TOPIC OF REPORTTOPIC OF REPORT

Consumer Preference Consumer Preference to Fixed deposits over to Fixed deposits over

Mutual fundMutual fund

Presented Presented ByBy

Namita jainNamita jain

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PREVIEWPREVIEW

INTRODUCTION TO SUBJECTINTRODUCTION TO SUBJECT OVERVIEW OF ORGANISATIONOVERVIEW OF ORGANISATION OBJECTIVE OF STUDYOBJECTIVE OF STUDY RESEARCH METHODOLOGY RESEARCH METHODOLOGY DATA ANALYSIS AND TESTING OF DATA ANALYSIS AND TESTING OF

HYPOTHESISHYPOTHESIS FINDINGS AND SUGGESTIONSFINDINGS AND SUGGESTIONS CONCLUSIONCONCLUSION

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FIXED DEPOSITSFIXED DEPOSITS

When you want to invest your hard earned When you want to invest your hard earned money for a longer period of time and get money for a longer period of time and get a regular income, our Fixed Deposit a regular income, our Fixed Deposit Scheme is ideal Scheme is ideal

It is SAFE, LIQUID and FETCHES HIGH It is SAFE, LIQUID and FETCHES HIGH RETURNS.RETURNS.

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BENEFITS OF FIXED DEPOSITSBENEFITS OF FIXED DEPOSITS

. . Interest paid either monthly or quarterlyInterest paid either monthly or quarterly The yield or return on a fixed deposit is different The yield or return on a fixed deposit is different

from interest. Interest paid either monthly or from interest. Interest paid either monthly or quarterlyquarterly

Possible to take loans against fixed depositsPossible to take loans against fixed deposits Bank fixed Deposits are exempt from income tax Bank fixed Deposits are exempt from income tax

up to a limit of Rs 9, 000/- under Section 80L, up to a limit of Rs 9, 000/- under Section 80L, though TDS is applicable on interest earned on though TDS is applicable on interest earned on Fixed Deposits of Rs 10,000/- and above. Fixed Deposits of Rs 10,000/- and above.

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Introduction to Mutual fundIntroduction to Mutual fund

A mutual fund is a pool of money contributed by A mutual fund is a pool of money contributed by individuals who have similar financial goals. The individuals who have similar financial goals. The money collected is then invested in various money collected is then invested in various securities such as equities, debentures/bonds securities such as equities, debentures/bonds and/or money market instruments. and/or money market instruments.

Main function of Mutual fund:Main function of Mutual fund: Buying and selling of securities on behalf of its Buying and selling of securities on behalf of its

unit holders.unit holders. Enables the small investors to share in large and Enables the small investors to share in large and

diversified portfolio of assets, which reduces the diversified portfolio of assets, which reduces the risk of Investment.risk of Investment.

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HISTORYHISTORY

Unit Trust of India was the first mutual fund set up in Unit Trust of India was the first mutual fund set up in India in the year 1963.India in the year 1963.

In early 1990s, Government allowed public sector In early 1990s, Government allowed public sector banks and institutions to set up mutual funds. banks and institutions to set up mutual funds.

In the year 1992, Securities and exchange Board of In the year 1992, Securities and exchange Board of India (SEBI) Act was passed. The objectives of SEBI India (SEBI) Act was passed. The objectives of SEBI are - to protect the interest of investors in securities are - to protect the interest of investors in securities and to promote the development of and to regulate and to promote the development of and to regulate the securities market. the securities market.

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Working of Mutual Fund Working of Mutual Fund

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Mutual fund

By portfolio By function By geography

Type of Mutual fundType of Mutual fund

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By portfolio

Growth Funds Income fundsMoney Market

Funds

Specialized Funds

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GROWTH FUNDGROWTH FUND

Investment objectiveInvestment objective: Capital : Capital appreciation of equity shares appreciation of equity shares

Investment avenueInvestment avenue: Equity shares of : Equity shares of companies with high growth potential companies with high growth potential

For e.g.. For e.g.. Morgan Stanley Growth Fund Morgan Stanley Growth Fund

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INCOME FUNDINCOME FUND

Investment objectiveInvestment objective: Providing safety of : Providing safety of investments and regular income investments and regular income

Investment avenueInvestment avenue: Bonds, debentures and : Bonds, debentures and other debt related instruments as well as equity other debt related instruments as well as equity shares of companies with high dividend payouts. shares of companies with high dividend payouts.

There are 2 aspects of income funds viz. low There are 2 aspects of income funds viz. low investment risk with constant income and high investment risk with constant income and high investment risk generating high income. investment risk generating high income.

For e.g.. For e.g.. Templeton Income FundTempleton Income Fund

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BALANCED FUNDBALANCED FUND

Investment objective:Investment objective: Modest risk of Modest risk of investment and reasonable rate of returninvestment and reasonable rate of return

Investment avenueInvestment avenue: Judicious mix of : Judicious mix of equity shares, preference shares as well equity shares, preference shares as well as bonds, debentures and other debt as bonds, debentures and other debt related instruments. related instruments.

For e.g.. For e.g.. GIC Balanced FundGIC Balanced Fund

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SPECIALISED FUNDSSPECIALISED FUNDS

Investment ObjectiveInvestment Objective: To take advantage : To take advantage of conditions in a particular sector or a of conditions in a particular sector or a specific income producing security specific income producing security

Investment AvenueInvestment Avenue: Specialized : Specialized investments in securities of companies in investments in securities of companies in certain sectors or specific income certain sectors or specific income producing securities producing securities

For e.g.. For e.g.. Kothari Pioneer's Internet Kothari Pioneer's Internet OpportunitiesOpportunities

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MONEY MARKET FUNDMONEY MARKET FUND

Investment objectiveInvestment objective: To take advantage of the : To take advantage of the volatility in interest rates in the money market.volatility in interest rates in the money market.

Investment AvenueInvestment Avenue: Certificate of deposits : Certificate of deposits (CDs), call money market, commercial papers. (CDs), call money market, commercial papers. Investors can participate indirectly in the money Investors can participate indirectly in the money market through MMMFs. market through MMMFs.

For e.g.. For e.g.. IDBI-PRINCIPAL Money Market Fund IDBI-PRINCIPAL Money Market Fund

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By FUNCTION

OPEN ENDEDFUND

CLOSE ENDED FUND

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OPEN ENDED FUNDS

An open-ended fund or scheme is one that An open-ended fund or scheme is one that is available for subscription and is available for subscription and repurchase on a continuous basis. These repurchase on a continuous basis. These schemes do not have a fixed maturity schemes do not have a fixed maturity period. Investors can conveniently buy and period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related sell units at Net Asset Value (NAV) related prices which are declared on a daily basis. prices which are declared on a daily basis. The key feature of open-end schemes is The key feature of open-end schemes is liquidity.liquidity.

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Close endedClose ended

A type of unit trust that offers only a fixed A type of unit trust that offers only a fixed amount of shares, usually sold through a amount of shares, usually sold through a brokerage firm by a broker. Most unit brokerage firm by a broker. Most unit trusts are not closed-end funds, they offer trusts are not closed-end funds, they offer unlimited shares and may be purchased unlimited shares and may be purchased and redeemed directly by the individual and redeemed directly by the individual through the mail by check. through the mail by check.

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KEY TERMKEY TERM

The NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on any particular date. For example, if the market value of securities of a mutual fund scheme is Rs 200 lakhs and the mutual fund has issued 10 lakhs units of Rs. 10 each to the investors, then the NAV per unit of the fund is Rs.20. NAV is required to be disclosed by the mutual funds on a regular basis - daily or weekly - depending on the type of scheme.

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Different plansDifferent plans

PLANS

GROWTH PLANS

INCOME PLANS

DIVIDENDRE-INVESTMENT

PLANS

SYSTEMATIC INVESTMENT

PLANS

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Overview of OrganizationOverview of Organization

Canara bank founded by late Shri A.S Rao Canara bank founded by late Shri A.S Rao pai in July 1906.pai in July 1906.

In 1969 , it declared to be Nationalized bank.In 1969 , it declared to be Nationalized bank. In 2006 it completed its century of operation in In 2006 it completed its century of operation in

Indian banking system.Indian banking system. With an unbroken record of profit since its With an unbroken record of profit since its

inception. As on march 2007 the total business inception. As on march 2007 the total business of bank was over Rs 2,40,000 crores.of bank was over Rs 2,40,000 crores.

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OBJECTIVE OF STUDYOBJECTIVE OF STUDY

To determine which factors is consider by To determine which factors is consider by investor before investing .investor before investing .

To determine how much weightage is To determine how much weightage is given to fixed deposits over mutual fund.given to fixed deposits over mutual fund.

To determine purpose of investment.To determine purpose of investment. To identify whether purpose of investment To identify whether purpose of investment

depends upon annual income of investor.depends upon annual income of investor.

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RESEARCH METHODOLOGYRESEARCH METHODOLOGY

It is descriptive and analytical researchIt is descriptive and analytical research For research study primary data is collected by For research study primary data is collected by

structured questionnaire .structured questionnaire . Sample size is 50Sample size is 50 Mean and chi-square test with z-test is used for Mean and chi-square test with z-test is used for

testing of hypothesis.testing of hypothesis. For data presentation pie and bar charts are For data presentation pie and bar charts are

used.used.

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hypothesishypothesis

1:Ho : Average preference of fixed 1:Ho : Average preference of fixed deposits is equal to Average preference of deposits is equal to Average preference of mutual fundmutual fund

2: Ho : purpose of investment depends on 2: Ho : purpose of investment depends on Annual income of investors.Annual income of investors.

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Return and Risk of various Return and Risk of various securities securities

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DATA ANAYSIS OF DATA ANAYSIS OF QUESTIONNAIR AND TESTING QUESTIONNAIR AND TESTING

OF HYPOTHESISOF HYPOTHESIS

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Do you invest your saved Do you invest your saved money?money?

RESPONDENTS WHO INVEST MONEY

YES 88%

NO12%

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What is your preferable investment What is your preferable investment option?option?

perferred investment options

fixed deposits 26%

mutual funds36%

others38%

fixed deposits mutual funds others

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Purpose of investmentPurpose of investment

32%

14%24%

26%

4% saving

income

tax benefit

future contingences

retirement

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Ho: Average preference of fixed deposits is equal Ho: Average preference of fixed deposits is equal to Average preference of mutual fundto Average preference of mutual fund

It is analyze from above data that mutual fund It is analyze from above data that mutual fund is more preferable as compare to fixed deposits is more preferable as compare to fixed deposits as X1<X2 .thus it means that preference of both as X1<X2 .thus it means that preference of both instrument among investors is not equal hence instrument among investors is not equal hence null hypothesis is rejected.null hypothesis is rejected.

Investment optionInvestment option Average Average preferencepreference

fixed depositsfixed deposits 2626

Mutual fundsMutual funds 3636

OthersOthers 3838

Average preference of investors

0

10

20

30

40

Fixed deposits Mutual fund Other

instruments

mea

n va

lve

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Ho : purpose of investment depends on Ho : purpose of investment depends on Annual income of investors.Annual income of investors.

Annual income and pur pose of investment

below 100000

100000-200000

200000 above

inc

om

e

purposesaving income tax benefit future contingence retirement

r etir ement 0 1 1

f utur e contingence 2 9 2

tax benefi t 1 7 4

income 1 4 2

saving 6 10 0

below 100000 100000-200000 200000 above

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We can see that when Chi square test was conducted using on cross tabulation of variables annual income and purpose of investments the following was observed:

Chi square calculated = 9.9093 Degree of freedom = 8 Chi square0.05 = 15.507 (here we take 5% level of significance by default)

As Chi square cal < Chi square0.05 Or

Z calculated = 0.579Z table valve = 1.96

As Zcal <Z table valve 0.579<1.96Therefore, H0 is accepted

That means that purpose of investment always depends upon income of individual.