CHAPTER II -

REVIEW OF LITERATURE

2.1. Introduction
2.2. Portfolio Structure
2.3. Gap Identificaton

20
 Chapter II
Review of Literature
2.1 Introduction:
The review of literature helps in understanding the earlier work of the researcher and
the theoretical paradigm of their analysis. The contribution made by researcher in the
form of books ,research articles, reports shows the different issues and the solutions
offered by them .The financial Management and planning attracted the attention of
researchers to allocate the financial resources in a most efficient way in given
constraint of tools and the options available at that time. The time series analysis also
shows the journey of research and modifications in the approaches. The chapter aims
to summerrize the molestones in this endeveour.
2.2 Portfolio Structure
The selection of portfolio depends upon the objectives of the investor. The selection
of portfolio under different objectives are dealt subsequently
1. Current income and asset mix: If the main objective is getting adequate amount
of current income, sixty percent of the investment is made in debt instruments and
remaining in equity. Proportion varies according to individual preference.
2. Growth of income and asset mix: Here the investor requires a certain percentage
of growth as the income from the capital he has invested. The proportion of equity
varies from 60 to 100 % and that of debt from 0 to 40 %. The debt may be
included to minimize risk and to get tax exemption.
3. Capital appreciation and Asset Mix: It means that value of the investment made
increases over the year. Investment in real estate can give faster capital
appreciation but the problem is of liquidity. In the capital market, the value of the
shares is much higher than the original issue price.
4. Safety of principle and asset mix: Usually, the risk averse investors are very
particular about the stability of principal. Generally old people are more sensitive
towards safety.
5. Risk and return analysis: The traditional approach of portfolio building has
some basic assumptions. An investor wants higher returns at the lower risk. But
the rule of the game is that more risk, more return. So while making a portfolio the
investor must judge the risk taking capability and the returns desired.

21
6. Diversification: Once the asset mix is determined and risk – return relationship is
analyzed the next step is to diversify the portfolio. The main advantage of
diversification is that the unsystematic risk is minimized.
The portfolio theories or models propounded by various experts show the different
dimensions of portfolio management. The selection of portfolio is influenced by
the objectives of portfolio. The goals of portfolio may differ from person to person
as well as from company to company.
Several types of techniques have been used to support the portfolio management
process:
A. Heuristic models: The earliest Portfolio Management techniques optimized
projects' profitability or financial returns using heuristic or mathematical models.
However, this approach paid little attention to balance or aligning the portfolio to
the organization's strategy.
B. Scoring techniques: Scoring techniques weight and score criteria to take into
account investment requirements, profitability, risk and strategic alignment. The
shortcoming with this approach can be an over emphasis on financial measures
and an inability to optimize the mix of projects.
C. Visual or mapping techniques: Mapping techniques use graphical presentation
to visualize a portfolio's balance. These are typically presented in the form of a
two-dimensional graph that shows the trade-off's or balance between two factors
such as risks vs. profitability, marketplace fit vs. product line coverage, financial
return vs. probability of success, etc.
Markowitz Theory(1956)(1)The portfolio theory became popular with Nobel Prize
winner Markowitz Theory which is known as Modern Portfolio Theory or
MPTModern Portfolio Theory – MPTAccording to the theory, it's possible to
construct an "efficient frontier" of optimal portfolios offering the maximum possible
expected return for a given level of risk. This theory was pioneered by Harry
Markowitz in his paper "Portfolio Selection," published in 1952 by the Journal of
Finance.
There are four basic steps involved in portfolio construction:
1. Security valuation
2. Asset allocation
3. Portfolio optimization
4. Performance measurement

22
Following are important aspects of MPT theory
It helps to find out Efficient Frontier which is a line created from the risk-reward
graph, comprised of optimal portfolios. The optimal portfolios plotted along the curve
have the highest expected return possible for the given amount of risk. This further
leads to find out Markowitz Efficient Set . It is a set of portfolios with returns that are
maximized for a given level of risk based on mean-variance portfolio construction.
The efficient "solution set" to a given set of mean-variance parameters (a given
riskless asset and a given risky basket of assets) can be graphed into what is called the
Markowitz efficient frontier. It explains the Two Kinds of Risk
Modern portfolio theory states that the risk for individual stock returns has two
components:
Systematic Risk - These are market risks that cannot be diversified away. Interest
rates, recessions and wars are examples of systematic risks.
Unsystematic Risk - Also known as "specific risk", this risk is specific to individual
stocks and can be diversified away as you increase the number of stocks in your
portfolio. It represents the component of a stock's return that is not correlated with
General market moves.
For a well-diversified portfolio, the risk - or average deviation from the mean - of
each stock contributes little to portfolio risk. Instead, it is the difference - or
covariance - between individual stock's levels of risk that determines overall portfolio
risk. As a result, investors benefit from holding diversified portfolios instead of
individual stocks.
The work of Markowitz was extended by the William Sharpe, John Linter and Jan
Mossin through the development of the Capital Asset Pricing Model (CAPM).

Portfolio Theories (1959)(2): Modern Portfolio Theory (“MPT”) is also called

“portfolio theory” or “portfolio management theory.” MPT is a sophisticated
investment approach first developed by Professor Harry Markowitz of the University
of Chicago, in 1952. Thirty-eight years later, in 1990, he shared a Nobel Prize with
Merton Miller and William Sharpe for what has become the frame upon which
institutions and savvy investors construct their investment portfolios.
Dr. Markowitz was among the first to quantify risk and demonstrate quantitatively
why and how portfolio diversification can work to reduce risk, and increase returns
for investors. While the technical underpinnings of MPT are complex, and drawn

23
from financial economics, probability and statistical theory, its conclusion is simple
and easy to understand: a diversified portfolio, of uncorrelated asset classes, can
provide the highest returns with the least amount of volatility. Many investors are
under the delusion that their portfolios are diversified if they are in individual stocks,
mutual funds, bonds, and international stocks. While these are all different
investments, they are all still in the same asset class and generally move in concert
with each other. When the bubble burst in the stock market, this was made painfully
clear! Proper diversification according to MPT is in different asset classes that move
independently from one another.

Arbitrage Pricing Theory ( 1976 )(3):A model which tries to explain a stock’s return
based upon FUNDAMENTAL FACTORS.To Qualify as a Fundamental Factor, a
variable must possess several characteristics
1. Important Economic Factor that enters the Valuation of ALL stocks or firms.
2. Must have a STABLE Impact on a Firm’s Value over time
3. Must be INDEPENDENT of other Fundamental Factors
4. Must have a VARIANCE
Fundamental Factors that Have been suggested include
1. REAL GDP Growth
2. Interest Rates
3. Inflation
4. Equity Risk Premiums
Assumptions of APT
1. Capital Markets are perfectly competitive
2. Investors prefer more wealth to less wealth with certainty
3. Asset Returns can be related to a set of fundamental factors

Dr. John Lintner Professionally Managed Futures(1983)(4) One of the most

uncorrelated and independent investments versus stocks are futures. The value of
professionally managed futures was thoroughly researched by Dr. John Lintner, of
Harvard University, in a 1983 landmark study, “The Potential Role of Managed
Futures Accounts in Portfolios of Stocks and Bonds.”
Lintner wrote that “the combined portfolios of stocks (or stocks and bonds) after
including judicious investments... in leveraged managed futures accounts show

24
substantially less risk at every possible level of expected return than portfolios of
stocks (or stocks and bonds) alone.” Lintner specifically showed how managed
futures can decrease portfolio risk, while simultaneously enhancing overall portfolio
performance.

Donald E. Fischer and Ronald J.Jordan (1995)(5) provided a comprehensive

introduction to the area of security analysis and portfolio management in their book
which has seven parts. . In first chapter It is noted that the measurement of return and
risk were the main focus of the job of the security analyst and the portfolio manager.
This unit explored the debt and equity instrument which are primary
categaries.Investment categories involve financial and real assets .Financial assets are
piece of paper representing an indirect claim to real assets by someone else.
They cleared that speculation and investment are two distinct terms by the time
horizon and by the risk return characteristics of the investment. In this text they
emphasized on investments and investment analysis although there was speculative
situations. They found the alternative investment vehicles and their more silent
attributes. The functioning of major security market and how investor decides to buy
or sell particular security type is examined in 2nd chapter. Part two has elaborated the
framework of risk and return. And its measures. In Security analysis investors see two
properties inherent in securities: the return expected from holding the security and the
risk that the return that is achieved will be less than the return that was expected. The
probability distribution theory, Beta, graph of SML is the statistical tools used to
measure various types of risk.
The top down approach is referred in chapter 4&5. This is approach of E-I-C
framework i.e. economy industry-company approach for estimating future dividend
and stock price. The economic forecast is important for making investment decision
concerning both the timing of an investment and the relative investment among the
various industries in the economy so economic terms are also discussed. And
critically evaluated with some economic forecasting techniques i.e anticipatory
survey, indicators, economic models and opportunistic model building .They observed
hoe economic analysis could best be meshed with the industry analysis .The concept
of industry life cycle ,end use analysis, regression and input output analysis were
explained .How an analyst estimate return and risk for stocks and to translate
information into expectations about holding period yields are demonstrated in next

25
three chapters. And showed the importance of information. The unit explained the
traditional and scientific techniques of forecasting of earnings and expenses. To
overcome the drawbacks of last techniques the modern portfolio analyse tools are
used in no computer situations. They proved how the newer techniques are
strengthened.
Active and passive are two strategies of bond management. A passive strategy
involves a buy and hold philosophy whish has taken a back seat where in the investors
objectives are to achieve broad diversification, predictable returns and low
management costs. .Now a day’s active strategy has taken a centre stage .these are
explained in the unit Bond Management.
There was also discussion on convertibles which also provides more income than the
underlying common stocks. The chapter no.15 concentrated on mystical approach
called technical analysis which shows the direction of general market and individual
stocks as well as fundamentalism. The next topic discussed on the implications of
random walk for the both fundamental and technical analysis. They reviewed the two
approaches and presented theory to stock price behaviour. The fundamentalist
considered financial and economic variable while chartist studied the historical price
patterns as they believed history repeats itself, to predict future price movements. The
random walk school had weak form of efficient market hypothesis. It demonstrated
on successive price changes over a short period were independent and had empirical
tests.i.e run test, filter test ,correlation analysis The result supported to the random
walk hypothesis.
The portfolio is the combination (packages) of securities may or may not
have the aggregate characteristics of their individual parts. The efficiency of such
combination evaluated in one of the unit .and analysed the range of possible portfolio
that could be constituted from a given set of securities. This unit proceeded logically
from the construction of feasible portfolios two securities to bigger portfolio from
large universe of securities some portfolio dominate other that they provide either
1. The same return in lower risk
2. The same risk but higher return.
These criteria distinguish portfolios that are feasible from those that are more
“efficient.”
The idea of Sharpe in simplifying the portfolio analysis process was introduced in
next unit.

26
In addition .Modern selection techniques by the work of Markowitz and others are
examined.
The next topic expanded on a capital market theory which is concerned with how
asset pricing should occur if investors behaved as Markowitz suggested. The CAPM
model uses the results of capital market theory to derive a linear relationship between
the expected returns and systematic risk of individual securities and portfolio.
In a Last chapter the authors explained on various types of managed portfolios
looking at broad categories as well as at differences among portfolios in each
category. and examined its sources of information
The managed portfolios included open end and closed end investment companies or
mutual funds, dual funds, money market funds bonds, index funds pension funds
ERISA, rust agreements, common trusts and professional investment counsel. The
Sharpe, Treyner Jensen approaches are the measures of performance evaluation of
above instruments.

Dr. G.P.Jakhotia and Mrs. M.G. Jjakhotiya (2001)(6) in their book ‘finance for one
and All’elaborated the techniques of investment management for individual investors
.He discussed reasons for making investment and listed five important reasons for
investment such as :
1. Regular income
2. Growth of Wealth
3. Contingency arrangement
4. fighting inflation
5. Oldage or post retirement Provision
Then he discussed the factors deciding of optional portfolio investment .in which he
listed 12 sensitive factors
• Rate of Return
• Degree of Risk
• Degree of inflation
• Rate of growth
• Liquidity or Marketability
• Tax benefits and allied advantage
• Frequency of return

27
 • Speculative interest
• Social beliefs and customs
• Degree of control
• Risk coverage
• Volume of fund required
Further they have given model for assessment of individuals portfolio mix he has
suggested that individual investors should form a group and meet for assessing each
ones portfolio .An arthemetic average of all assessment may be the most accurate
assessment of an individual’s portfolio. The model has 5 steps below
1. For each nvestment marks/credit/value is given as 0 to 5 scale as follows –0 – nil
,1-poor, 2-marginal , 3 – good , 4 – verygood, 5- excellent.The rate of return from
real estste is good .so it has credit of 3 to this factor .There is no risk in acquiring
and holding real estate .Here the factor of degree of risk gives value 5 to the
realestate.
2. There are 8 factors considered for investing in particular ivestment according to
their importance for investing in real estate, the important factor is rate of return
and this factors ranks first getting weightage of ‘8’ the least important factor will
get weightage of ‘1’.
3. Value allocated to factor X weighted to factor = weighted value.
4. The total of all the weighted values of all the factors under each investment
This total is called ‘Total weighted value’.Total weighted X amount invested in
each item of investment = product.
5. The effect of secondary weight age used is removed i.e. amount invested in
investment. Super product / Total investment.
6. The effect of primary weightages removed to calculate performance factor as
Secondary weightage / Total of primary weigtages.

(7)
G.Cotter Cunningham(2004) in his book ‘YourFinancial Action Plan explained
into twelve simple steps for achieving money success. The consumer’s personal
financial issues comprehensively and objectively covered into the book. It has twelve
chapters’ .The basic financial issues such as creating a will, building a savings nest
egg and making and sticking to a monthly budget is explained in a first chapter. The
survey in this book showed that people who pays their bills as they come in where

28
more satisfied and less stressed than those who didn’t. with this the second chapter
focused on how to gain control over the expenditure .This chapter helps to be solvent
and have good credit records .In the next chapter number three he looked on sure five
ways to keep one out of the debtors doldrums by sticking to a budget. This chapter
shaded light on creating a comfortable budget and recognizing shopping pitfalls
which will help to reduce stress.
The forth chapter covered on retirement planning .It explained four golden rules or
things to do as a priority .It includes
1. Shuck off debts
2. Pay down mortgage completely before retirement
3. Do not count on social security
4. Do not forgot to consider long term care insurance
This will help us for heading down the rocky road. The importance of reading Bank
account regularly and keeping safe of important documents is mentioned in the next
chapter. The fifth chapter ‘Willing it’ looked at the deadly business of funerals
.Insurance is there to protect against the unlikely and the unthinkable. How regularly
we shop around for the best insurance quotes and coverage is mentioned into the
chapter VII. The buying or leasing a car is another important financial decision. The
next chapter guided on buying and leasing the car. The rule of thumb for applying for
a credit card and for checking credit report is stated in chapter nine. The borrowing
responsibility, tax deduction and home ownership are things discussed in the
subsequent chapters. The author says financial knowledge means financial power. The
12 steps programs for financial literacy discussed in this book are –
1. Keep emergency funds
2. Pay bills on time
3. Follow monthly budget
4. Save for retirement
5. Read bank account statements
6. Get a will
7. Shop around the insurance quotes
8. Shop around best credit card interest rates
9. Check credit report annually repair as needed
10. Never carry on balance on credit cards
11. Shop around the better rate of mortgage

29
 12. Adjust w-4 form of pension plan annually.
These books provided the knowledge for making planning for better financial
future. In the appendix it lists 22 models letters needed in the case of making
correspondence with financial institutes. The practical utility of the book increased
due to last part of this book. As Cunningham is an authority on personal finance with
more than a decade of experience shared his rich experience an tips for the investors.
This book serves as a guide to every investor in managing his financial goal. The
lesson of the books although based on American investors it helps for all the investors
of the world. In a country like India its utility remains beyond doubts.

(8)
Valery Polkovnichenko(2005) in his study ‘Household Portfolio Diversification:
A Case for Rank-Dependent Preferences’ has supported for rank dependent
preferences The rank-dependent expected utility model also known as anticipated
utility. This model comprises generalized expected utility model of choice
under uncertainty, This model explained the behaviour of people that people both
purchase lottery tickets which indicates risk taking preferences and insurance are
implying risk aversion. For the survey of consumer expenditure data was used.He
figure out two widespread pattern inconsistent with expected utility.One is majority of
household had investment in well diversified funds .They had poor portfolios of stock.
Second are households who had moresavings but their investment in equity was very
low. He argued that portfolio choice models with rank-dependent preferences are used
parameters as possible and with fully rational assumptions which are constant and
quantitative with the observed diversification. He suggested there is need to integrate
the models of rank-dependent preferences in portfolio theory and asset pricing.

Angha Pathak (2005)(9) in her doctoral work, “ Comparative Study of Consumption,

Savings, and investment pattern of Salary earners in Kolhapur” studied the determinants of
consumption savings and investment. She studied single headed and multiheaded salary
earners families with variables like saving habits, investment is various options. The
researcher observed positive correlation between income and investment in shares. The study
revealed the differences in saving and investment across the different levels of income.The
consumption pattern also observed positive relation with difffernt levels of income.The sector
of the respondent determining the regularity of income was affecting saving level and

30
propensity.She suggested to increase the female participation in employment to increase
consumption saving and investment.

Gnana Desigan C, S. Kalaiselvi and L. Anusuya (2006)(10) studied women

investors‘ perception towards investment. An empirical study focuses on investment
pattern of women investors. Research concluded with finding that age of the women
investors and level of awareness about investment is not associated and no significant
association between educational level and level of awareness about investment.
Significant association was found between occupation and level of awareness,
monthly income and level of awareness and absence of association between marital
status and level of awareness

Efe Aksuyek Zurich,( 2008)(11) in his study of Information Theory And Portfolio
Management tries to understand the link of information theory to the theory of
optimal investments in a stock market. For that reason he considers two scenarios.
First he investigates an optimal portfolio construction problem in a stock market with
known distributions of stocks returns. Then he examines a universal approach for
portfolio construction in a stock market without knowledge about distributions of
stocks returns. He observed that the connection between information theory and
portfolio management lies on the data compression and universal codes. Besides the
properties of long-optimal portfolio are very challenging and powerful. Unfortunately
it is not perfectly constructible because in reality we do not have knowledge about the
true distributions of stock returns. Therefore the universal portfolio makes more sense
in terms of practical usage.

P Chandra’s(2008) (12),”Investment analysis and portfolio management” Book helps

to lay investor to be a sophisticated professional. The book discusses the techniques
and principles useful in systematic and rational investment Management. It has
valuable insights and practises alon with the spread sheets. The book constitutes with
seven parts.
Introduction in part first have 3 chapters which provide overview in field on
investments, Features of investment alternatives, howthe security market is
functioning. Investots persue the approaches as Fundamental approach, psychological
approach, academic approach eclectic approach. The contrary thinkings, patience,

31
composure, flexibility and decesiveness are important qualities. An investment is a
sacrifice of current money or other resources for future benefits .Investment is
different from speculation as well as gambling .The deposits and insurance are
classified as non-marketable financial assets ape the points discussed in this chapter.
Rate of return, Risk, Marketability Tax shelter, Convenience are the criterias relevant
for evaluation investment alternative. It describes the process of Portfolio
management .It has 7 steps
1. Specification of investment objectives and constraits- Investor has to decide
the objectives and it importance and identify constraits
2. Choice of Assets Mix-Investor decides the proporation of investments in
various investment options
3. Formulation of Portfolio strategy-Active and passive are the two strategies .An
active strategy strives to earn risk adjusted returns by resorting market timings
.security selection and sector rotation .A passive strategy involves holding
diversified portfolio with predetermined risk.
4. Selection of Securities- In an active portfolio strategy, investors go by
fundamental and technical analysis of scrips and company. The credit rating,
YTM, terms to maturity, tax shelters and liquidity is the factors considered in
selection of securities.
5. Portfolio Execution – This is practical stage for selling or buying the securities
which shows investment results.
6. Portfolio Revision – the rebalancing of securities is important. An Investor
rotates securities
7. Portfolio Evaluation-It means to assess whether the portfolio return is
commensurate with its risk exposure. Such review provides useful feedback to
improve the quality of portfolio management process
The investment alternatives are explained in chapter two. The chapter three describes
on security market.Part II covers basic concepts and methods useful in investments.
Chapter four introduces the concepts of risk and return .Risk and return are two sides
of coin. He explains total return i.e. current return and capital return as well as total
risk i.e.unique risk and market risk .There are three well known risk premiums equity
risk premium, bond horizon premium and bond default premium. The more accurate
rule of thumb is rule of 69 than the rule of 72 i.e..35 +(69 is divided by interest rate) is
stated . The chapter five explains the method for analysing the time value of money

32
Chapter six discusses the tool of financial statement analysis which is helpful for
investment decision in present as well as future .Economic value and Accounting
value are distinct separately.
Part III has four chapters which explain the Modern Portfolio Theory. Chapter
seven gives the introduction and basic tenets of portfoliotheory. Here we come to
know to measure the risk and return. How to apply the Morkowitz theory(1950) to
obtain the inputs required .Markowitz is the first person who tried to quantify the risk
, to reduce risk he gives the tool of diversification of portfolio and how to construct
best possible risky portfolio with the help of diversification.Markowitz model is based
on information .His theory needs securities ,expected returns ,variance co-variance
n(n-1)/2 in numbers e.g for 100 securities theory needs 100 expected returns ,100
variance and 4950 covariance which is not possible for lage number of securities in
the portfolio.Markowotz also suggested index for for generating co-variance . With
this clue W.Sharpe has developed a model of single index which expresses the return
on each security as a function of the return on a broad market index.This model is
helpful simplification .It represents a major practical advance in portfolio analysis.
Chapter eight dwells on the equilibrium relationships between risk and return .
This chapter discusses on CAPM Capital asset pricing Model) and explains the basics
of APT (Arbitrage pricing theory) Multifactor model as aalternative to the CAPM.
It describes the stock market as a complex adaptive system.
An efficient market hypothesis is explained in chapter nine .
The chapter ten describes the essence of behavioural finance.
Part IV to VII has chapters TEN chapters from XI to XX explains on fixed
income securities, equity shares ,derivatives and other investment options .
Part VIII focuses on Portfolio Management consists chapter 21 to chapter24
.It presents a Framework for portfolio management, Basic guidelines for investment
decisions, Strategies and various issues in international investing

Clifford Paul (2008)(13) made survey for 1655 people from Tricchi to study on saving
pattern .His descriptive type of study examined socio economic characteristics of
people .For that Age, education, Marital status ,no. of children income saving pattern
purpose of saving knowledge ,attitude ,beliefs opinions took into account. A simple
random sampling method is used to collect quantitative data. The sample size was
calculated by using the sample calculator 10.at 5%level of confidence. The above

33
socio economic characteristics contribute significantly to the saving pattern was the
hypothesis of this study. The primary data was collected through questionnaire and
secondary data from various reports..The econometric analysis tools used for analysis
i.e. z-test, chi-square, auto regression, `least square etc.
The findings of study were people saved their income for future,education; building
house, medical expenses and money saved depended on income level. People are
unaware that insurance is a saving avenue. They felt that insurance product is only for
tax and risk .There were no rational expectations of the people for return on their
investments .The researcher examined the determinants of savings. He concluded the
spread of saving avenues reason have an impact and changes in the external
environment have an impact on private savings. A Public savings seemed to crowd
out private saving. The returns and reason of saving have a significant impact on
saving pattern.

A Study of Psychographic Segmentation of Investors in Satara City (2009)(14) was

conducted by Priyanka Zanvar. The study focused on psychographic segmentation and
investment pattern of people resides in Satara city on the basis of selected demographic
parameters viz Age, Income, Sex, Education and Occupation. Available investment avenues
in Indian economy viz Insurance, P.P.F., Mutual Fund, Shares, Real estste, Gold, Bank
Deposits, etc have been taken for study. VALS model was used to determine Psychographic
dimensions of investors. VALS is values and lifestyles. It is a way of viewing people on the
basis of their attitudes, needs, wants, beliefs, and demographics.She concluded that majority
of respondents prefer long term duration for investment. They do investment for 5 and more
than 5 years. Sample investors expect 10% to 15% return on their investment. The majority
of sample investors in socio economic class A1 rely on Financial Advisors and Consultants
for advice.

B.Raju and K.M Rao(2011)(15) studied risk adjustment performance evaluation of

selected Indian Mutual funds .The mutual fund industry made its beginning with UTI
in 1964 however , from 1993 onward the industry was opened for private sector.This
offered an important as well as safe avenue for investment, the portfolio of risk averse
investor received popularity .however the returns from this mode of investment
remained a point of discussion .The mutual fund performance in a systematic way is
studied by these two researchers for 20 mutual fund schemes. These mutual fund
schemes were relative to banking sector, FMCG sector index funds and infrastructure

34
sector funds .They studied for the period of 2008-2010. They used monthly NAV data
during Jan 2008 to Dec 2010. They compared the returns of different mutual fund
schemes with benchmark of stock market index. The performance of selected mutual
fund schemes has been evaluated by using six performance measures.
A.Rate of Return
B.Sharpe measure
C. Treyneros Measure
D. Jensen differential return measure
E. Sharpe differential return measure
F. Farna’s component of investment performance.
Banking sector and FMCG sector funds were better performed than index funds.
Out of 20 schemes 11 scheme s given higher return than market further the risk in
term of S.D. of returns for the 4 sectors shows that FMCG schemes were less riskier
than the market. In terms of risk in FMCG schemes viz.ICICI Prudential FMCG
growth, Franklin FMCG Fund growth, UTIIndia lifestyle fund growth, SBI Magnum
sector umbrella –FMCG and Kotak life style fund growth has less variation in returns
as compared to the other three sectors and the market.
On the whole, out of 20 selected schemes all five FMCG schemes are less risky than
the other during the study period 2008-10
The researcher found FMCG schemes were more defensive. He calculated Treyners
index, Sharpe’s index along with Jensis Alpha at selected mutual fund He concluded
that many selected schemes failed to outperformed the market with low average Beta.
Disproporationate unsystematic risk, mismatch of the risk and return relationship in
some schemes failure of infrastructure and index schemes are the other significant
observations in the study.
The researcher poited out the risks in mual fund as tha common trust on mutual
fund is not justified while selecting the mutual fund in the portfolio
It is necessary to consider the performance of mutual fund and make proper changes
in their portfolio.

Ms. Vrushali Bhushan Shah (2011)(16)in her Ph.D work , “A Study of investment
pattern of investors in Satara on the bases of socio Economics classes”, conduced
survey of 1400 investors. The objective of this study was to find out whether there
exists a definite investment pattern of investors pertaining to specific socio-economic

35
class and to locate influencing factors for investment.The T-test ,U-Test,factor
analysis ,Regression Analysis, cluster Analysis were the statistical tools used for
analysis.The study highlighted on investment objectives, sources of information and
their reliability as viewed by sample investors of different Socio-economic Classes of
Urban as well as Rural area. The factors preferred for selection of investment evealed
with their current portfolio. She argued that these results would aid industry to frame
such investment instruments which would suit the needs of investors. Further the
sources of information and their reliability would serve as guiding force towards
marketing such instruments. Similarly the Government would be able to gauge
perception of investors from different economic strata about their own investment
instruments and investor inclination towards other financial instruments. She argued
that the common investors stand to benefit if they get an opportunity to review their
current portfolio in light of their own objectives and also for getting knowledge about
array of investment avenues and sources of information available. The results
generated from study would serve as guiding factors to investors for selecting
different instruments in future.

F. Relliy & K. Brown (2012)(17)tried to make investment background hence focused

on investment setting ,asset allocation decision, selecting investments in a global
market under the first section. There was discussionon the reasons of individuals save
and invest their income. According to them An investment is the current commitment
of their savingsfor a specific period of time in order to derive future payments that
will compensate the investor for 1. The time the funds are committed 2. The expected
rate of inflation and 3.The uncertainty of the future payments.
The ways to quantify the historical & expected rate of return and risk is explained
which helps to analyse alternative investment opportunities .The historical returns
are often used by investors when he is attempting to estimate the expected rates of
return and risk for an asset class.
The holding period, the historical average rate of return for an individual
investment,the average rate of return for a portfolio of investment were the measures
used. The study presented the traditional measure of risk for a historical time series of
returns by using variance and standard deviation .The expected rate of return for an
investment which dealt with uncertainty .The mean is used for that. The uncertainty
(risk) of expected return which helps to financial stability of investment. They

36
considered the financial assets as bonds and stock and other assets art and antiques.
The Variance and S.D.used to find the uncertainty and alternative measures of risk
and C.V. for relative measures of risk. They noticed that the estimation of required
rate of return was complicated because the rates on individual investments changed
over the time .There was wide range of rate of return available on alternative
investment.
The overall required rate of return on alternative investments was
determined by three variables
1. The economy’s RRFR influenced by investment opportunities in the economy
2. Variable that influenced the NRFR which include short run Ease or tightness in
the capital market and the expected rate of inflation.
3. The risk premium on the investment. The risk premium can be related to
fundamental factors including business risk, financial risk, liquidity risk exchange
rate risk, country risk or it can be a function of assets systematic market risk
(beta).
The second chapter explained on developments in investment theory, efficient
capital markets, an introduction to portfolio management and APM and multifactor
models of return and risk In short risk drives return therefore the practice of investing
funds and managing portfolios should focus primarily on managing risk rather than
managing return. The author examined the practical implication of risk management
in the context of asset allocation. An asset allocation is the process of deciding how to
distribute an investors’ wealth among different countries and asset classes. (Asset
classes is comprised of securities of similar characteristic)
The asset allocation decision is not an isolated choice rather it is a component
of a structured four steps portfolio management process to develop an investment
policy statement.
A carefully constructed policy statement determined the types of assets
included in a portfolio. It looked upon that the risky investor seeks capital
appreciation ,income or even capital preservation over the long time periods should
stipulate a sizeable allocation to the equity portion in their portfolio .It has noted that a
strategy’s risk depends on the investors goal and time horizon. The investor needed to
prudentluly manage risk within the context of their investment goal and preference,
income, spending and investment behaviour will change over a person’s life time

37
 They reviewed the importance of developing in an investment policy
statement before implementing an investment plan .By forcing investors to examine
their need ,risk tolerance and familiarity with the capital market .A policy statement
helped investors correctly identified appropriate objectives and constraints . In
addition the policy statement provides a standard by which to evaluate the
performance of the portfolio manager .The importance of asset allocation decision in
determining long run portfolio investment return and risks. Because the asset
allocation decision follows setting the objectives and constrains .The success of the
investment program depended on the construction of the statement of policy
He reviewed historical data to show the importance of asset allocation
decision and discuss and the need for investor education This chapter concluded by
examining asset allocation strategy across national borders to show the effects of
regulations for US based investor is not necessarily appropriate for a non US based
investor
This book explained on the topic of transition between modern portfolio
theory and CAPM along with industry specific characteristic lines . The theory and
practise of using multifactor models of risk and expected return is discussed The
connection between the arbitrage price theory and empirical implementation of the
APT continues to be stressed both conceptually. He used Morningstar style of
classification of data for presenting examples. This topic emphasized on cash flow
and relative valuation approaches and macro economic variables of market and macro
analysis of industry .There is focus on relative merits of passive v/s active
management techniques for equity portfolio management along with tax efficiency
and equity portfolio investment strategies and equity style analysis.
In addition the role of various government sponsored entities is explained
because major credit liquidity problem was encouraged by the US bond market.
They examined the specific factors that determine the required rate of return 1. The
real risk free return which is based on the real rate of growth.2. The nominal risk free
rate which is influenced by capital market conditions and expected real rate of return
of inflation 3.A risk premium which is a function of fundamental factors such as
business or the systematic risk of the asset relative to the market portfolio i.e. Beta he
discussed the risk return combination available on alternative investment at a point in
time (SML) & three factors can cause changes in this relationships (-1) a change in
the interest risk of an individual investment i.e. its (fundamental and market risk ) w

38
ill cause a movement along the SML 2. A change in inventor’s attitudes towards risk
will cause a change in the required return per unit of risk i.e.a change in the market
risk premium. Such a change will cause a change in the slope of the SML .finally a
change is expected real growth in capital conditions or in the expected rate of inflation
will cause a parallel shift of the SML.
The authors focused on the evaluation of portfolio performance and the requirements
of portfolio manager in chapter no. 25.
Utpal Bhattacharya,Andreas Hackethal, Simon Kaesler, Benjamin Loos, Steffen
Meyer (2012)(18) they recorded the favourable effects of unbiased investment advise
in article ‘Unbiased Financial Advice to Retail Investors Sufficient? ‘.The samples
near to 8000 active retail customers at random They took Large Field Study.They
found that very few investors who most need the financial advice likely to obtain it
and About 5% investors hardly followed the advise and did not improve their
portfolio efficiency by much . They came to conclude that the mere availability of
unbiased financial advice was a necessary but not sufficient condition for benefiting
retail investors.

Ms. Sachi Prakash( 2012)(19) in her article ‘Retail banking strategy: critically of
Financial Literacy and credit counselling in Indian Context ‘explained on the need of
financial education and credit councelling.In India banks have remained only
initiatives even after considerable time though banks are beneficiaries of financial
education and can act and strengthen financial stability and credit counselling
centres. In a part of introduction the developments of banks due to IT is put forth .An
article discusses on what and why is financial education ,importance of financial
education, initiatives of RBI and banks and its evaluation .Financial literacy refers to
the ability to make informed judgements and to take effective decisions regarding the
use and management of money. Financial Literacy is the set of skills and knowledge
that allows an individual to understand:
• The financial principles that is essential to make informed financial decisions
• The Financial product that impact ones financial well being
Financial Literacy should go beyond just acquiring financial information and advice.
It is the ability to know, monitor and effectively use financial resources to enhance the
well being and economic status of one.

39
The rising competition ,problem of financial exclusion shortage of banking facilities,
increasing consumerism (especially of the urban middle class) rising complexity of
financial products are the reasons mentioned which rises the need financial education
It supported with the instance of subprime crises which gives lessons to all and
emphasizes the importance of customer education
The financial education is essential just not people who do not make the decision and
invest but for understanding of product , process , pricing and protection .
The recent rapid developments have given access to financial services to people but
many of them have limited knowledge or experience in them .Another major trend
that has been seen is that consumers think they are more financially literate than really
is the case
e.g. 1. Increasing use of credit card and misutilization of credit 2. Considered
floating rate housing loan as a cheaper to fixed rate housing loan.

(20)
Monika Hansal and S.K.Singla(2012) studied on performance Evaluation of
Private Banks in India. They attempted to measure the efficiency of the banks of the
18 private sector banks in India in five years from 2007 to 2011. A one of the
important objective of their study is to evaluate the performance of private sector
banks with the help of CAMEL model, with this objective and the hypothesis was
performance of the bank is uniform in all parameters of camel model in a particular
year. For the study secondary data has been explored. A CAMEL stands for capital
adequacy, asset quality, management, Earnings and liquidity. On the basis of single
parameters of camel model the composite score for each bank has been calculated.
Hypothesis is tested with the help of Friedman Rank Test. The study examined the
areas of banking business of old private sector banks that may have been influenced
by the new generation private sector banks .The impact of new private sector banks
based on parameters such a growth, credit quality, operational efficiency, and
profitability etc has been analysed. The study concludes that the performance of the
bank is not uniform in all the parameters of CAMEL model.

(21)
Portfolio studies in US market examined in CFA institute book (2012)
Coprporate fiance and portfolio management observed that the mature financial
market of USA offered good returns to the investors the CFA study conducted by
Robert for 1990 to 2002 shows that the United states 401(k) plans are employers

40
sponsor individual retirement plan . This allows individuals to save and to get tax
benefits The study observes that individual shares like Enron has resulted into sixteen
times benefit during the decade but the financial distress of Enron resulted in
bankruptcy of Enron These shares become worthless .The share price came down by
90% which shows high risk in investing particular share. The same story is true about
Indian market also Rakesh Zunzunwala _ Warren buffet of share market also lost one
thousand corers in midcap shares (2013) This call for risk reduction technique known
as Portfolio diversification .Portfolio diversification helps investors to avoid disasters
investments outcomes .It also reduce overall volatility of returns.The return in the
individual security and its standard deviation is higher compared to portfolio
investment .The volatility is effectively reduced through reduction S.D.in returns. The
S.D.of equally weighted portfolio to S.D. Of randomly selected security is known as
diversification ratio .This helps in measuring returns from diversified portfolio two
simple portfolios.The Author has given a caution that if serious downturn takes place
in the market the diversified portfolio also cannot save from downside side protection
.During 2007-09 the average return for the E.W.P. including dividends was -
48.5%(Pg no 287) The diversification benefits were small as all the indices declined
in unison .The lesson is clear that portfolio diversification generally reduce their risk
but does not necessarily provide the same level of protection during severe market
turmoil.
Steps in portfolio selection
The actual portfolio needs to be prepared on the bases of following steps
1. The planning step – It is based on clients needs which includes his objectives and
constraints .On the bases of this investment policy statement is prepared .It
becomes benchmark.
2. The next step is execution step were asset allocation is done .Further security
analysis is conducted the by using top down or bottom up approach under top
down analysis micro Economic conditions are considered hile in bottom up
approach company specific analysis is conducted (pg 297) The last step is
feedback step were portfolio monitoring and rebalancing is done and finally
performance of the portfolio is measured and reporting is done .
3. Pooled investments helps in reducing the risk .this consists of mutual funds .In
mutual funds there are money market funds bond market funds Stock mutual

41
 funds and balanced funds. In addition to mutual funds exchange traded funds are
also available .they combine features of closed and open end mutual funds.

Ms. Tejasvi Rajaram Shinde ( 2012)(22) in her M.Phil dissertation titled, “ A Study
of Relationship between financial literacy and individual investment inclination in
Satara” conducted survey of businessman, serviceman and professionals . The study
is for the concept of financial literacy, scale for determining financial literacy,
different investment avenues available, and regarding demographic details of
investors, their current investment and investment inclination, sources of information,
importance of parameters for investment and awareness regarding investment
avenues. She concluded that the overall the financial literacy among respondents is
good. The respondents have their investment in bank deposits, gold/silver, real estate,
insurance and PPF/PF. She also observed that low investment in avenues like bonds,
precious stones, pigmy, pathasanthas, etc. The researcher pointed out that
respondents prefer parameters like Investment Performance, Track Record,
Management Reputation and Responsiveness to Enquires. While seeking the advise
on investment they prefer financial advisors like CA, Portfolio Manager and
Bankers.The portfolio pattern of the respondents was not based on risk and return
analysis . She observed that the Independent Sample ‘t’ test was not significant and
it indicates that there was similarity in the investment preferences of respondents
with different occupations. The respondents were more inclined to invest in
gold/silver and real estate even though the rates were increasing . The Hypothesis
testing proved that there was no significant relationship between demographic
factors and financial literacy, investment inclination and financial literacy
National Council For Applied Economic Research (2011)(23) conducted investors survey in
India sponsored by Securities Exchange Board of India on How Households Save and Invest:
Evidence from NCAER Household Survey.The broad findings of the survey shows that
National Level the percentage of investors is nearly 20 in urban areas while it is much lower
(6 per cent) in rural India. The estimated number of investor households in India was 24.5
million who constitute about 11 per cent of total households. It observed the strong
preference of investors was towards mutual funds (43 per cent) and secondary markets (22
per cent). In urban areas, 41 per cent of investors invested in mutual funds and 21 per cent
secondary markets, whereas, 46 per cent rural population chooses mutual funds and 22 per
cent secondary markets. There was a significant magnitude of small savers among all

42
households. Eleven to 25 per cent of all households save in post office savings schemes. The
survey observed that the investors are not participating in share marker. It poined out that
more than 16 per cent of the highly educated non-participants, as well as 16 per cent of the
middle and upper income groups feel that non-participation was due to the perceived non-
safety of returns.
Consumer Financial Literacy Survey (2012) was conducted by Harris Interactive Inc. Public
Relations Research of USA. he 2012 Financial Literacy survey was conducted by telephone
within the United States by Harris Interactive on behalf of the NFCC (National Foundation
for Credit Counseling) and the NBPCA (the Network Branded Prepaid Card Association)
between March 16 and March 19, 2012 among 1,007 adults ages 18+. Results were weighted
for age, sex, geographic region, and race where necessary to align them with their actual
proportions in the population.

Charul Shah( 2013 ) (24) inhis article on ‘Plan on track but idle cash must be invested
described the cash flow statement in square diagram and asset allocation in Pie
diagram. It explains how one can achieve just not essential goal but discretionary
goals as well. An Asset allocation before plan, after plan and existing plan are the
three plans of IT professional that has high income, small family, but little knowledge
of financial planning explained. The cash flow statement shows the total income and
expenditures as household expenses, insurance premium and investible funds. The
investible funds have allocated in equity 1 %, gold 5 % cash 31 % and debt 63 %
respectively .The monthly salary was Rs. 43573 and Rs.26970 as expenses, Rs.16602
was surplus.
1. Rs. 2 lakhs in one year for wedding
2. Rs 5 lakhs in four years for down payment for house worth rs 25 lakhs,
3 .Rs 2 corers for retirement corpus besides Child’s education and marriage are the
goals.
The less important goals include buying car and a holiday abroad.
The recommended plan constitutes equity 50 % ,gold 5 % cash 5 % and debt40 %
respectively.. After financial planners advise his plan has the SIP Rs. 5000 p.m. +cash
Rs. 6000 is equal to 1.2 lahks which adds Rs 7000 this would take care of his first
goal. The SIP of Rs. 9000 pm in equity mutual fund for the house down payment and
insurance costs Rs. 1000 pm for policy of Rs.1 crorer and Rs. 6376 p.m. And Rs.
3873 would help build a corpus for education and marriage in 23 years .His plan is
drastically improved, the income has risen and expenditure has gone down. The

43
adviser suggested to have balanced fund. Debt fund as well as equity fund .His plan
reworked to ensure the use of surplus cash.
His new plan helped to raise income and surplus cash considerably. The first
preference is given for health and adequate family insurance .The equity and debt
funds are expected to give returns of 12 % and 10 % respectively. Inflation is assumed
at 8 % p.a.
The investment with disciplined approach ,the defined short and long term goals and
the diversity in portfolio and its follow up ,experts advise etc gives a benefit to the
investor this is underlined in study

Santosh Danolkar (2013)(25) in his cover story article how to survive this crises as
given important suggestions to protect the portfolio during volatile situations .He
suggested to build a stable foundations. This will help to bear the downside without
serious adverse effect .A contingency reserve will help in this respect .He also
suggested to have sufficient insurance cover of accident, hospitalization or any
medical emergency.
He suggested to review the position so that based on return portfolio can be changed
for this again financial goal setting is necessary .the suggestions given by sanket
Dhanodkar are simple but practically significant.

Babar Zaidle (2013)(26)discussed NPS Funds Performance in his article NPS has
been started since 2009 has given poor returns in the last 5 years .The NPS scheme of
Kotak Pension Fund has given negative returns for equities, cororate bonds and
government bonds .The experience of other schemes like
ICICI Pru pension fund,
UTI retirement solution,
Reliance pension fund,
SBI pension fund .The story is the same .the short term returns were negative 2.2 % -
3.9 % .But even long term returns were also not impressive .Although the returns
were positive they were in the range of 5 to 6 % the SIP returns were also below the
rate of EPF (8.67 %) The SIP returns were 2.94% for equities, 6% for government
bonds and 8 % for corporate bonds. The total experience of NPS Funds raises the
basic sustainability of pension funds and how this scheme will protect the interest of
investors in the long run.

44
Chaitanya (2013)(27) studied gold loan Market future prospects in India’ in this
research paper the trend in gold loan market structure of layers in gold market
Trends in gold prices, growth of NBFC was expected .in the portfolio of Indian
investors gold always occupies important role. This resulted into heavy import of
gold. As the bank have started giving finance for purchasing gold .The gold loan
market has grown tremendously .The researcher observe that the region wise
concentration of gold market is observed for southern area .It has been observed that
the organized players are exploring the potential and trying to expand their networks
into North, East , and West regions .lenders provide loans by securing gold assets as
collateral ,compared with the rest of the world .In India the gold loan market is a big
business until a decade back ,most of the lending was in the unorganized sector
through pawnbrokers and moneylenders. However this scenario changed with the
entrance of organised sector players such as banks and non banking finance
companies NBFC’s which now command more than 25 % of the market.Of late
,banks have improved their gold loan product features and services coupled with
comparatively lower interest rates and charges ,banks stand to gain market share at the
expense of NBFC’s in the near future.
The researcher explained the development of gold loan market in which NBFC
companies are playing important role.
The gold market which had shown impressive growth of 70 -80% during F.Y.2011-12
.The increase in gold prices resulted in investment demand at global level the gold
prices compared to other assets have increased at higher rate and it can act as an
investment to hedge against inflation .During 2008-12
The total gold loans increased by 65 % but the NBFC gold loans increased by 98
%.the reasearcher concluded that NBFC entered as significant player in growing gold
market .Further she attributed changing consumers perception towords gold loan as a
significant cause .The researer concluded that the demand for gold will grow in the
long run and it needs innovative methods to cater the increasing customer base

The discussion of Investor Guide Staff (2013)(28) on ‘Real Estate as a Stable and
Reliable Investment’says that yet the real estate market isn’t an abstract concept only
available to a special anoint group of angelic investors who happen to have been in
the right place at the right time.For investment right time and right place is important
Virtually any way of making money in the modern world works just about the same

45
way, It focuses on the Real estate investment because of incredibly reliable way of
making money.and it gives more stability in the returns it generates on investments
that make it a different sort of animal in the investing game.
Sure, buying a piece of undeveloped land in the hinterland of the territory you live in
probably isn’t going to be as profitable as throwing all your life savings into
Microsoft would have been 20 years ago
It has pointed out worrying about share prices, buying high, selling low, bulls, bears,
and all that other jargon that goes along with investing in the stock market are
headache.
With real estate gives the benefit of capitalizing on an endlessly restless country that
is always shape-shifting and reconfiguring itself in new places and reinventing its
existence in new ways

Harris Interactive Inc. Public Relations Research (2014)(29) Conducted survey of

consumer financial literacy survey in 2013. The methodology followed of this survey
was based on telephonic answers with systemeatic and baised sampling technique.
Survey methodology The 2013 financial literacy survey was conducted online within
the United States by Haris Interactive on behalf of the NFCC (National Foundation
for Credit Counsiling) and the NBPCA (The Network Branded Prepaid Card
Association) via its quick query omnibus between March 4 and Mrach 6, 2013 among
2037 adults ages 18+. Figures of age, sex, race / ethinicity, education, region and
household income were weighted where necessary to bring them into line with their
actual proportions in the population. Propensity score weighting was used to adjust
for respondent’s propensity to be online. Prior to this year this surevey was conducted
by telephone.
The survey observed just over two in five U.S. adults (43%) report that they have a
budget and keep close track of their expenditures. More than half (56%) admit they do
not have a budget, including more than 1 in 5 (22%) who say they don’t have a good
idea of how much they spend on housing, food, and entertainment. Though the
likelihood of having a budget has not changed over the past 5 years, the proportion of
adults who do not pay all of their bills on time has increased from 28% in 2011 to
33% in 2012 – that is, fully one-third of U.S. adults, or more than 77 million
Americans, do not pay all of their bills on time. If they were facing financial problems
related to debt, U.S. adults continue to say they would first turn to their friends and

46
family for help (27%).Two in five adults (40%) say they are now saving less than last
year, and nearly the same proportion (39%) do not have any non-retirement savings.
Though there had been an increase in the proportion of adults who have savings
between 2008 (63%) and 2010 (67%), that proportion had begun (and now continues)
to decline since 2010 (67% 2010, 64% 2011, 59% 2012). In case of spending half (or
more) of adults were spending less – more than one in four U.S. adults (28%) say they
are now spending more than last year. The findings of survey shows the impact of
2008 recession in the US economy as well as the financial behavior of the citizens in
the developed economy.
Vijay Singhal discussed portfolio Risk and return where he has given various
formules and methods of risk return measurements.

2.3 Gap identification

The research in portfolio studies both at national and international level dealt with
subject in various dimensions. The studies conducted at micro level as well as macro
level for the developed countries are extensive in nature. The advancement in
technology, the growth of the corporate sector and general increase in income and
savings provided new avenues for investment. This process was further accelerated by
new institutional set up such as specialised brokers and regulatory mechanism.
Portfolio managers make decisions about investment mix and policy, matching
investments to objectives, asset allocation for individuals and institutions, and
balancing risk against performance Researcher has mainly focused on risky
investment avenues like shares and mutual fund for devising questions to judge the
financial literacy of respondents.
Review of literature reveals insufficiency of research in the field of behavioural
finance. Two approaches are found in the review of portfolio management of
investors and behavioural finance these are micro and macro. The research at
international level are conducted at micro level .These kinds of studies have been
rarely carried out by scholars in India. The studies related to demographic variables
are also found at international level but with different perspective like gender
importance in investment industry and the like. Similarly few studies were found
on focusing particular investment avenues and their relational aspects. The results of
studies in Indian scenario have given contradictory results. It may be because of

47
diversity in nature of population and many researchers have selected purposive and or
convenient sampling.
Despite these extensive studies the research in holistic nature to cover the trends in
income , expenditure , borrowings along with the demographic factors such as age,
family size, dependency ratio the portfolio analysis at micro level is not conducted.
The portfolio decision involves both income, expenditure, savings and investment
options on ne hand and the knowledge about these dimensions to the investors on the
other. Hence it was needed to test the relation between knowledge of financial
opportunities and its application to take benefit. Our present study is small attempt to
cover this gap by applying Knowledge gap Index and Knowledge Application Index
of the investors.
Further the portfolio analysis product-wise and its measurement in terms of nominal
and real returns was the area neglected by the researchers. Here we make an attempt
to fill this gap also

48
 REFERENCES

1. Markowitz, H.M. (1956). Portfolio Selection: Efficient Diversification of

Investments. New York: John Wiley & Sons
2. Ibid(1959)
3. Ross, Stephen (1976). "The arbitrage theory of capital asset pricing". Journal of
Economic Theory13 (3): 341–360.
4. Dr. John Lintner, of Harvard University,(1983), “The Potential Role of Managed
Futures Accounts in Portfolios of Stocks and Bonds.”
5. Donald E. Fischer and Ronald J.jordan (1995) ‘security Analysis and Portfolio
Management 6 th edition, Published by Prentice Hall of India Private limited
6. Dr. G.P.Jakhotia and Mrs. M.G. Jjakhotiya (2001) ‘finance for one and All’,3 rd
Edition, Himalaya Publishing House
7. G Corter Cunningham (2004) Your Financial Action Plan, John Wiley and Sons
Inc. Hobken New Jersy
8. Valery Polkovnichenko(2005) ‘Household Portfolio Diversification: A Case for
Rank-Dependent Preferences’
9. Angha Pathak (2005) Comparative Study of Consumption, Savings, and
investment pattern of Salary earners in Kolhapur, unpublished Ph.D. thesis of
Shivaji University Kolhapur.
10. C Gnana Desigan , S. Kalaiselvi , L. Anusuya (2006) Vol 36, No 4 www.i-
scholar.in/index.php/ijom/article/view/34314
11. Efe Aksuyek Zurich,(2008) ‘Information Theory And Portfolio
Management’.https://www.lgtcp.com/shared/.content/../Projekt_EfeAksueyek_en.p
df
12. P Chandra ,(2008) ,”Investment analysis and portfolio management Tata MC
Graw Hill Education Pvt. Ltd New Delhi 3rd edition
13. .Clifford Paul ,(2008), ‘Saving pattern of people and the impact of Insurance on
savings with special reference to Trichirappalli, ‘College science in
India.,downloaded on 31 March2013 2.00pm
14. Priyank Zanvar (2009) A Study of Psychographic Segmentation of Investors in
Satara City. ‘M.Phil Dessertation submitted to Shivaji University,Kolhapur.

49
15. B.Raju and K.M Rao(2011) ,’Risk adjustment performance evaluation of selected
Indian Mutual funds’.
16. Ms. Vrushali Bhushan Shah (2011)’ A Study of investment pattern of investors in
Satara on the bases of socio Economics classes’, Ph.D. Thesis submitted to Shivaji
University, Kolhapur .
17. F. Relliy & K. Brown (2012), ‘An investment analysis and portfolio Mnagement’
10 th edition South Westren Cenage Learning
18. Utpal Bhattacharya , Andreas Hackethal, Simon Kaesler, Benjamin Loos, Steffen
Meyer (2012 ) ‘Unbiased Financial Advice to Retail Investors Sufficient? 2012
Oxford University Press
19. Ms. Sachi Prakash(2012), ‘Retail banking strategy: critically of Financial Literacy
and credit counselling in Indian Context’, Vinimay, Volume XXXII 4, Jan –
March2012 National Institute of Bank Management.
20. MonikaHansal and S.K.Singla(2012) ,Performance Evaluation of Private Banks in
India ,no.4’vol.65, p 39-52, October-December 2012,The Indian Journal of
Commerce .
21. CFA Institute (2012) Corporate Finace and PorfolioManagement. Op cit. Portfolio
studies in US market CFA Book of CFA institute (2012).
22. Ms. Tejasvi Rajaram Shinde ( 2012) ‘ A Study of Relationship between financial
literacy and individual investment inclination in Satara ‘M.Phil Dessertation
submitted to Shivaji University,Kolhapur.
23. Securities and Exchange Board of India (2012)- Investor Survey
www.sebi.gov.in/cms/sebi_data/attachdocs/1326345117894.pdf
24. Charul Shah(2013) , ‘Plan on track but idle cash must be invested
25. Santosh Danolkar(2013) ‘How to survive this crises’. ET Wealth dated
Sept.15,2013.
26. Babar zaidle (2013)’NPS Funds Performance’.
27. Chaitanya (2013) ‘,Gold loan Market future prospects in India’.
28. Discussion on You –tube Investors Guide staff Discussion on real Estate as a
Stable and Reliable investment.dated January 25 th ,2013.
29. Harris Interactive Inc. Public Relations Research (2014)

50