Article : Modeling Investor’s Behavior Pertaining To Financial Awareness And Threat


Modeling Investor’s Behavior Pertaining To Financial Awareness And Threat


Dr. Hemant Sharma

 It is well known that investment and risk go side by side. All conventional models of investment recommend that every rational individual invest with a view to maximize his/ her utility for a given level of risk. Everyone wishes to enhance the returns to a desired level for a given level of risks. If it were true, all investment decisions would be taken judiciously and no one would suffer losses. But in reality it is witnessed that most of people are not able to attain the desired returns on their investment. Moreover, they have to bear risks much more than their expectations. This may be attributed to many other parameters which influence their investment decisions. Out of many parameters, the present study attempts to understand the investor’s behavior regarding to their financial awareness and financial threat preferences. As far as investor’s financial awareness is concerned, results reveal that there has not been any significant relationship between their financial awareness and investment behavior. Instead, interestingly it is found that investors possessing high financial awareness usually prefer to invest more only in a specific category mainly including equity, fixed deposits, gold and real estate. The findings also show that there is no significant association between investor’s behavior and their threat preferences i.e. averse, moderate and aggressive investors do not differ as far as their investment behavior is concerned. The findings also reveal that there has been a strong relationship between financial awareness and financial threat preferences. The people with high awareness favor to invest more in risky avenues and less in less risky avenues.

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