Investor Attitudes Towards Risk On Stock Market

Investor Attitudes Towards Risk On Stock Market

Investor Attitudes Towards Risk . For the abnormal return in stock market, investor attitudes will become increasingly important. This paper attempts to analyze the impact of investor attitude towards risk that have a greater influence on stock market .In this study researcher focused on particular Islamabad stock market and obtain primary data based on five point Likert scale from investor of ISE. The data indicate that investors have substantially different attitudes toward various investments.

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However, there are significant statistical differences between attitudes of the investor groups in their attitudes toward three risk types. These data also show significant differences in attitudes toward risk. After analyzing the data through the Regression and Correlation, including ANOVA test, the result found the significance impact of variables on stock market.
Introduction

The whole financial theory is based on the basic hypothesis of rational investor on the financial markets. This rationality is characterized by a continuous quest of the investors to maximize their utility function (actually maximizing the return of the investment for a given risk level or minimizing the risk for an expected return level). In spite their rationality; investors have a different perception over risk, its bearing having an important psychological factor.

Most investors show different attitude towards risk like motivated risk aversion, but we can find on the financial markets. While risk behavior has been studied intensely and a large number of risk perception. Through attention to risk perception and risk propensity which are mediators in attitude transaction, financial institutions can realize the effects on investor behavior and their returns expectations.

The first section of this paper is the introduction, the second section is the literature review, the third section establishes hypothesis model, the fourth section presents the study results and the fifth section is the conclusion and recommendations.

Different Studies are available; far less research exists regarding people’s mind-sets towards risk taking, i.e., risk attitudes, such as, risk aversion, risk tolerance and risk neutral. These can be conceptualized as two poles of a one-dimensional