Literature Review Essay

They warned the investors not to buy unlisted sh ars, as Stock Exchanges do not permit calling in unlisted shargons. Another rule that they decide is not to buy in restless shares, ie, shares in which proceedings take place rarely. Themain reason why shares are inactive is beca using up there are no buyers forthem. They are mostly shares of companies, which are not doing well. A terce rule according to them is not to buy shares in closely-held companies because these shares tend to be less active than those of widely held mavins since they have a fewer get of shareholders.They caution not to hold the shares for a unyielding period, expecting a mellowed price, but to trade whenever one earns a reasonable reward. Jack Clark Francis (1986) revealed the importance of the account of arrest in drops and reviewed the possibility of oversight and unsuccessful person attempt. He opined that in an uncertain world, investors plundernot predict incisively what rate of return an investment allow yield. exactly he suggested that the investors can formulate a opportunity distribution of the possible rates of return.He besides opined that an investor who purchases corporate securities must face the possibility of default and bankruptcy by the issuer. Financial analysts can know bankruptcy. He tell some easily discernable warnings of a firms failure, which could be find by the investors to avoid such a endangerment of infection. Preethi Singh3(1986) disclosed the basic rules for selecting the guild to invest in. She opined that understanding and step return m d take chances is profound to the investment touch on. fit in to her, most investors are risk averse.To have a higher return theinvestor has to face greater risks. She concludes that risk is fundamental to the process of investment. Every investor should have an understanding of the various pitfalls of investments. The investor should conservatively analyse the financial statements with special reference to solvency, profitability, EPS, and cogency of the company. David. L. Scott and William Edward4 (1990) reviewed the important risks of owning common carnations and the ways to minimise these risks. They commented that the insensibility of financial risk depends on how heavily a business relies on debt.Financial risk is comparatively easy to minimise if an investor sticks to the common stocks of companies that employ bittie amounts of debt. They suggested that a relatively easy way to correspond some degree of liquidity is to restrict investment in stocks having a history of adequate profession volume. Investors concerned about business risk can reduce it by selecting common stocks of firms that are modify in several unrelated industries. Lewis Mandells (1992) reviewed the nature of merchandise place risk, which according to him is very much global.He revealed that certain risks that are so global that they impress the entire investment market. Even the s tocks and bonds of the well-managed companies face market risk. He concluded that market risk is influenced by factors that cannot be predicted accurately like economic conditions, policy-making events, mass psychological factors, etc. Market risk is the systemic risk that affects all securities simultaneously and it cannot be reduced through diversification Nabhi Kumar Jain (1992) condition certain tips for buyingshares for holding and also for selling shares.He advised the investors to buy shares of a growing company of a growing industry. Buy shares by diversifying in a number of growth companies operating in a different but equally unfaltering growing sector of the economy. He suggested selling the shares the atomic number 42 company has or almost reached the peak of its growth. Also, sell the shares the moment you realise you have do a mistake in the initial selection of the shares. The only option to decide when to buy and sell high priced shares is to come in the indivi dual merit or shift of each of the shares in the portfolio and arrive at a decision.Carter Randal (1992) offered to investors the underlying principles of winning on the stock market. He emphasised on colossal-term vision and a plan to reach the goals. He advised the investors that to be successful, they should never be pessimists. He revealed thatthough there has been a major economic crisis almost every year, it be true that patient investors have consistently made money in the equities market. He concluded that investing in the stock market should be an un-emotional exploit and suggested that investors should own a stock if they believe it would perpetrate well.S. Rajagopal. (1996) commented on risk management in telling to banks. He opined that vertical risk management is good banking. A professional approach to run a risk charge will safeguard the touch ons of the banking institution in the long run. He described risk identification as an art of combining intuition wit h formal information. And risk measurement is the estimation of the size, probability and timing of a potential loss under various scenarios. Charles. P. Jonesl8 (1996) reviewed how to project security return and risk.To betoken returns, the investors must estimate cash flows the securities are likely to provide. Also, investors must be able to quantify and measure risk victimization variance or standard deviation. Variance or standard deviation is the accepted measure of variability for both realised returns and expected returns. He suggested that the investors should use it as the fact dictates. He revealed that over the departed 12 years, returns in stocks,bonds, etc. have been normal. high chip stocks have returned an average of more than 16% per year.He warned that the investors who believe that these rates will plow in the future also, will be in trouble. He also warned the investors not to allow themselves to bend victimised by investment gurus. Rukmani Viswanath (200 1) reported that the capital Dealers in Govt. securities are working(a) on a new internal risk management representative suited for the Indian market conditions. Theattempt is to lay belt down general parameters for risk perception. The Primary Dealers Association of India (PDAI) is formulating a set of prudential norms for risk management practices. enchantment internationally the principles of risk management may be the same everywhere, the Association is of the view that they have to identify the relevant issues and apply those principles in the Indian context. It powerfully argues that it must work on a mock up that can help to manage liquidity and interest rate risk. While the existing RBI guidelines on risk management cover mainly statutory risk, the PDAI hopes that its new risk management ensample will be able to perceive real risk. These new norms are expected to help calculate several issues like, whether a fall in the prices of securities or yields is a temporary or permanent situation etc.The areas the new norms are likely to channelise are the assessment of the liquidity situation and envisaging investor lust for a specific instrument and their appetite for risk. According to thegovt. securities dealers, these norms are expected to help them hedge. FOOTNOTES 1. Grewal and Navjot Grewal, Profitable lnvestment in shares, Vision Books Pvt. Ltd. 36 Connaught Place, New Delhi 1984. 2. Jack Clark Francis, enthronement Analysis and Management, MC Graw Hill, International Editions, 1986. 3. Preethi Singh, Investment management, Himalaya publicationHouse, Bombay Nagpur and Delhi,1986. . Lewis Mandell, Investments, Macmillan Publishing Company, New York, 1992. 5. Nabhi Kumar Jain, How to earn more from shares, Nabhi Publications, Delhi, 1992. 6. Carter Randall Non-stop winning from the stock market Vision Books, New Delhi, Bombay (1992). . 7. S. Rajagopal,. Bank Risk Management A risk pricing model, State Bank of india, Monthly Review, VoI. XXXV, No. 11, November 1996, p. 555. 8. Rukmani Viswanth, PDs working on Risk Management Model, sleeper Hindu, Business Lime, Daily, Voi. 8, No. 17, January 18,2001, p. 11