Final Revised Work 5-1-12 Rizwan Ahmed 13425

8/3/2019 Final Revised Work 5-1-12 Rizwan Ahmed 13425

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CHAPTER NO 1

INTRODUCTION

1.1 Background

The rapid growth in business and technology has increase the concern and attention on

risk concept. Dictionary definition of risk is the chance of actual return on investment

different to expected. It comprises of possibility of losing some portion or all actual

investment. In risk assessment, firms engage themselves to evaluate the risks round their

investment / business. Frequency to which individual takes or avoid various kinds of risks

is known as risk propensity. The most comprehensive research carried out by Sitkin and

Pablo (1992) suggested two major inputs to risk-taking are risk propensity and risk

perception. Risk propensity conceptualized as dispositional tendencies, past experience

and cognitive inputs. Definition of risk propensity is the tendency of a decision maker

either to take or to avoid risks Sitkin and Pablo (1992, p. 12). Risk propensity has vital

implications on individual level risk behavior. In organizational respective, superior

understanding of risk could contribute considerably better risk management (Bernstein,

1996).

Two concepts are of risk propensity highlighted in literature. The first concept relate to

prospect theory, which suggest that risk is asymmetric about some reference point.

Prospect-theory has initiated many research studies conducted into risk taking and risk

preference but the major area of the theory is concerned with individual level of risk

taking. People will risk averse when find themselves in the domain of gain. On other

hand, seek risk when in loss situation (Kahneman & Tversky, 1979). Therefore, it

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indicates that risk is situational factor and people take and avoid under some

circumstances. Second concept suggests that individual factor could influence on risk

taking behavior and could relate to trans-situations, such as risk propensity, personality

etc. (Zuckerman et al., 1964). Risk propensity has rather more individual characteristic as

compared with situations such as sensation seeking like high-risk actives and compulsive

gambling (Zuckerman & Kuhlman, 2000 and Zuckerman et al., 1964).

The empirical studies on inter correlation measures risk in difference areas of decision-

making and found weak correlation between different risk measures. However, study on

managerial decision-making indicates preclude pattern of strong possibility of internal

relationship among different risk measures showed consistent results and classified as

risk seekers (MacCrimmon and Wehrung, 1986). Likewise, people inconsistent to take or

avoid risk regarded as weak propensity but the domain of risk decision could vary.

Evident from study, possibility is for risk propensity on both general and specific domain

(Salminen & Heiskanen, 1997). Risk analysis includes both assessment and management

of risk (Haimes, 2006). Previous researches describe risk perception as degree of risk

associated with situation. The perception based on the probability occurring of loss as

well as potential size of loss occur (Mellers and Chang, 1994).

Experience and investment information as determinant of risk behaviors by using risk

propensity and perception as mediators to establish a model which influence decision-

making behavior but Financial educational deficiency leads to negative management

outcomes (Huhmann and McQuitty, 2009). Educational programmers are effective when

they able to differentiate between financially literacy and capacity as they facilitate to

improve familiarity with financial concepts (Chou, Huang and Hsu, 2010) described. This

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study suggests that educational sources increase personal-financial- materials enable to

process information to improve capacity and literacy for advanced for research. Does the

personal-financial-material have any affect in improving capacity? On the other hand,

investor perceived frame a situation based on his experiences with financial instruments.

The Pakistani economy articulated as high degree of uncertainty and turbulence due to

political, economic, social, and institutional changes that during the last 12 years.

Aftermaths of Financial crises of 2008 cause serious losses to investors. Embedded risk

in financial products, current economic turmoil, and recession shake the attitude of

investor towards investment through out the world. It is imperative for investor to have

appropriate financial knowledge to process information. Familiarity and sufficient

experience with financial products improve personal financial material. Investors classify

past experiences as anchor and record them to form a frame for interpretation of their

perspective behavior. Results indicate that propensity to risk ineffective by gender but

perception of risk varies with their personal experience and financial framing (Williams,

Zainuba and Jackson, 2003). Lack of financial experience and high expectation for

returns is a common risk attitude; demands that influencing factor of investor for higher

expected return may reassess.

Economic fluctuations shape up individuals behavior to take level of risk and had a

enduring effect on their attitude and empirical results suggests that individuals differ in

level risk based on personal experience over their lives and used this experience for

higher expected returns (Malendier & Nagel, 2011). Historically, financial proficiency or

numeracy, arise from two interconnected construct: financial capacity (ability to process

information) and financial literacy (past knowledge of financial concepts). Both

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financial literacy & financial capability are interrelated terms includes the following:

prior knowledge, cognitive capacity, expertise and expected outcomes but it guides

individual to improve their personal finance material to create a situational frame in

expectation of tall returns (Hu et al., 2007). Financial ability directly concern with

financial management outcomes of individual issues of investors related to saving,

borrowing, & taxes; indirectly involve with higher expected returns (Huhmann and

McQuitty, 2009). Past performance and information produce expectation for returns on

the same level as happened in the past; the historical outcome is a main predictor

variable, positive experience lead to high-risk propensity (Kathleen Byrne, 2005).

Self reported information is important to measure the risk attitude to judge their abilities

to explain the risky behavior and provide behavioral validity (Dohmen, Falk, Huffman

and Sunde, 2011). Chou, Huang and Hsu (2010) suggest investor who suffer loss keep in

mind past memories while making new investment in addition to other sources of

information for risk assessment. Investor tolerate product with lower potential profit and

accept those product with high risk but match his preference and balance in his view.

Investor behavior is situational; it changes depending upon the circumstances they face

considered traditionally as risk averse all time. Investors choose investment risk

accordance to their own preferences. However, investor act in accordance with their

preference on different available financial products from simple to the most complex on

depending upon the degree of risk provided choice of investment with possible risk and

return match their preference. At the time of investment, investor make a situational

frame based on his personal material already retained through experiences. Factor that

forms investor behavior includes expert/peer/family advice, past experience, personal

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financial material, new and other source of information. These factors not only affect

investors perception to risk but also build formation of risk attitude to develop potential

outcomes. Investor who suffered loss keeps in mind while making new investment

decision. In this study conducted with investors to look at investor behavior towards

intrinsic risk and expected returns.

1.2 Problem Identification

The Pakistani economy articulated as high degree of uncertainty and turbulence due to

political, economic, social, and institutional changes that during the last 12 years.

Financial crises of 2008 cause serious losses to investors. Implanted risk in financial

products, recession, and current economic turmoil has shaken the attitude of investor

towards investment through out the world. It is imperative for investor to have

appropriate financial knowledge to process information. Familiarity and sufficient

experience with financial products improve personal financial material. Lack of financial

experience and high expectation for returns is a common risk attitude; demands that

influencing factor of investor for higher expected return may reassess. Therefore, it is

needed that a proper education programs / training should be provided to investor to

assess the situation and interpreted the information. Lack of skill to interpreted

information investment decision often simulated or imitation of others rather than

logically based.

1.3 Statement of Problem

Thus, it is necessary for investor to have personalized financial material to interpret

information available in the market using in experience to maximize his expected returns.

Therefore, a study is carried out to mitigate referral decision by investor. Consequently,

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the statement is Financial education are necessary in addition to past experience to

obtain expected returns under optimistic and pessimistic situations.

1.4 Objectives of the study

The purpose of study to investigate the influence of personal experience, personal finance

material and risk frame on risk propensity to get higher expected returns. As in, the past

research has hardly ever tied the financial-literacy construct how consumers learn and

process information and use prior knowledge. To deal with this shortcoming, we relate

consumer psychology theories of learning, processing, and knowledge to the ability to

acquire, understand, and use financial information and financial concepts. We

conceptualize a model of financial numeracy rooted in theoretical construct of prior

knowledge, financial information, and personalized financial material. There are few

researches on subject matter to describe a model to evaluate attitude of an investor

towards risk. Establish the significance of risk propensity and risk perception as mediator

in experience, information and personal finical material to comprehend expected returns.

The main objectives are:

To determine the risk propensity behavior of experience investors

To explore the risk propensity between investor has sufficient academic financial

concept and no personalized financial material and

Influence of information on investors

To establish the effect of financial education material on investment

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1.5 Significance of the study

A number of investment plans and investor has been fail because of lack of sufficient

concept of financial. Those who have sufficient personalized financial material along

with experience are successful. Therefore, great need is felt for general public

understand the reason for success and sustain, no such works has been done previously.

Resultantly, importance so preset research has been recognized. In addition, many i firm

relied heavily on humans; their performance is depended upon experience and individual

who has personalized financial material concept. Obtaining financial knowledge through

educational programs not only encourage the investor to participate logically in

investment decision but also enhance their expect returns. Effectively and clear

understanding financial concept plays important role to achieve goals and give chance to

maximize the expected returns. People of all part of society subject of life get benefit

Therefore, implications of research are universal in approach. Educational programs are

major externally sourced to answer the question of investment. The lack of education

literacy or deficiently has negative management outcomes (Hilgert and Hogarth, 2003). It

helps investor to difference among investment products and interpret information to take

right decision. Investor with poor financial-numeracy is incapable to interpret

information and they can only improve their skill to get familiarity with financial

concepts. Financial-educational-programs increase the familiarity with concept, enhance

financial literacy, boost efficiency, improve capacity and knowledge and (Alba and

Hutchinson, 2000). Moreover, economic benefits are also associated such as high

earning with low chance of failure will be achieved. As it is an important factors that

normally affects the success or failure of investors

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1.7 Rationale of the Study

The scope of present research is broad and fit to all-purpose investor of Pakistan. The

research is comprised upon primary-data collection. Primary data will be collected form

general investor, mangers executives and investment consultants using structure

questionnaire-survey. Pre-test is carried out the current study with structure questionnaire

with rectification as applied in previous researches. Likert Scale of five points will be

used in the questionnaire.

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CHAPTER NO 2

LITERATURE REVIEW AND THEORETICAL FRAMEWORK

2.1 Empirical Literature

Ability of consumer defines attitude to risk and behavior in risk-associated decisions.

Risk perception defined as evaluation of risk in uncertainty (Sitkin and Pablo, 1992). It is

determined from important factors such as question asked by investor, familiarity with

management/organization and financial market. Both risk propensity and perception have

strong negative relationship with each other. As prospect theory ignored the effect of

former experience of investor over prospect investment behavior (Chou, Huang and Hsu;

2010). Sikin and Pablo (1992) risk behavior model develop suggests that past experience,

personal preference and social influences individual risk perception. According to Sitkin

and Weingart (1995) extend the model risk behavior of Sikin-Pablo by adding risk

propensity and risk perception as mediator for decision-making.

Risk involves potential outcomes that will occur or influences outcome (March 1978).

Risk is a multi-dimensional complex construct, which is difficult to measure (Sitkin and

Pablo, 1992). Behavior that influence the decision in response to risk such as

identification of choices, alternatives and other action in response to risk (Pablo et al.,

1996). Risky decision is relevant with personal involvement (Williams and Wong, 1999).

Williams, Zainuba and Jackson (2003) suggested that high positive affect decision maker

view situation optimistically but unwilling to take risk while high negative affect

individual presume risk related gains negatively to avoid risk.

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Literature suggested two main components of financial numeracy (i.e., financial capacity

and literacy). Atkinson et al. (2006) described financial capabilities; as managing, future

planning, selecting, using, familiarity and, financial literacy; as stay informed. However,

Personal Finance Research Centre (2005) elucidated as knowledge and management

financial behavior but mostly was collecting, understanding, and interpreting information

(Willis, 2008). Both terms are interrelated often interchangeable used but capacity is a

process to obtain knowledge regarding financial concept whereas the financial literacy is

memory based.

Comprehension suffered when demand increased for processing information exceeds

over cognitive capacity (Hu et al., 2007). Individual differs in cognitive abilities, less

capable can learn, improve, and develop skills to get benefits more efficiently (Huhmann

and McQuitty, 2009). Skills also increase efficiency in financial capacity but this ability

depends upon how efficiency extracts information from available sources. Although

attaining proficiency is quite difficult (Willis, 2008) but each step towards improving

financial capacity, improve ability to collect valuable information and then apply this

gather information for financial management.

According to Fama (1970) rational investor updates their investment commitment on

receipt of change in any new information. Rapid decision-making maximizes the value of

assets held with investor and adjusts their deviations through arbitrage to reasonable price

value. Number of empirical researches identified that EMH fail to support efficient

market as it often ignores psychological attributes of investor process of decision making.

Value-Function suggests that the facing gain or loss cause difference in risk attitude

among investors (Kahneman and Tverskey (1979). In prospect of gain, investor ensures

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stability in profit and tends towards risk averse while facing loss, investor take more risk

get away from the situation. Thus, the attitude towards risk changes in accordance with

change in situation that was traditionally considered as risk averse all the time.

2.1.1 Experience with Financial Instruments

Experience influence on previous knowledge, increased financial literacy, develops skills

and processing informational (Hutchinson, 1987). Past financial experience reduces

behavioral risk associated with weak financial numeracy rather than academic education

(Hilgert and Hogarth, 2003). Financial product purchases often transacted in absence of

sufficient information rather based on experience or evaluation process. Expertise and

experience provide awareness to assess future financial risks (Chou, Huang and Hsu;

2010). Personal experiences affect awareness and risk assessment, which eventually

affect behavior. The people facing uncertainty and doubt in existing information draw

their conclusion and depend upon their intention, attention, memory process, and

interpretation (Sitkin and Pablo, 1992). Atkinson et al. (2006) described that the

consumers who held risky debts more than half of their monthly earnings decline with

growing age. In contrast, consumers who obtained risk free debt or accumulated savings

increased with age. Past investment, experience develops the frame for risk awareness,

propensity and risk transfer that influences behavior of future decision making. High

experience Investor has relatively risk tolerance, they make high-risk portfolio and is an

imperative factor that influences behavior (Corter and Chen, 2006). Kathleen (2005)

suggests that there is positive relationship between risk and pas investment experience

and successful investment experiences enhance investor tolerance towards risk.

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2.1.2 Personal Finance Materials

personal-finance-materials comprises of teaching material such as audio/visual aids,

instructions or text presentation designed to improve financial concepts, which may be

self /externally selected by the consumer (Huhmann and McQuitty, 2009). Although

educational programs considered as major source of externally selected material but some

firms also tell consumers regarding financial product offerings. Financial educational

programs suitable to answer the questions of financial product as investment, insurance,

credit cards, and taxes often improve financial literacy program are very popular. The

common users of these programs are new business starter, women unemployed and

students (Elliehausen et al., 2007). Some groups of professionals unexposed to

educational financial programs despite occurrence of low financial results because they

considered having sufficient education (Brown and Taylor, 2008). The lack of education

literacy is negative management outcomes (Hilgert and Hogarth, 2003). Educational

programs are effective when it helps individual to differentiate between financial literacy

and capacity. The individual with poor financial numeracy are incapable to interpret

information and they can improve their skill through theses programs to familiarize

financial concepts. Financial-educational-programs increase the familiarity with concept,

boost efficiency, improve capacity, store knowledge and enhance financial literacy (Alba

and Hutchinson, 2000). Consumers with low cognitive efforts have less cognitive

experience and therefore, they always engage in searching process information (Hu et al.,

2007). Huhmann and McQuitty (2009) described that consumer with less natural

financial capacity use their limited processing skill to comprehend efficiently financial

information. Decline in financial numeracy despite of increasing effort of increase

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financial programs suggests that these programs have failed to provide financial material

to meet the current needs of audience (Huhmann and McQuitty, 2009). Consumer only

seeks and process information when they have capable to process it. Lusardi and Mitchell

(2007) described that one out of fifth programs actually managed to provide financial

outcomes and exposure to these programs will eventually improve consumers financial

behavior (Hilgert and Hogarth, 2003). According to MacInnis et al. (1991) though

familiarity aids financial numeracy but it is depend upon the processing effort of

consumer during exposure and without exposure to financial concept limits the

processing ones ability to obtain, use retain into personal-finance-material. Consumer

retains and process only portion of information actually they exposed but unfortunately

most educational programs do take consideration of target audience and despite of access

to financial educational programs consumer tent to rely on experience, family, peer and

media (Hilgert and Hogarth, 2003). Thus, personalized financial material should assist

consumer to develop to efficient use of their capacity, get familiar with concept, and

consequently increase ability to encode new knowledge.

Pablo and Sitkin (1992) past-experiences provide bases risk propensity and play as bacon

value in investment decisions. Experienced investor has high-risk tolerance and willing to

take high risky investments. Experience provide knowledge to future financial risks

(Chou, Huang and Hsu; 2010). Personal experiences affect awareness and risk

assessment, which eventually affect behavior. Atkinson et al. (2006) described that the

consumers who held risky debts more than half of their monthly earnings decline with

growing age. In contrast, consumers who obtained risk free debt or accumulated savings

increased with age. Past investment, experience develops the frame for risk awareness,

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propensity and risk transfer that influences behavior of future decision making. High

experience Investor has relatively risk tolerance, they make high-risk portfolio and is an

imperative factor that influences behavior (Corter and Chen, 2006). Kathleen (2005)

suggests that there is positive relationship between risks and past investment experience

and successful investment, experiences enhance investor tolerance towards risk.

Financial educational programs are regarded as the major sources of externally obtains

knowledge and suitable to answer the many question of financial-products. Lack of

educational literacy often results in negative outcomes (Brown and Taylor, 2008). In

additional, educational programs capable to alter the risk- attitude of investor. Consumers

with poor financial numeracy are unable to interpret information. Financial education

programs improve capacity (Alba and Hutchinson, 2000). Consumer only seeks and

process information when they have capable to process it (Huhmann and McQuitty,

2009). Lusardi and Mitchell (2007) described exposure to these programs will eventually

improve consumers financial behavior and consumer are more risk tolerant. Thus,

personalized financial material should assist consumer to develop to efficient use of their

capacity, get familiar with concept, and consequently increase ability to encode new

knowledge. Educational programs develop the framework for risk awareness, propensity

that influences behavior of future decision-making. Familiarity with financial concept

Investor has relatively risk tolerance, they make high-risk portfolio and is an imperative

factor that influences behavior (Huhmann and McQuitty, 2009). Therefore, suggests that

there is positive relationship between risk and familiarity with financial concept increase

enhance investor tolerance towards risk.

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Consumer with low risk behavior is less eager to participate in risky investment and have

low risk tolerance. Expected returns affect the investor perception towards risk. Investor

with higher expected returns will perceive to take higher risk and have high level of risk

perception. On the other hand, investor with high-risk perception is willing to participate

in high-risk investment (Sitkin and Weingarts, 1995). Consequently, perception of risk

in these investors is relatively low. Thus risk and return positive in relation (Chou, Huang

and Hsu; 2010).

Prospect theory suggests that different stimulations affect investor risk perception

(Tverversky and Kahnemen, 1972). Information stimulation (such as media new or

analysts report), insist individual to make his own interpretation. Investors respond to

information in according with situation, on receiving negative report, the investor

respond negatively vis--vis.

In addition to unique characteristics of each investor in terms of risk tendencies, level,

awareness and style helps to make investment decision and construction portfolio

(Tverversky and Kahnemen, 1972). Keeping in view CAPM, risk increase with increase

higher compensation premium. On the other hand, low expected return with low risk.

Therefore, there is positive relationship between risk and expected returns. Additional

significant factor are personalized financial material, past performance and information

stimulation of investor provide bases for future expected returns is focus the study.

Moreover, familiarity with financial concept, experience, over-confident, and over-

optimistic investor expect high returns (Kahneman and Tversky, 1974).

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Figure-2.1 Theoretical Frame work

A framework will be designed to analyze the hypotheses and answer the investigate

quarries. The main objective of this study is to find the relationship between factors

affecting expected returns of investor. On the bases of literature review, this study

hypnotized as:

2.2 Research Hypotheses

H1:Experienced investors have high propensity to risk as compared to less experienced

investors.

H2:Positive relationship between personal financial materials and risk propensity

H3:Investor perception and propensity to risky investment is negative correlated.

H4: Optimistic market reports have a lower perception of risk; pessimistic reports

perceive a higher degree of risk.

H5: O ptimistic market reports have higher returns expectations; pessimistic market

reports have lower returns expectations.

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Personal FinancialMaterial

Market Information

Past Experience

Risk Perception

Risk Propensity

Expected Return

2H

+

4H

+

1H

+

5H

+

3H+


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CHAPTER NO 3

METHODOLOGY

3.1 Pilot Testing

A pilot study will be carried out to confirmation and validity of variables and

questionnaire. SPSS computer program will use to analysis of the data. The pilot data will

analyze the significance of relationship among the variables of the study. Sample will test

on first on financial market to deduct any inefficiency to rectify and to ensure validity of

survey. The survey conducted general investor regardless of their gender. The answers of

respondents analyzed to confirm inter-consistency and reliability.

3.2 Main Study

Keeping information obtained from the literature review, a questionnaire with

modification structure questions used to test the local Pakistani investors. Sample will

test on first on financial market to deduct any inefficiency to rectify and to ensure validity

of survey. The survey conducted both with public and financial institute members. Five-

point scale questionnaire used but few questions used selection filling to build portfolio.

The answers of respondents analyzed to confirm inter-consistency and reliability. Prior

to finalization of the questionnaire was discussed with two professionals managers

working at top level and two mid level managers for implementation to obtain their

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feedback. The questionnaire accommodated in accordance with our environment to make

it more comprehensive tool to analyze the opinion.

3.2.1 Sample

The number included in the sample is called as sampling size. The question remains what

and how big the sample should be taken. Simply, if variability, population size and

confidence level is higher according the sample size will be high but cost factor will also

be kept in mind while selecting sampling size. Probability-sample ensures zero possibility

of each component in the population to chance to be included in the sample to be

selected. This Sampling method will negate the in the chance of biasness. Therefore,

purposive technique will be used in the selection of sample. The research will identify

and compare the group of respondents. All educated as well as uneducated investors will

be considered for the research regardless of their gender. The sample will survey with the

Investment risk assessment in Financial Products Questionnaire. Questionnaires are

divided into two parts. In first part Five-point scale questionnaire used but few questions

use selection filling to build portfolio.

Chou, Huang and Hsu, (2010) three hundred responded were taken as sample to test data

of Taiwanese investors in similar study. Therefore, General investor firms will be

selected as target respondents keeping in view the size of their investment from

Rawalpindi and Lahore randomly as target sample. Out of 300 questionnaires, 100

questionnaires will be distributed to investor from Rawalpindi and 200 from Lahore

randomly to measure their responses for reliability of study. The personnel record of

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investor is notified against their profile for cross reference. The questionnaires will be

personality distribution by visiting each individual.

3.2.2 Research Tools/Instrument

Weber, Blais and Betz (2002) scale of risk-attitude adapted scale ranges from strongly

agree to strongly disagree will be used to test the local investors of Rawalpindi/Islamabad

and Lahore. Five-point scale questionnaire will use to obtain the responses of sample.

The survey conducted both with public and financial institute members. Three variables

will be use achieve objective of study (Past-experience, Personalized-financial-material

market information, risk propensity, risk perception and expected return. The sample will

survey with the Investment risk assessment in Financial Products Questionnaire. The

answers of respondents analyzed to confirm inter-consistency and reliability. SPSS will

be used for descriptive, statistics, validity, reliability, confirmatory factor analysis and

regression to measure the comparison between investor has sufficient academic financial

background then who has no academic financial management concept. Risk propensity

and risk perception used as mediator variables. Every Investor has unique experience,

guided by personal financial material frame various scenarios to risk awareness and risk

propensity to vary financial decisions. Resultantly, this behavior reflected in product

accumulation, expected returns, and portfolio configuration.

3.2.3 Research Procedures

Investor past experience used to describe the anchor effect and personal-financial

material along with information sources for framing the framework. As discussed,

situational factor play vital role on decision-making process. The questionnaire spotlights

on response of investors under good and bad economic information. In this study,

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probability-sampling technique will be used for data collection. A questionnaire

comprising nine questions will be personally handed over to the selected samples.

Situational factor and personalize financial material provides framework to measure the

effect on variables. Data will be collected from survey questionnaire to measure variables

(personalized financial material, information influences, pas-experiences, risk propensity,

risk perception and expected return).

Cronbachs alpha and Reliability will provide reliability and validity of the instrument.

Descriptive analysis will describe to check and identify the level of application of study.

Regression analysis will explain to indicate the relationship among the variables

Independent sample t-test will measure significance of variables as well as qualification

for dependent and independent variables. SPSS will be used for descriptive, statistics,

validity, reliability, confirmatory factor analysis and regression to measure the

comparison between investor has sufficient academic financial background then who has

no academic financial management concept.

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Appendix

Weber, Blais and Betz (2002) scale of risk-attitude scale

Selected questionnaire of risk assessment of investment in financial products:

Q 1: How well do you consider yourself capable of managing your personal finances?

Question Strongly

Agree

Agree Neutral Not

Agree

Strongly

Agree

I have sufficient financialmanagement knowledge

My fixed deposit investmentshave been successes

My investments in mutual fundshave been successful.

My investments in structurednotes have been successful.

My investments in investment

insurance policies have beensuccessful.

My investments in futures andoptions have been successful.

Q 2: How well do you consider educational programs help yourself capable of managing

your personal finances?

Question Strongly

Agree

Agree Neutral Not

Agree

Strongly

Agree

I have sufficient financial

management knowledge

My fixed deposit investments

have been successes

My investments in mutual funds

have been successful.My investments in structured

notes have been successful.

My investments in investment

insurance policies have been

successful.

My investments in futures and

options have been successful.

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Q 3: In your own subjective opinion, indicate the degree of riskiness you associate with

each of the activities described below:

Question Strongly

Agree

Agree Neutral Not

Agree

Strongly

AgreeUsing a days pay to purchaselottery tickets or place sporting

bets.

To lend a months pay to friend.

Use 5% of a months pay to buy

a very speculative stock.

Use 10% of a years pay to buy

a risky mutual fund.

Start a new job without a fixed

salary.

Q 4: Indicate your attitude on the statements about investment in financial products:

I have to be prepared to lose some of my investment.

Question Strongly

Agree

Agree Neutral Not

Agree

Strongly

Agree

I must bear the risk for any

failure to meet the forecastinterest.

If the information provided forthis investment type isinsufficient, I would feel the

investment were unsafe.

The returns from time deposits

have changed considerably in

recent times.

If I were to invest in time

deposits, I would feel concernedabout risk.

I do not think the regulatory

system for time deposits issufficiently strict.

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Q 5: Please read the message below and then answer the following questions:

If you will invest three million dollars in the following products, what asset value would

you anticipate after three years?

1. Fixeddeposits:

a. less than 0.5million

b.05~ 1 million c.1~1.5 million d. more than 2million

2. Insurancepolicies:

a. less than 0.5million

b.05~ 1 million c.1~1.5 million d. more than 2million

3. Stocks: a. less than 0.5

million

b.05~ 1 million c.1~1.5 million d. more than 2

million

4. Mutual

funds:

a. less than 0.5

million


million

5. Structured

notes:

a. less than 0.5

million


million

Q 6:

If you had 5 million to invest,

please indicate how (according

to your risk perception andexpected returns) you woulddistribute these funds across the

different financial products.

Strongly

Agree

Agree Neutral Not

Agree

Strongly

Agree

Q8: Please indicate which of the following conditions apply for you:

Your Gender

Your marital status:

Your age

Your highest level of formal education:

Your occupation type:

Personal average monthly income:

Final Revised Work 5-1-12 Rizwan Ahmed 13425

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