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1.

Introduction
1.1 Introduction One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute. - William Feather. The conventional finance standard seeks to understand financial markets using models in which investors are rational. In common discussion, investment refers to financial assets such as deposits, bonds and shares. It is an inquiring thing, that by difference economists can discuss investment without ever declare finance. By investment they mean capital formation, the formation of new capital assets, including intangible assets such as education. Economists have always discussed the relationship between these two, investment and finance, and the disagreement over its nature remains unsettled. The capital market, similar to the money market plays a considerable responsibility in the national economy. A developed, active and vibrant capital market can adjoin widely in the rapidly economic growth and development. It circulates funds from people for investments purpose in the creative means of an economy, activating idle monetary resources and puts them in proper investments. Capital market also assists in capital generation. Capital formation is net accumulation to the present stock of capital in the economy. Through utilization of idle resources it generates savings; the mobilized savings are made available to a range of sectors e.g. agriculture, industry, etc. This assists, in increasing capital formation. It lifts up resources for longer span of time. Therefore, it provides an investment possibility for people who aspired to invest resources for a longer span of time. It provides appropriate interest rate of return also to investors. Instruments such as bonds, equities, units of mutual funds, insurance policies, etc. definitely provide diverse investment avenues for the public. The capital market increase production and output in the national economy. As it makes funds available for long periods of time, the financial requirements of business houses are met by the capital market. It helps in research and development. This helps in increasing production and productivity in the economy by generation of employment and development of infrastructure. Capital markets consist mainly of Stock (equity) and Debt markets. The capital market provides a path for raising the long-term financing needs of business through equity and long term debt by magnetize investors with a long term investment perspective. In the last few months Pakistans economic situation has been failing due to unstable political position, rise in insurgency and global slowdown. In fact, annual growth below 4 percent remains insufficient to absorb the growing labor force and
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inflation rate remains high. To make things even worst, budget shortage has reached unsustainable stage; foreign reserves had dropped and the currency fall to a record low. As a result, the government had requested a new bailout from the IMF. Yet, given that general election is about to take place, it may be difficult for the declaration party to implement tax reforms, spending cuts and tightening of the monetary policy .Stocks in Pakistan had a positive presentation during the last month. Pakistan Stock Market (KSE100), rally 890 points or 5.23 percent during the last 30 days. Historically, from 1990 until 2013, Pakistan Stock Market (KSE100) averaged 5170 Index points reaching an all time high of 18074 Index points in February of 2013 and a record low of 539 Index points in June of 1990. The Karachi Stock Exchange 100 Index is a major stock market index which tracks the routine of largest companies by market capitalization from each division of Pakistani economy listed on the Karachi Stock Exchange. Since October 15th, 2012 it is a free-float index. The KSE100 has a base value of 1000 as of November, 1991. Here we comprise a chart with historical data for Pakistan Stock Market (KSE100).

In 2012 stock market shows positive affect in investment through various monitory channels as per economic review, from 1990 until 2013, Pakistan Stock Market averaged 5170 Index points reaching an all time high of 18074 Index points in February of 2013. Very satisfying atmosphere for investment, after watching trend of investment in country, I decided to conduct a study that is consisting of such factors which influences while deciding whether to invest or not. Secure investment is mandatory for economic growth above all, that will help attract investors in this context. That is very crucial problem for an inexperienced investor who seeks appropriate decision making criteria in this regard.

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My proposed variables that influence investment decision are rate of return, security and risk, although there are number of studies conducted by different scholars around the globe, different conceptual frame works in this regard presented by now but I consider above mentioned variables carry more importance than any other variables. Secondly, all the variables are interconnected with each others. Investor always seeks an opportunities where he supposed to get high rate of return and minimum risk factors that is only possible if investment is secure and invested at a firm which is guaranteed by governmental regularity authorities. Cleary (1999) explained the relationship of investment and firm financial status.The objective of his research was to show how financial factors effect the investment decisions in high creditworthy and less creditworthy firms.He used five variables in which leverege,liquidity,growth and profitability were independent and investment decision was dependent variable. The study showed that liquidity,profitability and growth had positive significant relationship with investment decision and leverege had negetine relationship with investment decision. Polk & Sapienza(2009) examined that how stock market mispricing might influence firms investment decesions.Their objective was to explor that how price fluctuation of shares effect ones to invest. They selected three variables for their research which were mispricing,discretionary accruals and investment decesion. Their study reflected the strong positive relationship between mispricing and investment decision and also positive relationship of investment with discretionary accruals. Jains & Dashora(2012) elaborated the risk of different factors on investment decisions.Their intention was to study and analyze the impact of different factors on an individual investor He used three variables Income,Age and Investment pattern as independent variable to test dependent variable investment decision. The key results of the study was that the income and investment pattern had significant relationship with investment decision and age had negetive relationship with investment decision. Lee, Wang, Kao, Chen, & Zhu(2011) explained the factors that effect the investment performance in Taiwan stock market.Their objective was to show that how decision factors affect the performance of taiwan stock market.They selected Investor background,Strategy selection,Fundamental factors,Psychological factors and Macroeconomic factors as independent variables to checked the Investment performance. They finally concluded that macroeconomic factors had strong positive significant relationship with investment decision and it was most influencing factor in their study.Their study also showed that Strategy selection,Fundamental factors and Psychological factors had significant relationship with investment pattern but Investor background had no significant relationship with investment decisions. Kadariya(2012)
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investigated the factors that effects in decision making to invest in Nepalese stock market.The intent of the study had to determined the attitude of Nepalese investor for investing in stock market.He used Capital structure,Averege pricing method,Political factor,Media coverege,Belief on luck and Financial education as independent variable for their research to test investment decision. He found that capital structure and averege pricing method had strong positive significant relationship with investment decision and there was also positive relationship among Political factor,Media coverege,Belief on luck,Financial education and investment decision. This type of research has been conducted in developed countries hence there is a need to be studied investment decision making process by different aspects in developing or under developing countries perspective. Where risk factor is very high comparatively and investment is not secured. Nevertheless, opportunities are also high due to continuous development in different sectors. Therefore, there is a need to define criteria which must be kept in mind while taking decision about investment purpose. Proposed variables importance cannot be denied in this regard. Because most of the researches are conducted on different variables while the proposed variables are not given as importance as it deserves. It could be called as basic factors which are mandatory for decision making in this context. The second very important thing is its interdependency on each other. Investors always priorities that opportunities which gives high level of rate of return combined with lower risk factor and high security. In developing countries, significance of investment security increases comparatively due to limited spare amount and low per capita income of citizens. Expenses have gone up for last couple of years due to economical instability and insufficient resources planning from establishment. Every individual has been striving for secure means of investment. As long as chances are available to invest in any business globally while present in home country, investors seek highest rate of return over their investment. Therefore the purpose of this research study is to examine the impact of factors that affect investment decision 1.2 Research Objective This research is focusing on the factors that affect investment decisions in Pakistani stock market. Following are the main objectives of the study: To examine the impact of rate of return on investment decision To determine the impact of security on investment decision To test the impact of risk on investment decision
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1.3 Research Question and Hypothesis Research Question What are the factors that affect investment decisions in stock market? to answer this question I select the different variables. Hypothesis Hypothesis 1: H1: There is relationship between rate of return and investment decision. H0: There is no relationship between rate of return and investment decision. Hypothesis 2: H1 There is relationship between security and investment decision. H0: There is no relationship between security and investment decision. Hypothesis 3: H1: There is relationship risk and investment decision. H0: There is no relationship between risk and investment decision.

1.4 List of variable


Rate of return Market value Organizational environment Security Foreign investor Business opportunity International relation Risk taking Derivative instruments Inflation rate

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1.5 Details of variable


1) Rate of return: The gain or loss on an investment over a specified period, expressed as a percentage increase over the initial investment cost. Gains on investments are considered to be any income received from the security plus realized capital gains. By (Asiedu, 2002). 2) Market value: The market value also effect on the investment decision for the invester.if the market value of the organization is strong the investor not feel hesitation in investment. On the other hand if the organization market value the investor feel hesitation for investment. 3) Organizational goodwill: Organizational goodwill is another important variable for the investment decision .the goodwill of the organization attract the investor for investment. Goodwill is the asset of any organization. 4) Security: Security is the guarantee given on the investment made that is actually an assurance that investment is saved and firm is accountable under the law of regularity authorities. By (Gutter & Fontes, 2006). 5) Foreign investor: If the security of the organization satisfied the foreign investor invest in the organization. The foreign investor is the important variable for the investment decision. 6) Business opportunities: Business opportunities also attract the investor for the investment. if the organization provide opportunity for the development t 7) International relation: International relations is the study of relationships among different countries, the roles of sovereign states, inter-governmental organizations, international non-governmental organizations, non-governmental organizations, and multinational corporations. .if the relation strong than people make more investment.
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8) Risk taking: Risk is the potential of loss resulting from a given action, activity and/or inaction. The notion implies that a choice having an influence on the outcome sometimes exists. Potential losses themselves may also be called "risks". If the investor is the risk taking then he make more investment. 9) Derivative instruments: A security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Most derivatives are characterized by high leverage. 10) Organizational environment: Organizational environment also attract the investor for investment decision. Organizational environment: set of Forces surrounding an organization. May affect its operation and access to scarce resources 11) Inflation rate: He rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. Central banks attempt to stop severe inflation, along with severe deflation, in an attempt to keep the excessive growth of prices to a minimum. Inflation rate is high in country than less chance of investment 1.6 Term Definitions Rate of Return The gain or loss on an investment over a specified period, expressed as a percentage increase over the initial investment cost. Gains on investments are considered to be any income received from the security plus realized capital gains. By (Asiedu,2002) Investment Decision Investment decision is the process of taking decision of whether to invest or not over certain assumptions The basic decision rule for a project appraisal using certainty equivalent values as inputs and discounted at a rate adjusted for risk is simply to accept or

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reject the project depending on whether its NPV is positive or negative, respectively. By (Savvides,1994) Security Security is the guarantee given on the investment made that is actually an assurance that investment is saved and firm is accountable under the law of regularity authorities. By (Gutter & Fontes,2006) Risk The chance of financial loss or more formally, the variability of returns associated with the given asset. Risk is attributable to the performance of the stock market or the economy. A risk is defined as one which is critical to the viability of the project in the sense that a small deviation from its projected value is both probable and potentially damaging to the project worth. By (Savvides,1994).

2.0: Theoretical Model

Rate of Return

Risk

Investment decision

Security

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2.3 Population and Sample The population consists of all those investors who invest in stock market. A survey
questionnaire was constructed and randomly distributed to different investors and get response from them. The sample size for study consists of 150 questionnaires and each questionnaire consists of 17 questions.

2.4 Data Collection Method Interview


A face to face meeting of people in which information is exchanged. A proper meeting in which one or more persons question, talk to, or assess another person. Interviews generate an advanced response rate. It is useful for gathering information about difficult topics. The Interviewer can investigate deeper into a response given by an interviewee. It is very time consuming. It is not used for a huge number of people.

Questionnaire
A set of printed or written questions with a selection of answers, develop for the objective of a survey or statistical study. A set of cautiously considered questions given in exactly the same form to a group of people in order to gather data about some topic in which the researcher is interested. The responses are gathered in a consistent way, so questionnaires are more purposeful, certainly more than interviews. Huge amount of information can be gathered from a high number of people in a short time frame. The results of the questionnaires can generally be quickly and easily measure by either a researcher or through the use of a software package. When data has been measured, it can be used to judge against other research and would be used to compute change. Questionnaires are in standardized form so it is not feasible to clarify any points in the questions that respondent might misread. People may read in a different way about each question therefore, their answer based on their own interpretation of the question. Finally I select questionnaire for my study because it is match with my research topic and also give a numeric data which mean we apply quantitative research

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approach in our study that leads towards theory testing and previous results confirmation. Measurement In case of measuring the Investment decision, Rate of return, Security and Risk only filled questionnaire is used that was filled from different investors. Respondents data was obtained thorough one survey with 5-point Likert scale. Few questions were asked from respondent and told him to tick only one appropriate option. The survey contained a total of 17 questions and took approximately 10 minutes to complete. Incomplete questionnaire was not included in the survey. There were different measures for the variables defined. There were different related questions in the survey for obtaining data for one variable. Measure for each variable is defined below: Investment Decision Investment Decision was measure by asking the three questions by using the 5-points rating type scales ranging from (1) strongly disagree to (5) strongly agree. Rate of Return Rate of Return was measure by asking the four questions by using the 5-points rating type scale ranging from (1) strongly disagrees to (5) strongly agree. Security Security was measure by asking the five questions by using the 5-points rating type scale ranging from (1) strongly disagrees to (5) strongly agree. Risk Risk was measure by asking the five questions by using the 5-points rating type scale ranging from (1) strongly disagrees to (5) strongly agree. Methodology We use Descriptive and Inferential statistics in our study because descriptive statistics summarize data in a meaningful way which is a representation of the entire population. Generally, there are two main kinds of descriptive statistic that are used to illustrate data, measures of central tendency include the mean, median and mode, whereas measures of variability include the standard deviation (or variance), the minimum and maximum values, kurtosis and skewness. Inferential statistic is used for in-depth analysis which
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shows the relationship between variables. We conduct inferential statistics to make the conclusions. Inferential statistics consist of regression, correlation, histogram, bar charts, scatter plots, chi-square test, f-test, z-test and t-tests. We use regression, correlation, histogram, scatter plots and f-test in our study. Descriptive statistics is the term that summarizes a given data set, which can also be an illustration of the whole population or a sample. With descriptive statistics you are basically telling what is or what the data shows. With inferential statistics, you are trying to reach at the result that extends away from the urgent data alone. We use inferential statistics to assume from the sample data what the population might assume. Descriptive statistics help us to simplify large amounts of data in a sensible way. Each descriptive statistic decreases lots of data into an easier summary. Histogram is a summary graph explains a count of the data points spread in various ranges. The effect is a rough calculation of the frequency distribution of the data. Histogram is a form of a bar graph used with numerical (scale) variable preferably of constant nature. The intervals are shown on the X-axis and the number of scores in each interval is stand for the height of a rectangle located above the interval. Unlike the bar graph, in a histogram there is no space between the bars. The data is continuous so the lower limit of any one interval is also the upper limit of the previous interval. It is useful to Summarize the data Investigate and comparing frequency distributions Check the normality of data Scatter plots show the relationship between two variables by presenting data points on a two-dimensional graph. These are especially valuable when there are a huge number of data points. Scatter plot is a graph of two variables that shows how the score of one variable associates with the score of other variable. Each dot or circle on the plot is a symbol of a particular individuals score on the two variables with one variable being represented on the X axis and the other on the Y axis. The measurement for both variables is continuous (measurement data). It is useful to Gain insight into the relationship between two scale variables To check the assumptions of linearity for correlation and regression statistics To locate the outliers those are far from the normal line Correlation is used to check relationship between variables. The type and degree of connection between any two or more variables in which they differ jointly over a period. A positive correlation exists where the high values of one variable are related with the
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high values of the other variable. A 'negative correlation' means association of high values of one with the low values of the other. Correlation can vary from +1 to -1. Values close to +1 indicate a high-degree of positive correlation, and values close to -1 indicate a high degree of negative correlation. A regression model is method to find out the statistical relationship between two or more variables where a change in a dependent variable is associated with, and depends on, a change in one or more independent variables. A statistical measure that try to determine the strength of the association between one dependent variable and a series of other changing variables known as independent variables. The two central types of regression are linear regression and multiple regressions. The general form of each type of regression is: Linear Regression: Y = a + bX + Ei

3. Descriptive Summary

Table 3.1 Descriptive Statistics N Rate_of_Return Security Risk Investment Decision Valid N (list wise) 150 150 150 150 150 Minim um 2.00 2.40 1.80 1.33 Maxim um 4.75 4.40 4.40 4.67 Mean 3.5650 3.3573 3.1453 3.2156 Std. Deviation .52571 .51584 .48322 .63002

In the above table the minimum values, maximum values, mean values and the values of standard deviation of all the four variables have been shown. There were scales of 5 responses that lead to the options (strongly disagree, disagree, neutral, agree, and strongly agree). Number of observations of each variable is 150.If we observe the above output to assess the average response rate then we come to know the means of different variables like Rate of return (mean: 3.565), Security (mean: 3.357), Risk (mean: 3.14) and
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Investment decision (mean: 3.21). If we observe then know that all variables (Rate of return, Security, Risk, Investment decision) show the average response rate of respondents as lie within the option 3-4 (3 is for neutral and 4 is for agree).The minimum option that is ticked by respondent is 1.33 and the maximum option that is ticked by responded is 5. Standard deviation and the extreme values (minimum in comparison to maximum value) give the idea about the dispersion of the values of a variable from its mean value. Since different units of measure have been used for different variables the dispersion of a variable using standard deviation cant be compared to that of other variable unless both the variables have the same unit of measure. But still these statistics are helpful to have an idea about the central tendency and the dispersion of a variable in absolute terms rather than relative terms. The value of standard deviation is (S.D.483) for risk which is the lowest value as compare to other variable values. Which shows that most of the respondent answers were same for the variable risk and have consistency in their response rate but the value of standard deviation for investment decision is (S.D .630) which is quite high as compare to other variables which clearly shows that the response regarding investment decision of mostly respondents were not the same and they dont have consistency in their answers. 3.2 Histogram This shows the graphical representation of the variables with the curve to check the normality of the response rate. Lets discuss the result of each variables histogram one

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Strongly Disagree Disagree Neutral Agree Strongly Agree

= = = = =

1 2 3 4 5

The fig.1 shows the graphical representation of data through bars that is showing the response of the respondents regarding rate of return. Most of the participants responds in the center option 3 - 4 (3 is for neutral and 4 is for agree). Small numbers of respondents were marked very low and also low response for high options. The bar in the histogram is high for neutral response, form a curve that is similar to the normal curve. The hump of the curve is on the top mean value which shows that the most of respondents show the neutral response. Thus, frequency distribution of the rate of return is normal and figure showed that data is normally distributed. Figure 3.2

Figure 3.2

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The fig.2 shows the graphical representation of the bars that is showing the response of the respondents regarding security. Most of the participants lies in the center option 3 - 4 (3 is for neutral and 4 is for agree). Small numbers of respondents were marked very low and also low response for high options. The bar in the histogram is high for neutral response from a curve that is similar to the normal, bell shaped curve. Thus, frequency distribution of the security is normal and figure showed that data is approximately normally distributed.

Figure 3.3

The fig.3 shows the graphical representation of data through bars that is showing the response of the respondents regarding risk. Most of the participants respond towards higher values but most of data lies in the center option 3 - 4 (3 is for neutral and 4 is for agree). Small numbers of respondents were marked very low. The bar in the histogram is

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high for neutral option form a curve that is similar to the normal, bell shaped curve. Thus, data is normally distributed.

Figure 4.4

The fig.4 shows the graphical representation of data through bars that is showing the response of the respondents related to investment decision. Most of the participants respond towards higher values but most of data lies in the center option 3 - 4 (3 is for neutral and 4 is for agree). Small numbers of respondents also marked very low. The bar in the histogram is high for neutral option, form a curve that is similar to the normal, bell shaped curve. Thus, data is normally distributed which showed that data is not dispersed from mean values.

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3.1.3 Scatter Plots Scatter plot or graph for two variables shows that how the scores of an individual on one variable associates with his or her scores on the other variable. Lets discuss each plot or graph one by one:

Figure 3.5

Figure 4.5 shows the results of scatter plot matrix where we intend to have some idea about the relationship between rate of return and investment decision. If we observe the flow of line that is downward from right to left this shows the positive relationship between rate of return and investment decision. This means that if the organization gives

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high rate of return then it also increases the investing decision power. The above results have been confirmed by the table of correlations.

Figure 3.6

Figure 4.6 shows the results of scatter plot matrix where we intend to have some idea about the relationship between security and investment decision. If we observe the flow of line that is downward from right to left which shows the positive relationship between security and investment decision. This means that if the organization gives security then it also increases the investing decision power. This result has been confirmed in the table of correlations.

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Figure 3.7

Figure 4.7 shows the scatter plot matrix where we intend to have some idea about the relationship between risk and investment decision. If we observe the flow of line that is almost equal to straight line that is parallel to x-axis which shows that there is no relationship between risk and investment decision.

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Figure 3.8

Figure 4.8 shows the results of scatter plot matrix where we intend to have some idea about the relationship between security and rate of return. If we observe the flow of line that is downward from right to left which shows the positive relationship between security and rate of return?

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Figure 3.9

Figure 4.9 shows the results of scatter plot matrix where we intend to have some idea about the relationship between security and risk. If we observe the flow of line that is downward from right to left which shows the positive relationship between security and risk.

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Figure 3.10

Figure 4.10 shows the results of scatter plot matrix where we intend to have some idea about the relationship between rate of return and risk. If we observe the flow of line that is downward from right to left which shows the positive relationship between rate of return and risk? The above results have been confirmed by the table of correlations.

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4. Correlation Correlation is used to check the mutual relationship among variables. For checking the relationship we will make two hypotheses: null (H0) and alternative (H1). We interpret the findings on the acceptance or rejection of the hypothesis. We used correlation matrix to check the mutual relationship of different variables.

Table 4.1 Correlation Rate_of_R eturn 1 Investment Decision .194* .017 150 1

Rate_of_Return

Investment Decision

Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N

150 .194* .017 150

150

Table 4.4 presents the results of correlations. Where significance value (0.017) is less than 0.05 which shows that there exist a relationship between rate of return and investment decision. To check the strength of relationship between variables we compare the value of Pearson correlation with developed ranges. The Pearson correlation value (0.194) lies between 0 to 0.33 which shows that there is weak relationship between rate of return and investment decision. The +ve sign with Pearson value (0.194) shows that there is positive significant relationship between rate of return and investment decision.

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Table 4.2 Correlation Investment Decision 1 Security .279** .001 150 1

Investment Decision

Security

Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N

150 .279** .001 150

150

Table 4.5 presents the results of correlations. Where significance value (0.001) is less than 0.05 which shows that there is a relationship between security and investment decision. To check the strength of relationship between variables we compare the value of Pearson correlation with developed ranges. The Pearson correlation value (0.279) lies between 0 to 0.33 which shows that there is weak relationship between security and investment decision. The +ve sign with Pearson value (0.279) shows that both variables are positively correlated to each other. Table 4.3 Correlation Investment Decision 1 Risk .093 .256 150 1

Investment Decision

Risk

Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N

150 .093 .256 150

150

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Table 4.6 presents the results of correlations. Where significance value (0.256) is greater than 0.05 which shows that there is no relationship between risk and investment decision. Table 4.5 Correlation Rate_of_R eturn Pearson 1 Correlation Sig. (2-tailed) N 150 Pearson .461** Correlation Sig. (2-tailed) .000 N 150

Security .461** .000 150 1

Rate_of_Ret urn

Security

150

Table 4.7 presents the results of correlation analysis. Where significance value (0.000) is less than 0.05 which shows that there is a relationship between rate of return and security. To check the strength of relationship between these two variables we compare the value of Pearson correlation with developed ranges. The Pearson correlation value (0.461) lies between 0.33 to 0.70 which shows that there is moderate relationship between rate of return and security. The +ve sign with Pearson value (0.461) shows that there is positive significant relationship between rate of return and security.

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Rate_of_Ret urn

Risk

Table 4.6 Correlation Rate_of_R eturn Pearson 1 Correlation Sig. (2-tailed) N 150 Pearson .203* Correlation Sig. (2-tailed) .013 N 150

Risk .203* .013 150 1

150

Table 4.8 presents the results of correlations. Where significance value (0.013) is less than 0.05 which shows that there is a relationship between rate of return and risk. To check the strength of relationship between variables we compare the value of Pearson correlation with developed ranges. The Pearson correlation value (0.203) lies between 0 to 0.33 which shows that there is weak relationship between rate of return and risk. The +ve sign with Pearson value (0.203) shows that both variables are positively correlated with each other. Table 4.7 Correlation Risk Risk Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N 1

Security .216** .008 150 1

Security

150 .216** .008 150

150

Table 4.9 presents the results of correlation. Where significance value (0.008) is less than 0.05 which shows that there exist a relationship between risk and security. To check the
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strength of relationship between these two variables we compare the value of Pearson correlation with developed ranges. The Pearson correlation value (0.216) lies between 0 to 0.33 which shows that there is weak relationship between risk and security. The +ve sign with Pearson value (0.216) shows that there is positive significant relationship between rate of risk and security.

Regression Regression is used to check the effect size of independent variable on dependent variable. Let I discuss the results of regression

Tables 4.8 Variables Entered/Removed Mode l 1 Variables Entered Rate_of_Ret urn Variables Removed Method . Enter

a. All requested variables entered. b. Dependent Variable: Investment Decision

Model Summary Mode l 1 R .194a Adjusted R Std. Error of R Square Square the Estimate .038 .031 .62016

a. Predictors: (Constant), Rate_of_Return

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ANOVAb Model 1 Regression Residual Total Sum of Squares 2.222 56.920 59.141 df 1 148 149 Mean Square 2.222 .385 F 5.777 Sig. .017a

a. Predictors: (Constant), Rate_of_Return b. Dependent Variable: Investment Decision

The value of F-statistic (0.017) is statistically significant at less than five percent that explains that the independent variable rate of return effect the dependent variable investment decision. The value of the coefficient of determination (R2) is 0.038 which represents the simple correlation and, therefore, indicates a high degree of correlation. The R2 value indicating that how much of the investment decision is being affected by rate of return and its value 0.038 means that rate of return contributing 3.8% in investment decisions. The value of the adjusted coefficient of determination (adj. R2) is 0.031, which shows that 3.1% variations in investment decisions.

Coefficients Unstandardized Coefficients Model 1 (Constant) Rate_of_Retu rn B 2.387 .232 Std. Error .348 .097 .194 Standardized Coefficients Beta t 6.856 2.404 Sig. .000 .017

a. Dependent Variable: Investment Decision

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The coefficient table presents the results of the regression analysis. The objective of the regression in this study is to find such an equation that could be used to find the impact of rate of return on investment decision. The specified regression equation takes the following form: Investment decision = a + B (Rate of return) +Ei Investment decision =2.387+0.232(Rate of return) +Ei

The results show that the independent variable less significantly affects the investment decision as shown by the values of the t-statistic and the corresponding P-values. T-test is used to test the significance of the individual partial regression coefficients. This test shows that the coefficients of the predictor are statistically significant at less than five percent level of significance.

Tables 4.9 Variables Entered/Removed Model 1 Variables Entered Security Variables Removed Method . Enter

a. All requested variables entered. b. Dependent Variable: Investment Decision

Model Summary Mode l 1 R .279a Adjusted R Std. Error of R Square Square the Estimate .078 .072 .60703

a. Predictors: (Constant), Security

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ANOVAs Sum of Squares Regression Residual Total 4.606 54.536 59.141 Mean Square 1 148 149 4.606 .368

Model 1

df

F 12.499

Sig. .001a

a. Predictors: (Constant), Security b. Dependent Variable: Investment Decision

The value of F-statistic (0.001) is statistically significant at less than five percent that explains that the independent variable security effect the dependent variable investment decision. The value of the coefficient of determination (R2) is 0.078 which represents the simple correlation and, therefore, indicates a high degree of correlation. The R2 value indicating that how much of the investment decision is being affected by security and its value 0.078 means that security contributing 7.8% in investment decisions. The value of the adjusted coefficient of determination (adj. R2) is 0.072, which shows that 7.2% variations in investment decisions.

Coefficients Unstandardized Coefficients Model 1 (Constant ) Security B 2.071 .341 Std. Error .327 .096 .279 Standardized Coefficients Beta t 6.326 3.535 Sig. .000 .001

a. Dependent Variable: Investment Decision

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Coefficients Unstandardized Coefficients Model 1 (Constant ) Security B 2.071 .341 Std. Error .327 .096 .279 Standardized Coefficients Beta t 6.326 3.535 Sig. .000 .001

The coefficient table presents the results of the regression analysis. The objective of the regression in this study is to find such an equation that could be used to find the impact of security on investment decision. The specified regression equation takes the following form: Investment Decision = a + B (Security) +Ei Investment Decision =2.071+0.341(Security) +Ei

The results show that the independent variable security less significantly affects the investment decision as shown by the values of the t-statistic and the corresponding Pvalues. T-test is used to test the significance of the individual partial regression coefficients.

Tables 4.10 Variables Entered/Removed Model 1 Variables Entered Risk Variables Removed Method . Enter

a. All requested variables entered. b. Dependent Variable: Investment Decision

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Model Summary Mode l 1 R .093a Adjusted R Std. Error of R Square Square the Estimate .009 .002 .62938

a. Predictors: (Constant), Risk

The value of F-statistic (0.256) is not statistically significant at less than five percent that explains that the independent variable risk does not effect the dependent variable investment decision. The R2 value indicating that how much of the investment decision is being affected by security and its value 0.009 means that risk contributing only 1% in investment decisions.

Coefficients Unstandardized Coefficients Model 1 (Constant ) Risk B 2.833 .122 Std. Error .340 .107 .093 Standardized Coefficients Beta t 8.343 1.141 Sig. .000 .256

a. Dependent Variable: Investment Decision

The coefficient table presents the results of the regression analysis. The objective of the regression in this study is to find such an equation that could be used to find the impact of risk on investment decision. The specified regression equation takes the following form: Investment Decision = a + B (Risk) +Ei Investment Decision =2.833+0.122(Risk) +Ei

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Discussion
Discussion Much of the economic and financial theories assume that individuals act rationally in the method of decision making, through taking into account all available data. But there is proof to confirm repeated patterns of illogicality in the way humans arrive at decisions and choices when faced with uncertainty. A study of the stock market that draw on psychology, throws light on why people buy or sell stocks and why sometimes do not buy or sell at all. The most vital challenge look by the investor is in the area of investment decisions. The profit made, or losses acquire by an investor can be attributed mainly to his decision-making abilities. In this study, the aim is to create the reality of such fundamental factors, driven through various issues, in the investment decision-making process. The capital market, similar to the money market plays a considerable responsibility in the national economy. A developed, active and vibrant capital market can adjoin widely in the rapidly economic growth and development. It circulates funds from people for investments purpose in the creative means of an economy, activating idle monetary resources and puts them in proper investments. Capital market also assists in capital generation. Capital formation is net accumulation to the present stock of capital in the economy. Pakistan had a positive presentation during the last month. Pakistan Stock Market (KSE100), rally 890 points or 5.23 percent during the last 30 days. The Karachi Stock Exchange 100 Index is a major stock market index which tracks the routine of largest companies by market capitalization from each division of Pakistani economy listed on the Karachi Stock Exchange. Secure investment is mandatory for economic growth above all, that will help attract investors in this context. That is very crucial problem for an inexperienced investor who seeks appropriate decision making criteria in this regard. The aim of the study is to explain the impact of different factors on investment decision. I decided to conduct a study that is consisting of such factors which influences while deciding whether to invest or not. My proposed variables that influence investment decision are rate of return, security and risk, although there are number of studies conducted by different scholars around the globe, different conceptual frame works in this regard presented by now but I consider above mentioned variables carry more importance than any other variables. This study will be helpful for the finance managers in corporate and industries of Pakistan in particular and those in developing countries and also give help to the layman who wants to invest in stock market. The population consists of all those investors who invest in stock market. The sample size for study consists of 150 questionnaires and each
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questionnaire consists of 17 questions. In case of measuring the Investment decision, Rate of return, Security and Risk only filled questionnaire is used that was filled from different investors. Respondents data was obtained thorough one survey with 5-point Likert scale. There were different related questions in the survey for obtaining data for one variable. The focus of my research on quantitative approach because data used in this study is in numerical form. Quantitative research is frequently apply for testing theory and also helps to check relationship between different variables whether they have significant relationship or not. We use Descriptive and Inferential statistics in our study because descriptive statistics summarize data in a meaningful way which is a representation of the entire population. Generally, there are two main kinds of descriptive statistic that are used to illustrate data, measures of central tendency include the mean, median and mode, whereas measures of variability include the standard deviation, the minimum and maximum values, kurtosis and skewness. Inferential statistic is used for in-depth analysis which shows the relationship between variables. We conduct inferential statistics to make the conclusions. Inferential statistics consist of regression, correlation, histogram, bar charts, scatter plots, chi-square test, f-test, z-test and t-tests. We use regression, correlation, histogram, scatter plots and f-test in our study. With descriptive statistics you are basically telling what is or what the data shows. With inferential statistics, you are trying to reach at the result that extends away from the urgent data alone. Histogram is a summary graph that is used to explain a count of the data points spread in various ranges. The effect is a rough calculation of the frequency distribution of the data. Scatter plots are used to show the relationship between two variables by presenting data points on a two-dimensional graph. These are especially valuable when there are a huge number of data points. Correlation is used to check relationship between variables. The type and degree of connection between any two or more variables in which they differ jointly over a period. A regression model is method to find out the statistical relationship between two or more variables where a change in a dependent variable is associated with, and depends on, a change in one or more independent variables. The study shows different results related to data and purposed variables. First of all we check the reliability of data through Cronbachs alpha value. The value of Cronbachs alpha is 0.655 which is considered as reliable. Descriptive statistic table shows mean, minimum, maximum and standard deviation of all variables in which mean shows the average value of all variables and standard deviation shows the dispersion of data from mean values. Histogram and scatter plots show relationship in form of graphical representation. The values of correlation and regression analysis present the strength and
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significances of variables. The results shows that there is weak positive significant relationship between rate of return and investment decision and study also shows that security and investment decision has moderate positive significant relationship but there is not any relationship between investment decision and risk. The results clearly illustrate that while taking investment decision, layman dont consider risk factor if he expects to get high level of rate of returns of his investment while security factor is considerable after all, the whole picture shows that there are some other factors that are kept in mind while decision making. Conclusion According to the findings rate of return and securitys relationship with investment decision is significant but week while there is no relationship of risk with investment decision. which clearly illustrate that while taking investment decision, layman dont consider risk factor if he expects to get high level of rate of returns of his investment while security factor is considerable after all, secondly, whole picture shows that there are some other factors that are kept in mind while decision making rather than proposed theoretical frame work. Still there is a need to study different aspects of investment decision making. Limitations and Delimitations The main disadvantage of the study is that the primary data is gathered to study investor behavioral pattern using questionnaires. Making financial decisions can be serious for various reasons that possibly could push many into making irrational decisions. Therefore, while answering a questionnaire, the same respondents wants to be relaxed and in a better frame of mind, hence when they have limited time they do not give proper response that affect the results. A second drawback arises out of the fact that Pakistan is a big country, and this study cannot be considered an estimate of the average Pakistani investor. The sample collected is mainly from the Lahore city, which represents the whole Pakistan population. The main advantage of this study is for Pakistani investor because there is not a sufficient work on this topic in past, it helps them to make a decision about investing in stock market. Secondly this study based on those variables on which not a lot of research was conducted in past and these variables have lots of important regarding investment decision.

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Implications According to the finding of the study, investor should think rationally rather than emotionally, which means that while taking decision regarding investment especially in developing countries like Pakistan, layman should consider economical facts and figure of that country. Second very important thing, investor should come up with a proper plan of investment which encompasses the potential fluctuation of that particular stock market combined with possible corrective measures could be taken timely and investments investing and withdrawal should be properly planned.. Last but not least, the country where risk factor over investment is high and security on investment is insufficient, investor should focus on short term investment projects rather than long term.

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Appendix A
Factors that Effect Investment Decisions:
Dear participant, The purpose of this survey is to explore the factors that effect the investment decisions. I am the student of Superior University and this survey has been conducted by me for my thesis purpose. I request you to kindly give me your valuable time to fill this questionnaire. I assure you that the data provided by you will be kept confidential.

Thanks for your time and cooperation.

Name (optional) 1. Age Less than 25 years 25 35 year 35 45 year 45 plus 2. Gender Male Female 3. Nature of Investor Salaried Self Employed professional Please indicate how strongly you agree or disagree with each statement using the scale given below. Please mark the appropriate answer. Scale
Strongly Agree 5 Agree 4 Neutral 3 Disagree 2 Strongly Disagree 1

Rate of Return

1 2
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In my point of view rate of return attracts 5 the investors. The rate of return increases the market 5

4 4

3 3

2 2

1 1

3 4

1 2 3 4 5

value of the organization. The profit ratio effects the organizational 5 environment. My profit effect the organization 5 goodwill. Security The security of business is not appropriate 5 in the country. My security provides the domestic 5 government of the foreign investors. The security increases the business 5 opportunity. My organizations security satisfied the 5 foreign investors. Our countrys security effect the 5 international relation and investing decision.

4 4

3 3

2 2

1 1

4 4 4 4 4

3 3 3 3 3

2 2 2 2 2

1 1 1 1 1

1 2 3 4 5

Risk I am a risk taker. My company has domestic branch office in most of major city. My company has international branch office in most of country. My company hedges their risk through derivative instruments. My company prefer to individual investors than institutional investors.

5 5 5 5 5

4 4 4 4 4

3 3 3 3 3

2 2 2 2 2

1 1 1 1 1

Investment My investment can tolerate moderate losses 5 in order to achieve potentially favorable return. My investment can tolerate the risk of large 5 losses in my portfolio in order to increase the potential of achieving high returns. My investment outpaces inflation. I am 5 willing to assume some potential for shortterm loss in order to achieve that goal.

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