A Project Report on

“Study of Portfolio Management and investment

decision for New investor”
Submitted to:

Jamshedpur Workers College

Mango, Jamshedpur – 831012

In partial fulfillment for the award of the degree of

Master of Commerce

Submitted by:
( Reshmi Kumari )
University Roll. No. -
Registration No. -
Under the Guidance of:
DR. XXXXXX

Semester 3rd (2022 – 2024)

 Academic Year 2022-2024

CERTIFICATE
This is to certify that Reshmi Kumari has submitted the project report titled,
“Study of Portfolio Management and investment decision for New investor”
towards the partial fulfillment of MASTER OF Commerce degree
Examination. This has not been submitted for any other examination and does
not form part of any other course under gone by the candidate.
It is further certified that she has ingeniously completed her project as prescribed
by Jamshedpur Workers College (NAAC Accredited "B" Grade) affiliated
to Kolhan University , Chaibasa.

Dr. Afsar Sheikh Dr. Sonali Gadekar

(Project Guide) (Co-Ordinator)

 DECLARATION

I here-by declare that the project with title “Study of Portfolio Management and
investment decision for New investor” has been completed by me in partial
fulfillment of MASTER OF Commerce degree examination as prescribed by
Jamshedpur Workers College, (NAAC Aaccredited "B" Grade) affiliated to
Kolhan University , Chaibasa and this has not been submitted for any other
examination and does not form the part of any other course undertaken by me.
 ACKNOWLEDGEMENT

With immense pride and sense of gratitude, I take this golden opportunity to
express my sincere regards to Dr. Swati Kathaley, Principal, Jamshedpur
Workers College.

I am extremely thankful to my Project Guide Dr. Afsar Sheikh for her guidance
throughout the project. I tender my sincere regards to the Coordinator, Dr. Sonali
Gadekar for giving me guidance, suggestions and invaluable encouragement
which helped me in the completion of the project.

I will fail in my duty if I do not thank the non-Teaching staff of the college for
their Co-operation.

I would like to thank all those who helped me in making this project complete and
successful.
 INDEX

Sr.NO. Particulars Page NO.

1. Introduction 1
1.1 portfolio management 1-9
1.2 portfolio management services 10-11
2. Company profile 12
2.1 company introduction 12-13
2.2 services offered by company 14
3. Research methodology 15
3.1 source of data 16
3.2 need of the study 16
3.3 objectives of the study 17
3.4 scope of the study 18
3.5 limitations of the study 19
4. Literature review 20-22
5. Data analysis and interpretation 23-29
6. Findings 30
7. Conclusions 31
8. Suggestions 32
9. Bibliography 33
10. Questionnaire 34
 Introduction

1.1 Portfolio management

 Portfolio management is the art and science of selecting and overseeing a

group of investments that meet the long-term financial objectives and risk
tolerance of a client, a company, or an institution.
 Some individuals do their own investment portfolio management. That
requires a basic understanding of the key elements of portfolio building
and maintenance that make for success, including asset allocation,
diversification, and rebalancing.
 Investors can implement strategies to aggressively pursue profits,
conservatively attempt to preserve capital, or a blend of both.
 Portfolio management requires clear long-term goals, clarity from the IRS
on tax legislation changes, understanding of investor risk tolerance, and a
willingness to study investment options.
 Portfolio management refers to managing an individual’s investments in the
form of bonds, shares, cash, mutual funds etc. so that he earns the maximum
profits within the stipulated time frame.

 Portfolio management refers to managing money of an individual under the

expert guidance of portfolio managers.

 In a layman’s language, the art of managing an individual’s investment is

called as portfolio management.

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2
 TYPES OF PORTFOLIO MANAGEMENT

Active portfolio management:

Active Portfolio Management focuses on generating higher returns than a

benchmark index like the Nifty 50 or the BSE Sensex.

The portfolio manager actively manages the investment portfolio, and the
research team picks the requisite securities.

Investors who have a higher risk appetite and seek higher capital gains opt for
Active Portfolio Management. The portfolio manager selects undervalued stocks
and sells them at a higher price when they realize their true potential.

Moreover, the portfolio manager diversifies the portfolio across investment

options to mitigate investment risk.

Passive Portfolio Management:

Passive Portfolio Management involves mimicking the performance of a market

index such as the Nifty 50.

The fund manager tracks and replicates the stock market index portfolio to give
investors returns in line with the index it tracks.

Passive Portfolio Management focuses on index funds which are mutual funds
that mimic market index portfolios.

Moreover, the Passive Portfolio Management strategy involves lower transaction

costs as the portfolio manager doesn’t churn the portfolio frequently compared
to Active Portfolio Management.
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Discretionary Portfolio Management:

The Discretionary Portfolio Management Services portfolio manager has

complete control over the portfolio and can adopt any strategy to achieve
investment objectives.

Investment Decisions are entirely at the portfolio manager’s discretion, and the
clients don’t have much of a say in investment decisions.

Non-Discretionary Portfolio Management:

Under Non-Discretionary Portfolio Management Services, the portfolio manager

gives investment ideas. However, clients decide whether to take up these
investment ideas while the execution of trades rests with the portfolio manager.

In Non-Discretionary Portfolio Management Services, the fund manager

suggests investment strategies and works according to the direction given by the
client.

4
 OBJECTIVES OF PORTFOLIO MANAGEMENT

 Capital appreciation
 Improving portfolio flexibility and proficiency
 Maximizing return on investment
 Optimal resource allocation
 Protecting earnings from market hazards
 Risk management
 Securing future
 Long-term financial planning

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Need for Portfolio Management

 Portfolio management presents the best investment plan to the

individuals as per their income, budget, age and ability to
undertake risks.
 Portfolio management minimizes the risks involved in investing
and also increases the chance of making profits.
 Portfolio managers understand the client’s financial needs and
suggest the best and unique investment policy for them with
minimum risks involved.
 Portfolio management enables the portfolio managers to provide
customized investment solutions to clients as per their needs and
requirements

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PROCESS OF INVESTMENT
PORTFOLIO MANAGEMENT

7
WAYS OF PORTFOLIO MANAGEMENT

Several strategies must be implemented to ensure sound investment portfolio

management so that investors can boost their earnings and lower their risks
significantly.

Asset allocation

Essentially, it is the process wherein investors put money in both volatile and non-
volatile assets in such a way that helps generate substantial returns at minimum
risk. Financial experts suggest that asset allocation must be aligned as per
investor’s financial goals and risk appetite.

Diversification

The said method ensures that an investors’ portfolio is well-balanced and

diversified across different investment avenues. On doing so, investors can revamp
their collection significantly by achieving a perfect blend of risk and reward. This,
in turn, helps to cushion risks and generates risk-adjusted returns over time.

Rebalancing

Rebalancing is considered essential for improving the profit-generating aspect of

an investment portfolio. It helps investors to rebalance the ratio of portfolio
components to yield higher returns at minimal loss. Financial experts suggest
rebalancing an investment portfolio regularly to align it with the prevailing market
and requirements.

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 PORTFOLIO MANAGEMENT STRATEGIES

Aggressive: An aggressive portfolio prioritizes maximizing the potential earnings

of the portfolio. Often invested in riskier industries or unproven alternative assets,
an investor may not care about losses. Instead, the investor is looking for the
"home run" investment by striking it big with a single investment.

Conservative: On the other hand, a conservative portfolio relates to capital

preservation. Extremely risk-adverse investors may adopt a portfolio management
strategy that minimizes growth but also minimizes the risk of losses.

Moderate: A moderate portfolio management strategy would simply blend an

aggressive and conservative approach.

Income-Orientated: Often a consideration for older investors, some folks who do

not have income may rely on their portfolio to generate income that can be used to
live off. This strategy priorities fixed-income securities or equities that issue
dividends.

Tax-Efficient: As discussed above, investors may be inclined to focus primarily

on minimizing taxes, even at the expense of higher returns. This may be especially
important for high-earners who are in the highest capital gains tax bracket.

9
 1.2 PORTFOLIO MANAGEMENT SERVICES

Portfolio management services or PMS offer customized investment solutions

to investors to help them attain their financial goals.

Portfolio management services construct investment portfolios across various

investment options, and portfolio managers take care of the investment
portfolio.

Portfolio management services help investors maximize returns over time by

focusing on the time horizon, risk profile and investment objectives.

Many High-Net worth Individuals (HNIs) opt for portfolio management

services as tailor-made portfolios are constructed after considering investment
horizon, risk tolerance, liquidity, and taxation. Moreover, entities offering PMS
services must be registered with SEBI, eliminating fraud and malpractices.

Portfolio management services are popular among HNIs, HUFs, partnership

firms, NRIs, Association of Persons, and Sole Proprietorships etc. Portfolio
management services specify a minimum ticket size for investor portfolios.

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REASONS TO OPT FOR PORTFOLIO MANAGEMENT SERVICES

BENEFITS OF PORTFOLIO MANAGEMENT SERVICES

Expert opinion on your investment: One of the primary benefits of using a
Portfolio Management Service is that your investment is in the hands of
professionals. The portfolio managers assigned to you are experts in their field and
understand how to deal with market volatility.

Customized investment plans: The portfolio managers customize investment

strategies based on your financial objectives. They then modify the strategy based
on your income, budget, risk tolerance, and age.

Efficient risk management: A portfolio manager's primary goal is to reduce the

risk of your investment while increasing the returns. They focus on diversifying the
risk involved so that you do not suffer a loss when market trends change.
Regular monitoring: A portfolio manager will keep a close eye on the
performance of each asset and the returns generated regularly. Based on this
analysis, your investment is altered to meet your financial
objectives. The Portfolio Management Service allows you to sit back, relax, and
reap benefits from your investments.

11
 INTRODUCTION
2.1 COMPANY
Motilal Oswal Financial Services Limited is an Indian financial services
company offering a range of financial products and services. The company was
founded by Motilal Oswal and Ramdeo Agrawal in 1987.

Motilal Oswal Financial Services Ltd (MOFSL) was set up by Motilal Oswal and
Ramdeo Agrawal as a broking house in 1987.

The company entered into investment banking in 2005, followed by private equity
fund in 2006.

In February 2006, Motilal Oswal Financial Services Ltd.

 Motilal Oswal – Co-founder, MD & CEO of MOFSL

 Ramdeo Agrawal – Co-founder & Chairman of MOFSL & MOAMC
 Navin Agarwal – MD & CEO, MOAMC
 Abhijit Tare – CEO, Investment Banking Business
Motilal Oswal provides products and services related to equity trading, commodity
trading and investment advisory services, IPOs and SIPs investment, portfolio
management services, and mutual funds investment. Today, we are a multi-faceted
financial services company with a presence in over 550 cities through 2500+
business locations; ably managed by a team of over 9,800 employees. This network
of business locations coupled with people across business units and a diverse range
of financial expertise works synergistically to provide a host of products and
services across Retail and Institutional Broking, Private Wealth, Investment
Banking, Private Equity, Asset Management and Home Finance. All these
businesses are headquartered in a single location at Motilal Oswal Tower, Mumbai
to provide sharing and synergy of knowledge under one roof.

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 VISION
To achieve excellence in all our endeavors while delivering superior value to
stakeholders & delighting them.

MISSION
Invest all resources and energies in delivering high quality Products and services
through Innovation, capability, Enhancement & people Initiatives, based on the
foundation of our core values.

13
 2.2 SERVICES OFFERED BY COMPANY
Motilal Oswal, strives hard to connect with customers beyond transactions and help them
achieve their personal goals. What makes this approach possible is a set of robust technologies
through which customers can not only transact conveniently from various platforms, but also
have easy access to all our products & services.

 Broking & Distribution. Our Broking and Distribution business helps retail customers take
informed investment decisions with a strong. ...
 Asset Management. India’s only 100% equity fund house with a defined investing philosophy. ...
 Private Wealth. ...
 Home Finance. ...
 Institutional Equities. ...
 Private Equity. ...
 Investment Banking.

14
 RESEARCH METHODOLOGY

3.1 Sources of data collection

Primary Data:

Primary Data Was Collected Through Questionnaire Refer to The Appendix for
The Data

Secondary Data:

 Secondary Sources Through

 Internet
 Company Website
 Articles
 Newspapers
 Books

Sample design
Sample size – 150 samples
The sample size consists of clients of Motilal Oswal financial services limited.
 Clients having PMS account

15
3.3 NEED OF THE STUDY

 To know the best investments plans for investors through PMS according to
their age, income and risk appetite.

 To know about the various role and functions of a portfolio manager.

 To identify the tax benefits through good portfolio management services.

 To know why diversification of securities is essential in portfolio

management services.

 To identity the satisfaction level of clients from the portfolio management

services of Motilal Oswal Financial Services.

 To know the feedbacks and thoughts of investors with regard to the portfolio
management services.

16
 3.4 OBJECTIVES OF THE STUDY

 To make a detailed study on the overall concepts of the portfolio management.

 To identify the services at Motilal Oswal Financial Services ltd.

 To identify the risk taking capacity of individuals

 To understand how investment decisions and asset allocation is done

according to type of investor.

 To understand the occupational class of investors that are more inclined

towards PMS.

HYPOTHESIS

THERE IS SIGNIFICANT RELATIONSHIP BETWEEN RISK AND RETURN.

17
3.5 SCOPE OF THE STUDY

 To understand the clients / investors’ objective, constraints and preferences.

 To make revisions in the portfolios in accordance to market situations,

investors goals, etc.

 To offer complete transparency to investors with the transactions and profits

made through investments at Motilal PMS.

 To provide the best of the portfolio and financial services to the clients of
Motilal Oswal.

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 LIMITATIONS OF THE STUDY

 The data collected is basically confined to secondary sources, with little

amount of primary data associated with the project.

 The information collected may not be fully trustworthy or relevant, since the
data collected is secondary.

 The data/ information collected for the project is in reference to only one
Portfolio Management Financial Services.

 There is a high risk of underperformance of investors’ portfolios due

markets complex and dynamic nature or due to portfolio manager’s
decisions or predictions.

 There is constraint with regard to time allocated for the project study.

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 LITERATURE REVIEW

Jamadar Lal (1992) presents a profile of Indian investors and evaluates their
investment decisions. He made an effort to study their familiarity with, and
comprehension of financial information, and the extent to which this is put to use.
The information that the companies provide generally fails to meet the needs of a
variety of individual investors and there is a general impression that the company's
Annual Report and other statements are not well received by them.

Jack Clark Francis (1986) revealed the importance of the rate of return in
investments and reviewed the possibility of default and bankruptcy risk. He opined
that in an uncertain world, investors cannot predict exactly what rate of return an
investment will yield. However, he suggested that the investors can formulate a
probability distribution of the possible rates of return.

New academic portfolio theory is an extension of traditional portfolio advice first

posited by Markowitz (Journal of Finance, 1952). The traditional advice suggests a
"two-fund theorem" that allocates between risk-free bonds and a broad-based
passively managed stock fund. The most efficient portfolios, those on the mean-
variance frontier, can be formed by combining those two asset classes. Tailoring
portfolios by adding style-based asset classes is inefficient because each of these
classes lies on or inside the frontier. Therefore, every investor needs to hold only
the two basic asset classes, with risk aversion determining the proportions.

20
John H. Cochrane

Economic Perspectives, Federal Reserve Bank of Chicago, vol. 23, no. 3

(Third Quarter 1999):59-78

Investors today face numerous and often bewildering investment decisions.

Investors used to have fairly straightforward choices to make, selecting among
managed mutual funds, index funds, and expensive trading in a personal account.
Today, a wide variety of styles exist among funds, active managers offer
customized and complex strategies, and inexpensive online trading is widely
available. The author reviews these issues and addresses how they affect asset
allocation decisions, particularly in multifactor models. He also examines return
predictability and describes how the stock market acts as a large insurance market
by facilitating the transfer of risk among investors.

here are numerous methods for valuing equity securities; including methods more
heavily employed before the advent of quantitative equity portfolio construction
and management. These theories include the arbitrage pricing theory (apt), capital
asset pricing model. and discounted cash flow (def). Although modern portfolio
management still employs these models, they have been replaced with newer, more
effective models such as quantitative equity portfolio management.

According to the quantitative equity portfolio management theory, several factors

including price to earnings, price/earnings before interest, taxes, depreciation, and
amortization, and price/cash flow are important in the fundamental factor modeling
process. Price/e is the ratio of the current price to a different iteration of the firm's
earnings. The price/cash flow ratio measures the security's price in relation to its
generated cash flow. which is a measure of operating efficiency. The price to
21
earnings ratio, or P/E, is illustrated as the price of the underlying stock divided by
the annual earnings of the target firm. This helps determine the fair value of the
firm. the price of a given security can be significantly attributed to a combination
of these factors. The importance of these factors, however, may vary for different
stocks making it important to determine their influence on an individual basis.
Thus, in order to build a useful model for each stock these factors must be
measured against time in predicting historical returns in order to make the model
truly significant.

A portfolio is a collection of securities since it is really desirable to invest the

entire funds of an individual or an institution or a single security, it is essential that
every security be viewed in a portfolio context. Thus, it seems logical that the
expected return of the portfolio. portfolio analysis considers the determine of future
risk and return in holding various blends of individual securities portfolio expected
return.

22
 DATA ANALYSIS AND INTERPRETATION

RISK TAKING CAPACITY OF INDIVIDUALS STARTING THEIR

PORTFOLIO ACCOUNTS

Sr.no RISK LEVEL INVESTORS

1. MODERATE 60%
2. HIGH 30%
3. LOW 10%

INVESTORS
LOW
10%

HIGH
30%

MODERATE
60%

MODERATE HIGH LOW

Interpretation: -
According to the above graph we can interpret that more than 60% of
investors are ready to take moderate level of risk and 30% of investors
are ready to take high level of risk and only 10% are taking low risk
while taking investment decisions.

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 PERCENTAGE OF ASSET ALLOCATION ACCORDING TO THE
TYPE OF INVESTOR

SR.NO AGGRESSIVE INVESTOR’S SECURITIES

1. EQUITIES 70%
2. FIXED INCOME 20%
3. GOLD 10%

AGGRESSIVE INVESTORS

GOLD
10%

FIXED
INCOME
20%

EQUITY
70%

EQUITY FIXED INCOME GOLD

According to the above graph, aggressive investors are more inclined

towards investment in equities that is 70% compared with fixed income
and gold that is 20% and 10%.

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 SR.NO MODERATE INVESTOR’S SECURITIES
1. EQUITIES 50%
2. DEBT 30%
3. GOLD 10%
4. ALTERNATE ASSET CLASS 10%

ALTERNATE ASSET
CLASS
MODERATE INVESTORS
10%

GOLD
10%

EQUITY
50%

DEBT
30%

EQUITY DEBT GOLD ALTERNATE ASSET CLASS

Interpretation
According to the above graph, moderate investors are also more inclined towards
investment in equity that is 50% in comparison with all other securities that is debt,
gold and alternative asset class that is 30% ,10% and 10%.

25
 SR.NO CONSERVATIVE INVESTOR’S SECURITIES
1. FIXED INCOME 50%
2. LARGE CAP EQUITIES 30%
3. GOLD 10%
4. ALTERNATE ASSET CLASS 10%

ALTERNATE
ASSET CLASS
CONSERVATIVE INVESTORS
10%

GOLD
10%

FIXED
INCOME
50%

LARGE CAP EQUITIES

30%

FIXED INCOME LARGE CAP EQUITIES GOLD ALTERNATE ASSET CLASS

INTERPRETATION: -
According to the above graph, conservative investor is inclined towards investment
in fixed income securities that is 50% and invest less in large cap equities, gold,
alternate asset class.

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 MAXIMUM ALLOCATION IN INVESTORS PORTFOLIO
PERTAINS TO THE FOLLWING

SR.NO INVESTMENTS PERCENT

1. SAVING & FIXED DEPOSITS 5%
2. BONDS 15%
3. EQUITIES 45%
4. MUTUAL FUNDS 25%

SAVING &
INVESTMENTS FIXED
DEPOSITS
5%

MUTUAL
FUNDS BONDS
28% 17%

EQUITIES
50%

SAVING & FIXED DEPOSITS BONDS EQUITIES MUTUAL FUNDS

Interpretation: -

According to the above graph, investors invest more in equites that is 45% in
comparison with others securities that is savings and fixed deposits, bonds and
mutual funds that is 5%, 15%, 25%.

27
 OCCUPATION OF INVESTOR OPTING FOR PORTFOLIO
MANAGEMENT SERVICES

SR.NO OCCUPATION PERCENT

1. SALARIED EMPLOYEE 50%
2. BUSINESS 16%
3. SELF EMPLOYED 14%
4. OTHER OCCUPATION 20%

OCCUPATION
OTHER OCCUPATION
20%

SALARIED EMPLOYEE
SELF EMPLOYED 50%
14%

BUSINESS
16%

SALARIED EMPLOYEE BUSINESS SELF EMPLOYED OTHER OCCUPATION

Interpretation: -
According to the above graph, salaried employee is opting more for PMS that is
50% in comparison with other occupations that is business self-employed, and
other occupation that is 16%, 14%, 20%.

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 Satisfaction Level of The Clients Of Motilal Oswal Financial Services

SR.NO RATING PERCENT

1. EXCELLENT 18%
2. VERY GOOD 70%
3. VERY POOR 0%
4. AVERAGE 6%
5. POOR 2%
6. GOOD 4%

RATING
POORGOOD
AVERAGE 2% 4% EXCELLENT
VERY PO6O%R 18%
0%

VERY GOOD
70%
EXCELLENT VERY GOOD VERY POOR AVERAGE POOR GOOD

Interpretation: -
According to the above graph, 70% of the clients have satisfied with the services
and minimum only 2% clients are dissatisfied with the services.

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FINDINGS OF THE STUDY

 The Investor, Maintains the Portfolio of Diversified Sector Stocks Rather

Than Investing in A Single Sector of Different Stocks.

 Majority Of the Investors Select a Certain Portfolio Management Firm

Depending Upon the Word of Mouth, Self-Decision Makers, Financial
Advisors, Brokers.

 Motilal Oswal Also Deals in Services Like Mutual Fund Investment,

Management of Equities, Management of Money Market Investment,
Advisory and Consultancy Services.

 Among All the Services Offered Advisory and Consultancy Services Are the
Services That the Individual Investors Are Most Aware Of.

 Most Of the Clients Are Not Aware of the Vision and Mission Statements of
the Company they deal in.

 The minimum investment requirement to avail PMS scheme is about 50lacs

as per SEBI guidelines.

30
CONCLUSION
With the help of given project, I got an in-depth knowledge about the working of
portfolio management. Also I got an insight as to how to select the portfolio
management service provider, which scheme provides better return as compared to
other and who are the portfolio management players in the INDIAN market.

 Portfolio is a collection of financial investments like bonds, stocks,

commodities, cash and cash equivalents. Investors generally believe that
stocks, bonds and cash comprise the core of a portfolio.
 Motilal Oswal Financial Services Limited offers a range of financial product
and services like Retail Broking & Distribution, Mutual Funds, Wealth
Management, Private Equity, and Investment.
 Opting for PMS provides investors with financial growth and a range of
benefits, including maximum returns, protection from financial risk,
enhanced portfolio performance.
 Portfolio Management Services are managed by highly qualified and
experienced professionals and they are backed by a research team, they
provide necessary insights for managers.
 In a PMS, benefit of concessional tax rate on the long term or short term
capital gains is enjoyed. A good portfolio offers an individual with benefit
on income tax, gift tax and capital gains.
 The Investor Who Bears High Risk Will Be Getting High Returns.
 The Investors, Who Holds Their Investments for Medium Terms Will Fetch
Attractive Returns.

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SUGGESTIONS

 The Portfolio Manager or experts must consider both risk and return before
investing in any company for investor’s sake.

 The Company in advance must inform the clients about their terms and
conditions, fees structure and Company’s profile

 The Portfolio manager should suggest clients about different combinations

of securities to invest in and also about the advantages of diversifications of
securities to avoid risk that would occur due to investment in only one
security i.e., portfolio must include equity shares and other major categories
of investments like debentures, mutual funds, gold and silver.

32
BIBLIOGRAPHY
www.economictimes.com
www.wikipedia.com
www.sebi.com
www.managementparadise.com
www.scribd.com
www.jpmorgan.com
www.wallstreetprep.com/knowledge/about-investment-banking
www.investopedia.com

Books Referred
Investment Banking
By Pratap Subramany
Management Accounting & Financial Analysis
BY Ravi M. Kishore.
Business of Investment Banking
→ Financial Markets & Services
By E.Gordon and Dr. Natrajan

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