Title: Problem in Understanding Equities
Authors: Harsh Siroya,
Shubham Singh,
Anubhav Singh,
Harsh Kalra,
Introduction: Equities can offer high returns, but they also carry the risk of loss, especially in the short term. Some people see stock investing as gambling, but what they fail to recognize is that someone investing is taking a stake in a company as a part-owner. There is a lot that people don’t understand about the stock market, which is what makes them so worried to get involved or invest. However, I would say don’t even try to understand all the ins and outs of the stock market. Go back to basics and focus on the most important factors.
Here are some other reasons why people might not understand equities:
. Lack of awareness
. Anxiety about risk
. Need for risk-free investments.
. Limited knowledge of trading jargon
. Fear of losing money
Objectives: To understand the underlying phenomena of this problem.
Literature review: Understanding or not understanding equities can be influenced by various factors, and it’s a complex topic that researchers and experts have explored from different angles. Here’s a literature review highlighting some common reasons why people might struggle to understand equities: Complexity of Financial Markets, Risk Perception: Economic and Market Complexity: Cultural and Societal Influences: Trust in Financial Institutions: Psychological Factors:
Testing of Hypothesis:
Ho: μ=4
H1: µ≠4
Data collection:
- The terminology associated with equities is confusing to me.
- I have difficulty accessing reliable information about equities.
- Calculating and understanding the risk-return trade-off in equities is challenging for me.
- I believe more accessible and user-friendly educational materials would improve my understanding of Equities.
- I lack confidence in making investment decisions related to equities.
These 5 questions are asked in google form to students and for every question standard deviation, standard error, mean and t-stat was calculated.
Data analysis:
- The terminology associated with equities is confusing to me
S.D.=1.18 S.E.=0.58 Mean=2.04 t-stat=-3.39
- I have difficulty accessing reliable information about equities
S.D.=1.2 S.E.=0.55 Mean=2.19 t-stat=-3.29
- Calculating and understanding the risk return trade-off inequities is challenging for me
S.D.=1.19 S.E.=0.53 Mean=2.23 t-stat=-3.32
- I believe more accessible and user-friendly educational materials would improve my understanding of equities
S.D.=1.27 S.E.=0.56 Mean=2.28 t-stat=-3.08
- I lack confidence in making investment decisions related to equities
S.D.=1.43 S.E.=0.48 Mean=2.99 t-stat=-2.11
Conclusion:
- The terminology associated with equities is confusing to me.
- t-stat is -3.39 which means we reject the null hypothesis and t is negative less than 1.96. It means canteen food quality is not good.
- I have difficulty accessing reliable information about equities.
- t-stat is -3.29 which means we reject the null hypothesis and t is negative less than 1.96. It means hygiene is not good.
- Calculating and understanding the risk return trade-off inequities is challenging for me
- t-stat is -3.32 which means we reject the null hypothesis and t is negative less than 1.96. It means freshness of food is not good.
- I believe more accessible and user-friendly educational materials would improve my understanding of equities
- t-stat is -3.08 which means we reject the null hypothesis and t is negative less than 1.96. It means variety is not there.
- I lack confidence in making investment decisions related to equities
- t-stat is -2.11 which means we reject the null hypothesis and t is negative less than 1.96. It means mess timing is not up to the mark.
References:
https://www.5paisa.com/blog/why-do-most-indians-not-invest-in-the-stock-markets
https://economictimes.indiatimes.com/markets/expert-view/not-investing-in-equity-could-be-the-most-risky-thing-for-an-investor-even-for-retired-people-dhirendra-kumar/articleshow/95125929.cms?from=mdr