International journal of Contemporary Business Studies

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International Journal of Contemporary Business Studies Vol: 3, No: 6. June, 2012 ISSN 2156-7506 Available online at http://www.akpinsight.webs.com DATA ANALYSIS AND INTERPRETATION Hypothesis 1:- Ho = 60% investors are Rational. * Table -1 Rationality of Investors Question No. Rational Option Rational Investor in Irrational Investor Total 1 Option No. 2 71 59 130 10 Option No. 1 74 56 130 11 Option No. 1 21 109 130 Here in question-1, investors who supposed to be rational would like to select option 2 because compare to option 1 option 2 is profitable. In analysis 71 investors select option 2nd it show that 55% investors are rational and 59 investors select option 1st it means 45% investors are irrational. In question-10, under the rationality assumption of expected utility theory investors have to choose option 1 because option 1 offered loss of Rs. 100 and option 2 loss of Rs. 140. 74 investors select option 1st it show that 57% investors are rational and 56 investors select option 2nd it means 43% investors are irrational. In question no. 11 As per Rationality theory of behavior finance, intuition of investors is not playing any role in deciding or taking decision. The investors who are Rational they select option 1, that contain “no effect” of intuition and who are irrational investors they select option 2 & 3, these contain “little effect” and “high effect”. 21 investors select option 1 means 16% investors are rational on the other hand 109 investors who select option 2 & 3 means 84% investors are irrational. N=130, x=55, p^=55/130 = 0.4230, p=.60, q=.40, = 7%, confidence level =93% P^ p 0.4230 0.60 Z cal = pq / n 0.60 *0.40 /130 = = -0.1769/0.0429 = -4.12 Z cal
International Journal of Contemporary Business Studies Vol: 3, No: 6. June, 2012 ISSN 2156-7506 Available online at http://www.akpinsight.webs.com Hypothesis 3:- 60% investors are affected by Disposition Effect * Table - 3 Affected by Disposition Effect Question No. Option for Disposition effect Disposition Effect No Disposition Effect Total 3 1 102 28 130 8 2, 3 & 4 121 9 130 13 1 110 20 130 The disposition effect means sell the winner too soon and hold the looser too long. To check the disposition effect 3 questions were formed in a case form. Investors were asked about there decision for holding or selling winning stock and looser stock. The investors who prefer to sell winning stock and ready to hold looser stock were categorized as investors affected by disposition effect. N=130, x=111, p^=111/130=0.8538, p=.60, q=.40, = 7%, confidence level =93% P^ p 0.8538 0.60 Z cal = pq / n 0.60 *0.40 /130 = = 0.2538/0.0429 = 5.903 Z tab At = 7% from the normal table is = -1.48, Z cal >Z tab H 0 is failed to reject; it means 60% investors are affected by Disposition Effect. Hypothesis 4:- 60% investors are conservative * Table - 4 Conservative investors Question No. Option for Conservative Non conservative Conservatism Investors Investors Total 4 1 & 2 39 91 130 14 3 & 4 55 75 130 Conservative is simply means traditional. Conservative investors believe in past information. They are very slow to accept any new information that available in market regarding particular stock. Here, in question 4 and 14 particular case was given for their investment and asked about their decision regarding current investment. From the table it can observe that at the time of negative news (Question 4) investors were less conservative compared to positive news (Question 14). N=130, x=47, p^=47/130=0.3615, p=.60, q=.40, = 7%, confidence level =93% P^ p 0.3615 0.60 Z cal = pq / n 0.60 *0.40 /130 = = -0.2385/0.0429 = -5.55 Ztab At = 7% from the normal table is = -1.48, Zcal
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