 Management
Option Trading Risk Management
Chart Pattern Analysis Banking
Sector
Candle Stick Analysis Odin and MT4 software learning
Indicator Analysis Wealth management
Financial Market Algorithmic Trading
Mutual Fund Financial planner
Currency Derivatives Money management with Dead investment
Equity Derivative Financial Management Advanced

FCN Values and Beliefs

▪ Honesty and Integrity

▪ The provision of a fair, reliable trading environment
▪ An innovative approach to development of new products
▪ Upholding the highest standards of compliance and regulation
▪ A determination to offer the best possible customer service
▪ To only use the best technology
▪ To train all staff to the highest level
▪ Company and funds security and stability
 Organization

Vijay
sir )
(Founder

Sumul Dairy Pal

Katargam Branch Varahha Branch Nanpura Branch
Branch Branch

Gunjan Vnygar Kishor Sosa &

Vijay Rathod Amit Gujjar Hiren Katapara
(Branch Manager & Sanjay Solanki
(Manager) (Branch Manager) (Branch manager)
Trainer) (Branch Manger )

Preeti Patel
Priyanka Devilkar Manish Chawla
(Accountant)

Vikita Sarvaliya

(Junior Accountant)
 SWOT analysis of FCN training academy

 SWOT (strengths, weaknesses, opportunities, and threats) analysis is a

framework used to evaluate a company's competitive position and to develop
strategic planning. SWOT analysis assesses internal and external factors, as
well as current and future potential.
 A SWOT analysis is designed to facilitate a realistic, fact-based, data-driven
look at the strengths and weaknesses of an organization, initiatives, or within
its industry. The organization needs to keep the analysis accurate by avoiding
pre-conceived beliefs or Gray areas and instead focusing on real-life contexts.
Companies should use it as a guide and not necessarily as a prescription

Strength of FCN training academy

• More branches are available in Surat city.
• Founder Vijay sir have more than 10 years’ experience about trading and
about stock market.
• Well trained staff.
• Trainers have 2 to 5 years’ experience.
• We also do business of tours and travels and photo studio.
Weakness of FCN training academy
• FCN training academy is only available in Surat city.
• Less awareness about stock market, SIP, investment schemes to people
because of this reason they don’t want to join invest their money.

Opportunities for FCN training academy

• Expansion in different cities.
• Now a days because of pandemic people are moving towards savings and
investment schemes for that they must have knowledge about stock market and
different investment schemes.
• Diversification in different business line.

Threat for FCN training academy

• Threat on new competitor in market
• Because of new technologies, market condition trainee is attracting online
training class at home with free of courses.