Deism as a Worldview Essay Example | Topics and Well Written Essays - 2750 words

Deism as a Worldview - Essay Example divine revelations and holy books of revealed religion. Essentially, through the use of Reason, a belief in God is determined by the observation of the order and complexity found in nature and our own personal experiences of nature. The nature of God has been a point of contention for Deism because it has been defined as a religion that acknowledges a specific nature of God but in actuality it does not and leaves it up to the individual Deist to determine what they believe that nature to be. Overall, Deism is not a hard concept to understand as Deists use Reason and rational thought to develop their view on God, morals and life. [3] History : Deistic thinking has existed since ancient times (e.g., in philosophers such as Heraclitus and most especially Plato, who envisaged God as the Demiurge or 'craftsman') and in many cultures. The word Deism is generally used to refer to the movement toward natural theology or freethinking that occurred in 17th-century Europe, and specifically in Britain. Natural theology is a facet of the revolution in world view that occurred in Europe in the 17th century.[4] The 17th century saw a remarkable advance in scientific knowledge: the scientific revolution. The work of Copernicus, Kepler, and Galileo destroyed the old notion that the earth was the center of the universe and showed that the universe was incredibly larger than ever imagined. These discoveries posed a serious challenge to biblical authority and to the religious authorities, Galileo's condemnation for heresy being an especially visible example. In consequence, the Bible came to be seen as authoritative on matters of faith and morals but no longer authoritative (or meant... Deistic thinking has existed since ancient times and in many cultures. The word Deism is generally used to refer to the movement toward natural theology or freethinking that occurred in 17th-century Europe, and specifically in Britain. Natural theology is a facet of the revolution in a worldview that occurred in Europe in the 17th century. The 17th century saw a remarkable advance in scientific knowledge: the scientific revolution. The work of Copernicus, Kepler, and Galileo destroyed the old notion that the earth was the center of the universe and showed that the universe was incredibly larger than ever imagined. These discoveries posed a serious challenge to biblical authority and to the religious authorities, Galileo's condemnation for heresy being an especially visible example. In consequence, the Bible came to be seen as authoritative on matters of faith and morals but no longer authoritative (or meant to be) on matters of science. Isaac Newton's discovery of universal gravitati on explained the behavior both of objects here on earth and of objects in the heavens. It promoted a worldview in which the natural universe is controlled by laws of nature. This, in turn, suggested a theology in which God created the universe, set it in motion controlled by natural law, and retired from the scene. The new awareness of the explanatory power of universal natural law also produced a growing skepticism about such religious staples as miracles (i.e., violations of natural law) and about books, such as the Bible, that reported them.

What does Benedict Anderson's concept imagined community mean when Essay

What does Benedict Anderson's concept imagined community mean when comparing the idea of nationalism - Essay Example The process of Anderson’s imagined community is fundamental in understanding the elements of entry and connection in nationalism. It transcends the idea that nationhood is fabricated or merely imaginary discourses. This is the reason why the concept of imagined community is very popular among social theorists. The thesis is not that explicitly constructivist but the idea captures the intensity of the concepts such as nationalism and nationhood. As an imagined community, a nation is provided a narrative meaning for individuals that constitute it by allowing the imagination of a territory of the nation without having personally to encounter it and its inhabitants. The approach does not see nationalism as a discourse of power or one of ideology but one of cultural meaning and cognition. In imagined community†, gaps could still be found – there are limitations in regard to the explanation of the elements that characterize the concept. Indeed, Anderson, himself, have l eft open several areas and questions because the subject is dynamic. However, these do not entirely undermine the potency of Anderson’s vision. All in all, Anderson’s most significant contribution here is that he was able to address all the anomalies that most theorists have created or was not able to tackle in defining nationalism.

International Olympic Committee

International Olympic Committee Introduction: Now a day, to present and promote the national identity and cultures on a global scale, hosting the international games is the one of the greatest way. On 6 July 2005 the International Olympic Committee has given the right to stage the 2012 summer Olympic and Paralympics Games to London. Now its necessary to find out whether its good the Economy of UK or what affects will be on the UK. The pros and cons of the London 2012: [P1] As London is going to host the 2012 Olympic Games, we have to find out some advantages and disadvantages of hosting the 2012 Olympic Games. Even though its estimated that there will be  £2 Billion in tourism revenue and its predicted that the benefits of the game will be felt across the whole of the UK with becoming the centre of the worlds attention, there are so many disadvantages of the hosting of such a big games. Advantages of hosting the 2012 Olympic games: 1. Urban regeneration: Due to Olympic 2012, Government making a new stadium with setting capacity of 80000 and this will be the main focus area for Olympic. This East-end side is bit less developed area in comparison to other part of the London. So due to Olympic 2012 this area will be developing area very soon. 2. Housing: Government is building 5000 homes for the Olympic village which will be using for housing of the local people after the Olympic. It will increase the housing cost of the area. 3. Transport Improvement: As large number of visitor will be visiting during the Olympic, Government is improving the transport line rapidly. Following Improvements are mainly focused: a. Building a channel Tunnel which will connect Stratford with Kings Cross b. Increasing the jubilee line capacity by 45% c. Extending the DLR network d. Major improvement work in East London line which is costing around  £1bn. 4. Jobs: East end is known as a area where unemployment rate is very high. As this area has become the Olympic Zone, now there are lots of short-term jobs opportunity is there which may help to reduce the unemployment rate. 5. Tourism: UK is expecting the number of tourist will increase rapidly due to the Olympic. 6. Financial Benefits: A city may receive lots of benefits from Olympic games. If we look at previous Olympic history we can see that Barcelona was able to do vast urban renewal from the gained revenue of Olympic. Sydney was also able to generate huge revenue from the tourist and it also increase the number of tourist for the city. 7. Employment Effects: As we describe earlier Olympic creates lots of job which helps to reduce the unemployment rate.. 8. Intangible Benefits: There are lots of benefit for being host city of big event like Olympic. It could be tourist perspective, employment creation, development of particular area, improvement of transportation system, being the focus placed for the rest of the world. [http://olympics.pthimon.co.uk/londonadv.htm] Disadvantages of hosting the 2012 Olympic game: ïÆ'Ëœ Cost: Cost of hosting a big event is the main drawback. Government may need to spend around  £2.373bn for Olympic 2012 and it is predicted which may increase. There could be huge operating loss which is nearly  £500million. ïÆ'Ëœ Lakes of long term job: Olympic is creating short-term job but it is not creating any long term jobs. So that after the Olympic, unemployment rate may increase rapidly. ïÆ'Ëœ Olympic Debt: With the Olympic Games being of the scale that it currently is, there is a risk of ending up in huge financial deficit if preparations are not organised or overseen properly. The result is a debt that lasts for years, as happened at the 1976 Montreal Olympics. ïÆ'Ëœ Rising Consumer Prices/Rent: As we know that if demand increases, price will increase. So that price of product and rent may increase during the Olympic which will have a serious negative impact to the local poor resident. For example, is an area in which landlords will be able to charge 10 times their normal price during the surge of visitors to Athens in 2004. If too many prices shoot upwards in this way, a lot of poorer locals may find goods or services which they used to be able to afford are now out of reach. However, this change may not be affect larger cities. Cities such as Montreal and Los Angeles did not undergo any significant price surges around the Games, and price changes were consistent with those in surrounding cities. [[http://olympics.pthimon.co.uk/londonadv.htm]] Impact on Environment and Other stakeholder: [P2] The London 2012 Olympic and Paralympics Games will bring a wide range of positive impacts to the region. These include transport infrastructure, employment, skills, and economic, social and environmental impacts. Many benefits include opportunities to showcase the region through various Olympic-related media. It has to be monitored noise, dust which is around the Olympic park. The waterways which runs around the park must need to be protected so that storing chemicals, oils do not run into the water ways. Arrange a huge event like an Olympic can easily effect on environment. It can be effect environment in different way like Carbon emission: In this mega event its very possible to environment effected by carbon emission. But Olympic committee has set an inspirational goal ‘Towards a One Planet Olympic. They try to keep carbon emission as low as possible. London 2012 has pledged to undertake a study of the carbon footprint of the Games. The first draft of the carbon footprint and associated carbon management strategy, including a reference scenario and numbers quantifying emissions, is due to be published by the end of July 2008. This will then be revised in light of lessons learnt in Beijing Energy: For running this Olympic it needs a huge amount of energy. There is a possibility lots of energy can be waste as well. So London 2012 planning a proper energy plan for reduces waste of energy. Waste: In this Olympic game there will be lots of tourist who will come from all over the world. In this time London population going to be increase as well as waste. Because lots of people will dumps huge amount of waste every day. It can easily affect on environment. As further plans for waste infrastructure and minimising food packaging and other Games time waste are developed over the next few years it will become clearer whether the positive goals for waste management will be achieved [http://www.london2012.com/plans/olympic-park/getting-ready/environmental-monitoring.php] Other stakeholder: London Development Agency which is a subsidiary of the Mayor of London, its investing around  £15 million for games and improvement of Lower Lea Valley. [http://www.londonnet.co.uk/ln/guide/about/olympics2012_stakeholders.html] Comparison with other Olympic: [P3] First of all lets have look at the Beijing Olympic 2008. Beijing Olympic can be treat as a one of the successful Olympic. Chinese President Hu Jintao declared open the 29th summer Olympic Games of Beijing in the National Stadium in north Beijing. For the Olympic they have built 12 new stadiums with 11 existing stadiums and 8 temporary stadiums. On the other hand for London 2012 Olympic one of the biggest Olympic park construction going on where the setting capacity will be around 80000. To prepare for Olympic visitors, Beijings transportation infrastructure was expanded significantly. Beijing airport had a major expansion, adding the new Terminal 3 which is the worlds largest airport terminal. They reopened the Beijing south railway station after remodelling. They have introduced Beijing-Tianjin intercity train to connect with co-host city. On the other hand for London 2012 Olympic the government has already introduced major construction for London underground, and approximately 7.7 million tickets are available for sale for the London 2012 Olympic Games. An estimated 1.5 million spectators are expected to watch the Paralympics Games.. If you compare the investment, London 2012 Olympic are investing for then Beijing Olympic. London 2012 has got more sponsor then Beijing Olympic. House of common has approved budget of 5.3 billion pound for construction of venues [http://getsmaart.com/student-guides/index.php/student-life-advice/London_2012_Update] Impact on local business: [P4] The London 2012 Olympic and Paralympics Games will bring a wide range of positive impacts to the region. These include transport infrastructure, employment, skills, and economic, social and environmental impacts. Many benefits include opportunities to showcase the region through various Olympic-related media. Many small business premises have to move away due to manufacturing the main park. Its really worse to business owner, because they have been doing business for long time and when move to new place it will take long time to settle down. On the other hand, During the Olympic number of tourist will increase. They will come to London to visit and they will spend money over here. So that its a great opportunity for the local business to increase the profitability. For business people, 2012 London Olympics will not be just a gathering of sports events and countries—not just for entertainment—but more than that, it is going to be a huge potential business. Many people from different countries, various races and colours, will converge in one place and this just means, great business opportunity. There is a great deal of investment that is being pumped into the country and the area in particular and many are looking at the business opportunities that will come about as a result of this huge sports gathering. The London 2012 Olympics will be a great venue for the local United Kingdom based athletes as they look to showcase their talents to the country at large. There are also some potential negative impacts to the region as a result of the Games. The South West may experience a decrease in tourism as a result of displacement or negative effects on staging the sailing events. Research shows there are a number of ‘Olympic aversion markets that can increase tourism flows outside host cities. A number of national and international tourists may choose to not visit the region during 2012 because of perceived congestion and overcrowding. Through a structured and co-ordinated approach, the South West can plan accordingly for the tourism opportunities of people staying away or at home during the Games themselves. One such market will be London residents wanting to escape the Games, and the South West is one of the UK regions that has recognised the potential of this market, with the South West England Legacy Strategy for the 2012 Games noting the potential to capitalise on the displacement of UK citizens from London; this can be mitigated by d eveloping events (big screen, festivals etc.) to attract visitors. [http://blogstuck.com/sports-sports-more-sports/2012-london-olympics-jobs-why-should-england-host-the-olympics/3239/] Impacts on economy: The total cost of the hosting Olympic 2012 will be around  £736 million and if could affect in welfare of London around  £4003 million. So that Olympic 2012 will affecting significantly to the local economy which can help to recover the recession. There will a great opportunity for the economy to be stronger. For example, The Olympic 2012 games will impact in London economy because many tourist will come here, the hotel business will increase at that time, Food, drink business will increase. Because many people, tourist comes here and they will buy food, drink for them On the other hand we should also know that hosting of Olympic could be courses for huge loss. For example we can tell about Munich Olympics 1972. They made loses of  £178 million and in 1976 Montreal made losses of  £692. If we look at 1984 los angels Olympic and 1992 Barcelona Olympics they made around  £215 million profit as because of the increased economic performance , creation of large market, and broadcasting rights. So that Olympic 2012 could affect significantly to local economy. Micro and Macro Environmental Factors related with Olympic: [P7] There are some uncontrollable factors which has got impact on the business organisation. As like that Olympic Games could be affected by some micro and macro environmental factors and it could influence on the number of tourist. Factors or elements in an organizations immediate area of operations that affect its performance and decision making freedom. These factors include competitors, customers, distribution channels, suppliers, and the general public. Example for Olympic 2012: ïÆ'Ëœ Competitor- There is no competitor in London 2012 Olympic ïÆ'Ëœ Customer- Peoples who buy the Olympic events ticket. ïÆ'Ëœ Suppliers- Construction firms, workers. For macro environment we can say the economic factors, environmental factor political factors, technical factors, social environment and for micro environmental factors it includes the supplier, stakeholders, government, and competitor. These are the factors has got significant impact on the Olympic Games also. For example currently the political, situation of UK is satiable. So that tourist can visit UK without any fear. So that each an every factor has got significant impact. Marco and Micro environmental factors also has got affect on SMEs growth. To find out the macro and micro environmental factors on the SMEs growth we can have a look on the PESTAL and Potters five forces Analysis. PESTEL analysis: [P6] It is a part of the external analysis when doing market research and gives a certain overview of the different macro environmental factors that the company has to take into consideration. Political factors include areas such as tax policy, employment laws, environmental regulations, trade restrictions and tariffs and political stability. Political Factor: A political factor is one of the major factors which have got significant impact on SMEs. In UK political situation is stable and Politian appreciates small and medium business. All the existing rules regulation of business and the spending power of the customers are very good for SMEs. Economic Factor: As marketers need to consider the state of the trading economy in the state of a trading economy in the short and long tern. The economic condition of UK is much better then any other country for SMEs. In UK economic growth is very good; customer has got more spending power. So that its very helpful for the SMEs. Sericulture Factors: the social and cultural influence on business very from county to country. As UK is a multinational country it a good place to do business. Peoples already adopted with so many culture and they do respect each other. Here people would like to spend so that its good for SMEs. Also when customers do perceived that their cultural values are being respected by the business as evident in its market(ing) strategy and customer handling, they will respond more positively to the business and its revenues will increase. Technological Factors: Industry change is driving insurers to reinvent themselves by building new strategies and deploying new technologies. But it isnt easy in the tight economic market to fund new projects while prioritizing investments. It is more crucial than ever to know when to be an early adopter, and when to be a fast follower. Kimberly Harris-Ferranti, research vice president, Gartner, Inc., recently discussed opportunities to achieve a first-mover advantage, and others where it is acceptable to follow the crowd. As UK is technologically advanced it easy to get access to the new technology which is helpful for SMEs and its easy to get competitive advantage. Environmental Factors: climate changing, global warming, waste management could affect the business significantly. Sometimes its not easy to adopt with new environmental factors. In UK people are concern about environment. Its difficult to do business without concern about environment. It may increase the cost for small and medium business organisation as they have spend extra money for the waste management or recycling. Legal Factors: Current law and order in UK is very friendly for the business. Small and medium business organisation can get help for the local authority and police any time. The legal environment is secure and government has introduced business friendly law and regulation Affect on SME Growth: [P9] There will be certain affect on the SME growth. It has been shown through Porters Five Forces. Porters Five forces The model of pure competition implies that risk-adjusted rates of return should be constant across firms and industries. However, numerous economic studies have affirmed that different industries can sustain different levels of profitability; part of this difference is explained by industry structure. Michael Porter provided a framework that models an industry as being influenced by five forces. The strategic business manager seeking to develop an edge over rival firms can use this model to better understand the industry context in which the firm operates. Rivalry: In the traditional economic model, competition among rival firms drives profits to zero. But competition is not perfect and firms are not unsophisticated passive price takers. Rather, firms strive for a competitive advantage over their rivals. The intensity of rivalry among firms varies across industries, and strategic analysts are interested in these differences. It could create following cost for SMEs 1. A larger number of firms 2. Slow market growth 3. High fixed costs 4. High storage costs or highly perishable products 5. Low switching costs As there are large numbers of SMEs in UK the completive rivalry is very high which is affecting it. As because of London 2012 Olympic games the number of competitor will increase. Threat of Substitutes: In Porters model, substitute products refer to products in other industries. To the economist, a threat of substitutes exists when a products demand is affected by the price change of a substitute product. A products price elasticity is affected by substitute products as more substitutes become available, the demand becomes more elastic since customers have more alternatives. A close substitute product constrains the ability of firms in an industry to raise prices In UK the threat of Substitutes are very high. For SMEs they have to take quick decision regarding substitutes. Its also affecting SMEs. Buyer Power: The power of buyers is the impact that customers have on a producing industry. In general, when buyer power is strong, the relationship to the producing industry is near to what an economist terms a monophony a market in which there are many suppliers and one buyer. Under such market conditions, the buyer sets the price. In reality few pure monopolies exist, but frequently there is some asymmetry between a producing industry and buyers. The following tables outline some factors that determine buyer power. In UK the buying power of customers are more and they have got more choice. In order to get more customers all the SMEs has to provide excellent customer service. As London hosting Olympic 2012 games its good for the SMEs that the number of Buyer will increase. Supplier Power: A producing industry requires raw materials labour, components, and other supplies. This requirement leads to buyer-supplier relationships between the industry and the firms that provide it the raw materials used to create products. Suppliers, if powerful, can exert an influence on the producing industry, such as selling raw materials at a high price to capture some of the industrys profits. The following tables outline some factors that determine supplier power. Like other big business supplier has got some power to influence the SMEs. Due to Olympic London 2012 number of SMEs will increase and if the supplier has got more power they may increase the price of the produced which may seriously affect the SMEs. Threat of Entry: It is not only incumbent rivals that pose a threat to firms in an industry; the possibility that new firms may enter the industry also affects competition. In theory, any firm should be able to enter and exit a market, and if free entry and exit exists, then profits always should be nominal. In reality, however, industries possess characteristics that protect the high profit levels of firms in the market and inhibit additional rivals from entering the market. These are barriers to entry Lets have a look its easy to enter into the market what will happen to SMEs and its difficult then what will happen: Due the London 2012 Olympic the threat of new entry will increase significantly which may affect lots of SMEs. We can easily realise the situation of UK. From the analysis we can say that UK the Competitor rivalry is very high, so that every day lots of small business organisations are closing down. Also buying power of customer is very high and supplier power also involved with this. Due to London 2012 Olympic the buying power, supplier power and rivalry will be very high. Existing SMEs have to take preparation for that now onwards. They have take plan in order to maximise the profit during the London Olympic 2012. Reference ïÆ'Ëœ http://www.londonnet.co.uk/ln/guide/about/olympics2012_stakeholders.html ïÆ'Ëœ http://www.london2012.com/plans/olympic-park/getting-ready/environmental-monitoring.php ïÆ'Ëœ http://getsmaart.com/student-guides/index.php/student-life-advice/London_2012_Update ïÆ'Ëœ http://www.wirednewyork.com/forum/showthread.php?t=6580page=53 ïÆ'Ëœ http://www.dailymail.co.uk/sport/othersports/article-413426/Coe-London-wont-grind-halt-Olympic-Games.html ïÆ'Ëœ http://www.activedorset.org/site/index.php?/news/2012/transport_plan_for_the_london_2012_olympic_games_and_paralympic_games ïÆ'Ëœ http://blogstuck.com/sports-sports-more-sports/2012-london-olympics-jobs-why-should-england-host-the-olympics/3239/ ïÆ'Ëœ http://www.best-family-info.com/sports/4667-benefits-of-london-olympics-2012-london-olympics-2012-logo ïÆ'Ëœ http://www.bymnews.com/news/newsDetails.php?id=630 ïÆ'Ëœ http://www.tfl.gov.uk/corporate/media/newscentre/archive/5410.aspx ïÆ'Ëœ http://www.le.state.ut.us/interim/2000/html/20001017OCCM.htm ïÆ'Ëœ http://www.pm.gov.pg/speeches/52-33rdindependeceanniversay

Use of Logos, Ethos and Pathos by Dr. Martin Luther King Jr. :: I Have A Dream Speech

Alleged by Dr. Martin Luther King Jr. in his â€Å"I Have A Dream† speech on August 28, 1963 at the Lincoln Memorial in Washington D.C. Dr. King said â€Å"This note was a promise that all men, yes, black men as well as white men, would be guaranteed the inalienable rights of life, liberty, and the pursuit of happiness†. Meaning there shall be equality between one another. Dr. King grew up around pastors in a Baptist Church, so when he gave his speeches he sounded like a preacher. He was a well-educated person who graduated from Boston University and received his Doctorate degree. Plus he was a strong worker for civil rights for members of his race. Being a strong worker and having knowledge of civil rights made him more of a confident and convincing speaker. Therefore, In Dr. King’s â€Å"I Have A Dream† speech, he pointed out to African Americans, that in the near future the African Americans would have equal rights and liberty like all the other Caucasians have. In this speech I have found Dr. King using logos, ethos, and pathos to get his attention across about equality and to make his speech sound more effective. Out of the three rhetorical appeals I have found that Dr. King used ethos the most predominately followed by the second most effective, pathos, and how King is a convincing speaker to his audience. Dr. King announced the â€Å"I Have A Dream† speech in front of 200,000 African American families and to a few Caucasians who were at the scene of his speech. Dr. King’s speech was mainly addressed to the African Americans, to explain one day there will be equality in all Caucasians and other ethnicities such as; Hispanics, Native Americans and Asian Americans. Therefore at the time of his speech, his audiences were to the 200,000 people who attended the speech but he was also referring to all other ethnicities as well. To his audience for example, he said as the future years pass, the hardship they are going through would pay off for the future children. For example, in his speech he said, â€Å"I have a dream that my four little children will one day live in a nation where they will not be jugged by the color of their skin but by their content of character. Use of Logos, Ethos and Pathos by Dr. Martin Luther King Jr. :: I Have A Dream Speech Alleged by Dr. Martin Luther King Jr. in his â€Å"I Have A Dream† speech on August 28, 1963 at the Lincoln Memorial in Washington D.C. Dr. King said â€Å"This note was a promise that all men, yes, black men as well as white men, would be guaranteed the inalienable rights of life, liberty, and the pursuit of happiness†. Meaning there shall be equality between one another. Dr. King grew up around pastors in a Baptist Church, so when he gave his speeches he sounded like a preacher. He was a well-educated person who graduated from Boston University and received his Doctorate degree. Plus he was a strong worker for civil rights for members of his race. Being a strong worker and having knowledge of civil rights made him more of a confident and convincing speaker. Therefore, In Dr. King’s â€Å"I Have A Dream† speech, he pointed out to African Americans, that in the near future the African Americans would have equal rights and liberty like all the other Caucasians have. In this speech I have found Dr. King using logos, ethos, and pathos to get his attention across about equality and to make his speech sound more effective. Out of the three rhetorical appeals I have found that Dr. King used ethos the most predominately followed by the second most effective, pathos, and how King is a convincing speaker to his audience. Dr. King announced the â€Å"I Have A Dream† speech in front of 200,000 African American families and to a few Caucasians who were at the scene of his speech. Dr. King’s speech was mainly addressed to the African Americans, to explain one day there will be equality in all Caucasians and other ethnicities such as; Hispanics, Native Americans and Asian Americans. Therefore at the time of his speech, his audiences were to the 200,000 people who attended the speech but he was also referring to all other ethnicities as well. To his audience for example, he said as the future years pass, the hardship they are going through would pay off for the future children. For example, in his speech he said, â€Å"I have a dream that my four little children will one day live in a nation where they will not be jugged by the color of their skin but by their content of character.

Investment Avenues

INVESTMENT AVENUES 1. 1 INTRODUCTION TO INVESTMENT The money one earns is partly spent and the rest is saved for meeting future expenses, instead of keeping savings idle one may like to use savings in order to get returns on it in the future, this is called as investment. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth.In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price. Mere earning will not help one to secure the future, so it becomes important to invest. One of the important reasons why one needs to invest wisely is to meet the cost of Inflation. Inflation is the rate at which the cost of living increases. The cost of living is simply what it costs to buy the goods and services you need to live.Inflation causes money to lose value because it will not buy the same amount of a good or a ser vice in the future as it does now or did in the past. The sooner one starts investing the better. By investing early one allow one’s investments more time to grow, whereby the concept of compounding increases one’s income, by accumulating the principal and the interest or dividend earned on it, year after year. The dictionary meaning of investment is to commit money in order to earn a financial return or to make use of the money for future benefits or advantages.People commit money to investments with expectations to increase their future wealth by investing money to spend in future years. For example, if you invest Rs. 1000 today and earn 10% over the next year, you will have Rs. 1100 one year from today. An investment can be described as perfect if it satisfies all the needs of all investors. So, the starting point in searching for the perfect investment would be to examine investor needs.If all those needs are met by the investment, then that investment can be terme d the perfect investment. Most investors and advisors spend a great deal of time understanding the merits of the thousands of investments available in India. Little time, however, is spent understanding the needs of the investor and ensuring that the most appropriate investments are selected for him. Before making any investment, one must ensure to: ? ? ? ? ? ? ? ? ? ? ? ? Obtain written documents xplaining the investment Read and understand such documents Verify the legitimacy of the investment Find out the costs and benefits associated with the investment Assess the risk-return profile of the investment Know the liquidity and safety aspects of the investment Ascertain if it is appropriate for your specific goals Compare these details with other investment opportunities available Examine if it fits in with other investments you are considering or you have already made Deal only through an authorized intermediary Seek all clarifications about the intermediary and the investment Expl ore the options available to you if something were to go wrong, and then, if satisfied, make the investment. 1. 2 INVESTMENT NEEDS OF AN INVESTOR Investing money is a stepping stone to manage spending habits and prepare for the future expenses. Most people recognize the need to put their money away for events or circumstances that may occur in future. People invest money to manage their personal finances some of them invest to plan for retirement, while others invest to accumulate wealth. Each one has a different need and each of them expect something from their money in future. By and large, most investors have eight common needs from their investments: i. ii. iii. iv. v.Security of original capital Wealth accumulation Tax Advantages Life cover Income 1. 3 TYPES OF INVESTMENT AVENUES Fi gure 1. 1: Various investment alternatives Source: Investment analysis and portfolio management Author: Prasanna Chandra Figure 1. 1 shows various investment alternatives which are explained below. One can invest money in different types of Investment instruments. These instruments can be financial or non-financial in nature. There are many factors that affect one’s choice of investment. Millions of Indians buy fixed deposits, post office savings certificates, stocks, bonds or mutual funds, purchase gold, silver, or make similar investments. They all have a reason for investing their money.Some people want to supplement their retirement income when they reach the age of 60, while others want to become millionaires before the age of 40. We will look at various factors that affect our choice of an investment alternative, let us first understand the basics of some of the popular investment avenues. 1. 3. 1 Non marketable Financial Assets: A good portion of financial assets is represented by non-marketable financial assets. These can be classified into the following broad categories: ? Bank Deposits: The simplest of investment avenues, by opening a bank account and depositi ng money in it one can make a bank deposit. There are various kinds of bank accounts: current account, savings account and fixed deposit account.The interest rate on fixed deposits varies with the term of the deposit. In general, it is lower for fixed deposits of shorter term and higher for fixed deposits of longer term. Bank deposits enjoy exceptionally high liquidity. ? ? Post Office Savings Account: A post office savings account is similar to a savings bank account. The interest rate is 6 percent per annum. Post Office Time Deposits (POTDs): Similar to fixed deposits of commercial banks, POTD can be made in multiplies of 50 without any limit. The interest rates on POTDs are, in general, slightly higher than those on bank deposits. The interest is calculated half-yearly and paid annually. Monthly Income Scheme of the Post Office (MISPO): A popular scheme of the post office, the MISPO is meant to provide regular monthly income to the depositors. The term of the scheme is 6 years. T he minimum amount of investment is 1,000. The maximum investment can be 3, 00,000 in a single account or 6, 00,000 in a joint account. The interest rate is 8. 0 percent per annum, payable monthly. A bonus of 10 percent is payable on maturity. ? Kisan Vikas Patra (KVP): A scheme of the post office, for which the minimum amount of investment is 1,000. There is no maximum limit. The investment doubles in 8 years and 7 months. Hence the compound interest rate works out to 8. 4 percent. There is a withdrawal facility after 2 ? years. National Savings Certificate: Issued at the post offices, National Savings Certificate comes in denominations of 100, 500, 1,000, 5,000 and 10,000. It has a term of 6 years. Over this period Rs. 100 becomes Rs. 160. 1. Hence the compound rate of return works out to 8. 16 percent. ? Company Deposits: Many companies, large and small, solicit fixed deposits from the public. Fixed deposits mobilized by manufacturing companies are regulated by the Company Law Boa rd and fixed deposits mobilized by finance company (more precisely non-banking finance companies) are regulated by the Reserve Bank of India. The interest rates on company deposits are higher than those on bank fixed deposits, but so is risk. ?Employee Provident Fund Scheme : A major vehicle of savings for salaried employees, where each employee has a separate provident fund account in which both the employer and employee are required to contribute a certain minimum amount on a monthly basis. ? Public Provident Fund Scheme: One of the most attractive investment avenues available in India. Individuals and HUFs can participate in this scheme. A PPF account may be opened at any branch of State Bank of India or its subsidiaries or at specified branches of the other public sector banks. The subscriber to a PPF account is required to make a minimum deposit of 100 per year. The maximum permissible deposit per year is 70,000. PPF deposits currently earn a compound interest rate of 8. 0 perc ent per annum, which is totally exempt from taxes. 1. 3. Bonds: Bonds are fixed income instruments which are issued for the purpose of raising capital. Both private entities, such as companies, financial institutions, and the central or state government and other government institutions use this instrument as a means of garnering funds. Bonds issued by the Government carry the lowest level of risk but could deliver fair returns. Many people invest in bonds with an objective of earning certain amount of interest on their deposits and/or to save tax. Bonds are considered to be a less risky investment option and are generally preferred by risk-averse investors. Bond prices are also subject to market risk. Bonds may be classified into the following categories: ? Government ecurities: Debt securities issued by the central government state government and quasi government agencies are referred as gilt edge securities. It has maturities ranging from 3-20 years and carry interest rate that u sually vary between 7 to 10 percent. ? Debentures of private sector companies: Debentures are viewed as a mixture of having a shareholding and a fixed interest loan. Debenture holders are normally entitled to a return equivalent to a fixed percentage of their initial investment. The security inherent in debentures makes them a safer investment than shares. ? ? Preference shares: Investing in shares is safer and dividends are assured every year. Savings bonds 1. 3. Mutual funds: A mutual fund allows a group of people to pool their money together and have it professionally managed, in keeping with a predetermined investment objective. This investment avenue is popular because of its cost-efficiency, risk-diversification, professional management and sound regulation. There are three broad types of mutual fund schemes classified on basis of investment objective: ? Equity schemes: The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes norma lly invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences.Growth schemes are good for investors having a longterm outlook seeking appreciation over a period of time. ? Debt schemes: The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short ru n and vice versa.However, long term investors may not bother about these fluctuations. ? Balanced schemes: The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 40-60% in equity and debt instruments. These funds are also affected because of fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds. 1. 3. 4 Real Estate: Residential real estate is more than just an investment.There are more ways than ever before to profit from real estate investment. Real estate is a great investment option. It can generate an ongoing income source. It can also rise in value overtime and prove a good investment in the cash value of the home or land. Many advisors warn against borrowing money to purc hase investments. The best way to do this is to save up and pay cash for the home. One should be able to afford the payments on the property when the property is vacant, otherwise the property may end up being a burden instead of helping to build wealth. 1. 3. 5 Equity Shares: Equities are a type of security that represents the ownership in a company. Equities are traded (bought and sold) in stock markets.Alternatively, they can be purchased via the Initial Public Offering (IPO) route, i. e. directly from the company. Investing in equities is a good long-term investment option as the returns on equities over a long time horizon are generally higher than most other investment avenues. However, along with the possibility of greater returns comes greater risk. 1. 3. 6 Money market instruments: The money market is the market in which short term funds are borrowed and lent. These instruments can be broadly classified as: ? Treasury Bills: These are the lowest risk category instruments fo r the short term. RBI issues treasury bills [T-bills] at a prefixed day and for a fixed amount. There are 4 types of treasury bills: 4-day T-bill, 91-day T-bill, 182-day T-bill and 364-day T-bill. ? Certificates of Deposits: After treasury bills, the next lowest risk category investment option is certificate of deposit (CD) issued by banks and financial Institution (FI). A CD is a negotiable promissory note, secure and short term, of up to a year, in nature. Although RBI allows CDs up to one-year maturity, the maturity most quoted in the market is for 90 days. ? Commercial Papers: Commercial papers are negotiable short-term unsecured promissory notes with fixed maturities, issued by well-rated organizations. These are generally sold on discount basis. Organizations can issue CPs either directly or through banks or merchant banks.These instruments are normally issued for 30/45/60/90/120/180/270/364 days. ? Commercial Bills: Bills of exchange are negotiable instruments drawn by the se ller or drawer of the goods on the buyer or drawee of the good for the value of the goods delivered. These are called as trade bills and when they are accepted by commercial banks they are called as commercial bills. If the bill is payable at a future date and the seller needs money during the currency of the bill then the seller may approach the bank for discounting the bill. 1. 3. 7 Life insurance policies: Insurance is a form of risk management that is primarily used to hedge the risk of a contingent loss.Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium. An insurer is a company that sells insurance; insured or the policyholder is a person or entity buying the insurance. The insurance rate is a factor that is used to determine the amount which is to be charged for a certain amount of insurance coverage, and is called the premium. It can be classified as: ? Money-back Insurance: Money-back Insurance schemes are used as investment avenues as they offer partial cash-back at certain intervals. This money can be utilized for children’s education, marriage, etc. ? Endowment Insurance: These are term policies.Investors have to pay the premiums for a particular term, and at maturity the accrued bonus and other benefits are returned to the policyholder if he survives at maturity. 1. 3. 8 Bullion Market: Precious metals like gold and silver had been a safe haven for Indian investors since ages. Besides jewellery these metals are used for investment purposes also. Since last 1 year, both Gold and Silver have highly appreciated in value both in the domestic as well as the international markets. In addition to its attributes as a store of value, the case for investing in gold revolves around the role it can play as a portfolio diversifier. 1. 3. 9 Financial Derivatives: Derivatives are contracts and can be used as an underlying asset. Various types of Derivatives are: ? Forwards: A forward contract is a customized contract between two entities, where settlement takes place on a specific date in the future at today’s pre-agreed price. Futures: A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. Futures contracts are special types of forward contracts in the sense that the former are standardized exchange traded contracts ? Options: Options are of two types – calls and puts. Calls give the buyer the right but not the obligation to buy a given quantity of the underlying asset, at a given price on or before a given future date. Puts give the buyer the right, but not the obligation to sell a given quantity of the underlying asset at a given price on or before a given date. Swaps: Swaps are private agreements between two parties to exchange cash flows in the future according to a prearranged formula. They can be regarded as portfolios of forward contracts. E. g. Currency swaps, inte rest swaps. 1. 3 EVALUATION OF VARIOUS INVESTMENT AVENUES Table 1. 1: Summary evaluation of various investment avenues Investment Avenues Return Current yield Equity shares Non convertible debentures Equity schemes Debt schemes Moderate Low Low High No tax on Very High Low High High High High Very High High Negligible Low Average Nil High Low Capital appreciation High High Fairly High High High Risk Marketability/ Liquidity Tax Shelter Convenience ividend Bank deposits Public provident fund Life insurance policies Residential Moderate Moderate Gold and Silver Source: Investment analysis and portfolio management Author: Prasanna Chandra Table 1. 1 shows the evaluation of various investment avenues. From this table we can say that risk, liquidity and return are the so called factors which are considered before making an investment. But there is a trade off between risk and return. Higher the risk higher is the return. Lower the risk and lower is the return. The decision of which mode of investment to choose largely depends upon the investors necessity and the factors which according to him is the most vital one. People with more security concern choose fixed investment like bank deposits and investments in government securities and various post office savings.The main reason for choosing such an investment mode is that the amount invested in the above stated securities seems to be very secure and hence they seemed to be more preferred one where security is the prime concern. People whom returns are most important are ready to take risk to earn fairer risk. The preferred mode of investment over here is equity shares and mutual fund. The risk factor in these modes of investment is basically the returns are basically performance based. If the company performs well the investors can accept fairer returns but if the company fails to perform then there can be a threat to the invested amount. Hence the returns are very volatile with the changes in the market conditions .Nil Moderate Negligible Low Average Average Nil Moderate Nil Average Nil Moderate Nil Average Section 80 C benefit Section 80 C benefit High Nil Fair Average Very High Very High Moderate Nil Negligible High Low Very High 1. 4 ATTRIBUTES OF INVESTMENT Investment can be said to be an art. Many people invest money without knowing what they are doing. Only a few people really understand the art of investing money. They invest according to certain principles. There are also certain factors that affect the investment decisions. All these are done mainly to increase the return on the investment and also to keep the risk to a minimum. The various factors that affect the investment decisions are given below. For evaluating an investment avenue, the following attributes are relevant. ) Rate of Return: The rate of return on an investment for a period (which is usually a period of one year) is defined as follows: Rate of return = Annual income + (Ending price – Beginning price) Beginnin g price Yield: Yield is the annual rate of return for any investment and is expressed as a percentage. With stocks, yield can refer to the rate of income generated from a stock in the form of regular dividends. This is often represented in percentage form, calculated as the annual dividend payments divided by the stock's current share price. Current yield= Annual cash inflows Market price Capital Appreciation: It’s the rise in the market price of an asset. Capital appreciation is one of two major ways for investors to profit from an investment in a company. The other is through dividend income. ) Risk: The risk of investment refers to the variability of its rate of return. A simple measure of dispersion is the range of values, which is simply the difference between the highest and the lowest values. Figure 1. 2: Relationship between Expected Return and Risk Figure 1. 2 shows the relationship between expected return and risk. From this figure it is clear that with higher risk the returns also increases while it decrease as the risk decreases. High variance indicates high degree of risk and low variance indicates lesser risk. Expected returns increases when investors is willing to take risk. Other measures commonly used in finance are as follows: ?Variance: This is the mean of the squares of deviations of individual returns around their average values ? Standard deviation: This is the square root of variance ? Beta: This reflects how volatile the return from an investment is, in response to market swings. ? Risk = Actual Return – Expected Returns If, Actual Return = Expected Return = Risk Free Investment If, Actual Return ; or ; Expected Return is risky investment c) Marketability: An investment is highly marketable or liquid if: ? ? ? It can be transacted quickly The transaction cost is low; and The price change between two successive transactions is negligible. The liquidity of a market may be judged in terms of its depth, breadth, and resilience .Depth refers to the existence of buy as well as sells orders around the current market price. Breadth implies the presence of such orders in substantial volume. Resilience means that new orders emerge in response to price changes. Generally, equity shares of well established companies enjoy high marketability and equity shares of small companies in their formative years have low marketability. High marketability is a desirable characteristic and low marketability is an undesirable one. d) Tax Shelter: Tax benefits are of the following three kinds: ? ? ? Initial Tax Benefit: An initial tax benefit refers to the tax relief enjoyed at the time of making the investment.Continuing Tax Benefit: A continuing tax benefits represent the tax shield associated with the periodic returns from the investment. Terminal Tax Benefits: A terminal tax benefit refers to relief from taxation when an investment is realized or liquidated. e) Convenience: Convenience broadly refers to the ease with which the investment can be made and looked after. The degree of convenience associated with investments varies widely. At one end of the spectrum is the deposit in a savings bank account that can be made readily and that does not require any maintenance effort. At the other end of the spectrum is the purchase of a property that may involved a lot of procedural and legal hassles at the time of acquisitions and a great deal of maintenance effort subsequently. 1. APPROACHES TO INVESTMENT DECISION MAKING The stock market is thronged by investors pursuing diverse investment strategies which may be subsumed under four broad approaches: i. Fundamental Approach: The basic tenets of the fundamental approach, which is perhaps most commonly advocated by investment professionals, are as follows: ? There is an intrinsic value of a security, which depends upon underlying economic (fundamental) factors. The intrinsic value can be established by a penetrating analysis of the fundamental factors relating to the company, industry, and economy. ? At any given point of time, there are some securities for which the existing market price will differ from the intrinsic value.Sooner or later, of course, the market price will fall in line with the intrinsic value. ? Superior returns can be earned by buying under-valued securities (securities whose intrinsic value exceeds the market price) and selling over-valued securities (securities whose intrinsic value is less than the market price). ii. Psychological Approach: The psychological approach is based on the premise that stock prices are guided by emotion rather than reason. Stock prices are believed to be influenced by the psychological mood of investors. When greed and euphoria sweep the market, prices rise to dizzy heights. On the other hand, when fear and despair envelop the market, prices fall to abysmally low levels.Since psychic values appear to be more important than intrinsic values, the psychological approach suggests that it is m ore profitable to analyze how investors tend to behave as the market is swept by waves of optimism and pessimism, which seem to alternate. The psychological approach has been described vividly as the ‘castles in the air’ theory Burton G. Malkiel. Those who subscribe to the psychological approach or the ‘castles in the air’ theory generally use some form of technical analysis which is concerned with a study of internal market data, with a view to developing trading rules aimed at profit making. The basic premise of technical analysis is that there are certain persistent and recurring patterns of price movements, which can be discerned by analyzing market data.Technical analysts use a variety of tools like bar chart, point and figure chart, moving average analysis, breadth of market analysis, etc. iii. Academic Approach: Over the last five decades or so, the academic community has studied various aspects of the capital market, particularly in the advanced cou ntries, with the help of fairly sophisticated methods of investigation. ? Stock markets are reasonably efficient in reacting quickly and rationally to the flow of information. Hence, stock prices reflect intrinsic value fairly well. Put differently, Market price = Intrinsic value ? Stock price behaviour corresponds to a random walk. This means that successive price changes are independent. As a result, past price behaviour cannot be used to predict future price behaviour. ?In the capital market, there is a positive relationship between risk and return. More specifically, the expected return from a security is linearly related to its systematic risk iv. Eclectic Approach: The eclectic approach draws on all the three different approaches discussed above. The basic premises of the eclectic approach are as follows: ? Fundamental analysis is helpful in establishing basic standards and benchmarks. However, since there are uncertainties associated with fundamental analysis, exclusive relia nce on fundamental analysis should be avoided. Equally important, excessive refinement and complexity in fundamental analysis must be viewed with caution. Technical analysis is useful in broadly gauging the prevailing mood of investors and the relative strengths of supply and demand forces. However, since the mood of investors can vary unpredictably excessive reliance on technical indicators can be hazardous. More important, complicated technical systems should ordinarily be regarded as suspect because they often represent figments of imagination rather than tools of proven usefulness. ? The market is neither as well-ordered as the academic approach suggest, nor as speculative as the psychological approach indicates. While it is characterized by some inefficiencies and imperfection, it seems to react reasonably efficiently and rationally to the flow of information.Likewise, despite many instances of mispriced securities, there appears to be a fairly strong correlation between risk a nd return. ? Level of return often necessitates the assumption of a higher level of risk. 1. 7 COMMON ERRORS IN INVESTMENT MANAGEMENT Investments always do not generate wealth sometimes it fail do so because of some conditions. The reason for this failure is either the market condition or some mistakes made by the investors. We cannot control market condition but errors made by investors could be avoided. Investors appear to be prone to the errors in managing their investments. Some of the errors made by investors are discussed below: 1. 7. Inadequate Comprehension of Return and Risk Many investors have unrealistic and exaggerated expectations from investments, in particular from equity shares and convertible debentures. One often comes across investors who say that they hope to earn a return of 25 to 30 percent per year with virtually no risk exposure or even double their investment in a year or so. They have apparently been misled by one or more of the following; (a) tall and unju stified claims made by people with vested interests; (b) Exceptional performance of some portfolio they have seen or managed, which may be attributable mostly to fortuitous factors; and (c) Promises made by tipsters, operators, and others. In most of the cases, such expectations reflect investor inexperience and gullibility. 1. 7. Vaguely Formulated Investment Policy Often investors do not clearly spell out their risk disposition and investment policy. This tends to create confusion and impairs the quality of investment decisions. Ironically, conservative investors turn aggressive when the bull market is near its peak in the hope of reaping a bonanza; likewise, in the wake of sharp losses inflicted by a bear market, aggressive investors turn unduly cautions and overlook opportunities before them. Ragnar D. Naess put it this way: â€Å"The fear of losing capital when prices are low and declining, and the greed for more capital gains when prices are rising, are probably, more than an y other factors, responsible for poor performance. if you know what your risk attitude is and why you are investing, you will learn how to invest well. A well articulated investment policy, adhered to consistently over a period of time, saves a great deal of disappointment. 1. 7. 3 Naive Extrapolation of the Past Investors generally believe in a simple extrapolation of past trends and events and do not effectively incorporate changes into expectations. As Arthur Zeikel says: â€Å"People generally, and investors particularly, fail to appreciate the working of countervailing forces; change and momentum are largely misunderstood concepts. Most investors tend to cling to the course to which they are currently committed, especially at turning point. † `The apparent comfort provided by extrapolating too far, however, is dangerous. As Peter Bernstein says: â€Å"Momentum causes things to run further and longer than we anticipate. They very familiarity of a force in motion reduces our ability to see when it is losing its momentum. Indeed, that is why extrapolating the present into the future so frequently turns out to be the genesis of an embarrassing forecast. † 1. 7. 4 Cursory Decision Making Investment decision making is characterized by a great deal of cursoriness. Investors tend to: ? ? ? Base their decisions on partial evidence, unreliable hearsay, or casual tips given by brokers, friends, and others.Cavalierly brush aside several of investment risk (market risk, business risk, and interest rate risk) as greed overpowers them. Uncritically follow others because of the temptation to ride the bandwagon or lack of confidence in their own judgment. 1. 7. 5 Untimely entries and exits Investors tend to follow an irrational start and stop approach to the market characterized by untimely entries (after a market advance has long been underway) and exit (after a long period of stagnation and decline). 1. 7. 6 High costs Investors trade excessively and spend a lot on investment management. A good proportion of investors indulge in day trading in the hope of making quick profits.However more often transaction cost wipes out whatever profits they may generate from frequent trading. 1. 7. 7 Over-Diversification and Under-Diversification Many individuals have portfolios consisting of thirty to sixty, or even more, different stocks. Managing such portfolios is an unwieldy task and as R. J. Jenrette put it: Overdiversification is probably the greatest enemy of portfolio performance. Most of the portfolios we look at have too many names. As a result, the impact of a good idea is negligible. † Perhaps as common as over-diversification is under-diversification. Many individuals do not apparently understand the principle of diversification and its benefit in term of risk reduction.A number of individual portfolios seem to be highly under-diversified, carrying an avoidable risk exposure. 1. 7. 8 Wrong Attitude towards Losses and Profits An investor has an aversion to admit his mistake and cut losses short. If the price falls, contrary to his expectation at the time of purchase, he somehow hopes that it will rebound and he can break even. Surprisingly, such a belief persists even when the prospects look dismal and there may be a greater possibility of a further decline. If the price recovers due to favourable conditions, there is a tendency to dispose of the share when its price more or less equals the original purchase price, even though there may be a fair chance of further increases.The psychological relief experienced by an investor from recovering losses seems to motivate such behaviour. This means the tendency is to let the losses run and cut profits short, rather than to cut the losses short and let the profits run. 1. 8 RISKS IN INVESTMENT Risk is uncertainty of the income /capital appreciation or loss or both. Every investment (equity, debt, property, etc. ) carries an element of risk that is unique to it. Tho ugh risk cannot be totally eliminated, it can be managed by undertaking effective risk management. To manage risk, one first need to identify different kinds of risks involved in investing and then take appropriate steps to reduce it.Risk and return share a direct relationship with one another. Therefore, an investment which carries negligible risk, will offer a low return (viz. bonds issued by the Reserve Bank of India) while an investment which carries a higher risk, also offers the potential of higher returns (stocks). All investments are a ‘trade off’ between risk and returns. Let us first discuss the types of risks. 1. 8. 1 Types of Risks All investments carry their unique set of risks. Though there are several types of risks, the important ones are – market risk, credit risk, interest rate risk, inflation risk, currency risk and liquidity risk. These are briefly explained below: ) Market Risk: A share may rise or fall depending on the fortunes of the compan y, the industry it is in, or in response to investor sentiment. b) Credit Risk: This risk is attributed to debt investments wherein the borrower may default on interest and/or principal repayment. c) Interest Rate Risk: When interest rates rise, fixed income investments lose value. This is because the investor will continue to earn the same (lower) interest rate until the investment matures while market interest rates have already gone up. In order to compensate for a lower interest rate compared to the market rate, the fixed income investment will thus have to be priced at a lower rate. ) Inflation Risk: Rising inflation will erode the value of your income and asset. Due to inflation, the cost of products and services will rise and consequently, your future income and assets will be worth less than what they are worth today. e) Currency Risk: Changes in exchange rates between currencies could lead to decline in value of your investments. With Indian investors now being allowed to i nvest in other countries, you will now be exposed to currency risk i. e. a fall in the value of the currency in which you are investing vis-a-vis your home currency i. e. the Rupee. f) Liquidity Risk: Certain investments carry the risk of poor liquidity either due to the nature of the asset or regulatory reasons.For example, property is inherently an illiquid investment as it cannot be sold as simply as selling stocks. Certain investments like the Reserve Bank of India bonds are not transferable till maturity. Investments in Equity Linked Savings Schemes are illiquid for a period of 3 years and in case you redeem from such schemes, your tax benefit is withdrawn. 1. 8. 2 Risk Management Once different kinds of risks associated with investments are identified appropriate steps can be taken to reduce these risks. Some of these steps are: a) Diversification: Most types of risks can be managed by diversifying your investments across asset classes (stocks, bonds, properties etc. ), indust ry, currencies etc.Diversification spreads the risk and reduces the adverse impact that any one investment might have on a portfolio. b) Research and Monitor: Rigorous research and continuous monitoring will help in controlling the market and credit risk of your investments. This will caution beforehand to avoid an investment and alert in case the risk is increasing on an investment already undertaken. 1. 8. 3 Risk Tolerance Level: Risk includes the possibility of losing money. However, extra considerations should be made in addition to the safety of the principal and the potential for growth. These considerations include the likelihood of achieving the financial goals you have established.Additionally, one should consider whether he/she is willing and able to accept a higher level of risk in order to achieve further rewards. Before starting on the setting of the investment portfolio, every investor should establish his/her risk tolerance level. Only after this he/she is ready to bu ild strategies for the accomplishment of his/her financial goals. The higher the degree of risk involved in the investment portfolio the greater the chances of higher returns and failures. The setting of the risk tolerance level is very subjective issue. However, younger investors can afford more risk taking since they have more time to fix the losses. On the other hand older investors should apply more conservative approach since they have less time in front of them.But, they should keep in mind that they greatly decrease their chances of faster achieving their financial goals. A portfolio that carries more bonds is considered more conservative and risk averse. However, the one that includes a greater percentage of stocks is more risk taking with higher potential of rewards. Many financial experts recommend the diversification between investments with different degrees of risk. This is a good idea since your portfolio will benefit from the rises and falls of the different investmen ts and will alleviate the potential of losing money. Risk Personalities: Based on the risk capacity and risk tolerance, risk appetite can be decided. This is the level of risk that one is ready to bear.Broadly risk personalities can be categorised at 3 levels – Conservative, Balanced and Aggressive. Each risk personality has a different objective which it aims to achieve through the investment portfolio. These personalities are explained below: ? ? ? Conservative personality: For investors having this personality preservation of the capital invested is the ultimate goal, even if it means compromising on the returns. Balanced personality: People with this type of personality wish to strike a balance between high-risk and low-risk investments. Aggressive personality: Investors with such personality do not wish to compromise at all on the returns, even if their capital erodes. 2. 1 INTRODUCTIONIndian investor today have to endure a slow-moving economy, the steep market declines prompted by declining revenues, alarming reports of scandals ranging from illegal corporate accounting practices like that of Satyam to insider trading to make investment decisions. Stock market’s performance is not simply the result of intelligible characteristics but also due to the emotions that are still baffling to the analysts. Despite loads of information coming from all directions, it is not the calculations of financial wizards, or company’s performance or widely accepted criterion of stock performance but the investor’s irrational emotions like overconfidence, fear, risk aversion, etc. seem to decisively drive and dictate the fortunes of the market. The market is so volatile that its behaviour is unpredictable. In the past couple of years, the movement of share prices exceeded all the limits and had gone remarkably low and high levels. These dramatic prices of the shares ruin the concept of intrinsic value and rational investment behaviour. The traditi onal finance theories assume that investors are rational but they are unable to explain the behaviour and pricing of the stock market completely. Many research studies have validated the relationship between a dependent variable i. e. , risk tolerance level and independent variables such as demographic characteristics of an investor.Most of the Indian investors are from high income group, well educated, salaried, and independent in making investment decisions and from the past trends it is also seen that they are conservative in nature. Television is the media that is largely influencing the investor’s decisions. Hence, in the present project report an attempt has been made to study the relationship between risk tolerance level and demographic characteristics of Indian investors. 2. 2 STATEMENT OF THE PROBLEM This study on investor’s behaviour is an attempt to know the profile and the characteristics of the investors so as to understand their preference with respect to their investments. The main focus of the study is to discover the influence of demographic factors like gender and age on risk tolerance level of the investor.The study mainly concentrates on the factors that influence an individual investor before making an investment. It also studies the various patterns in which investors like to invest their money based on their risk tolerance level and other demographic factors like income level, occupation etc. 2. 3 REVIEW OF LITERATURE The literature review section examines the importance of research studies, company data or industry reports that serve as a foundation for the setup of study. The research dimension of the related literature and the relevant information begins from an explanatory perspective, approaching towards specific studies which do related to judge the limitations and informational gaps in data from the secondary sources.This analysis may reveal conclusions from past studies to realize the reliability of the secondary so urces and their credibility. This in turn enables one to rely on a comprehensive review for the study. Literature suggests that major research in the area of investor’s behaviour has been done by behavioural scientists such as Weber (1999), Shiller (2000) and Shefrin (2000). Shiller (2000) who strongly advocated that stock market is governed by the market information which directly affects the behaviour of the investors. Several studies have brought out the relationship between the demographics such as Gender, Age and risk tolerance level of individuals. Of this the relationship between Age and risk tolerance level has attracted much attention.Horvath and Zuckerman (1993) suggested that one’s biological, demographic and socioeconomic characteristics; together with his/her psychological makeup affects one’s risk tolerance level. Malkiel (1996) suggested that an individual’s risk tolerance is related to his/her household situation, lifecycle stage and subje ctive factors. Mittra (1995) discussed factors that were related to individuals risk tolerance, which included years until retirement, knowledge sophistication, income and net worth. Guiso, Jappelli and Terlizzese (1996), Bajtelsmit and VenDerhei (1997), Powell and Ansic (1997), Jianakoplos and Bernasek (1998), Hariharan, Chapman and Domain (2000), Hartog, Ferrer-I-Carbonell and Jonker (2002) concluded that males are more risk tolerant than females.Wallach and Kogan (1961) were perhaps the first to study the relationship between risk tolerance and age. Cohn, Lewellen et. al found risky asset fraction of the portfolio to be positively correlated with income and age and negatively correlated with marital status. Morin and Suarez found evidence of increasing risk aversion with age although the households appear to become less risk averse as their wealth increases. Yoo (1994) found that the change in the risky asset holdings were not uniform. He found individuals to increase their inves tments in risky assets throughout their working life time, and decrease their risk exposure once they retire. Lewellen et. l while identifying the systematic patterns of investment behaviour exhibited by individuals found age and expressed risk taking propensities to be inversely related with major shifts taking place at age 55 and beyond. Indian studies on individual investor’s were mostly confined to studies on share ownership, except a few. The RBI's survey of ownership of shares and L. C. Gupta's enquiry into the ownership pattern of Industrial shares in India were a few in this direction. The NCAER's studies brought out the frequent form of savings of individuals and the components of financial investments of rural households. The Indian Shareowners Survey brought out a volley of information on shareowners.Rajarajan V (1997, 1998, 2000 and 2003) classified investors on the basis of their demographics. He has also brought out the investor’s characteristics on the b asis of their investment size. He found that the percentage of risky assets to total financial investments had declined as the investor moves up through various stages in life cycle. Also investor’s lifestyles based characteristics has been identified. The above discussion presents a detailed picture about the various facets of risk studies that have taken place in the past. In the present study, the findings of many of these studies are verified and updated. Latha Krishnan (2006) explained as Investments come in many forms.While some people consider hard assets such as land, house, gold and platinum as investments, others look to monetary instruments such as stocks and bonds as ways to make their money grow. A cautious or conservative investor is unlikely to play carelessly with his hard-earned money. So he keeps to safe investments that guarantee the return of his capital and still earn good returns in a stipulated period if the product in which he invested gains in that pe riod. In such an investment, even if the markets go down and he does not gain much, he also does not suffer a heavy loss. A wealthy person with more money to invest can take more risks and invest in a variety of products that major financial players provide.A wealth of information on these as well as comments and criticisms on their performances and profitability is readily available. â€Å"Perception of investors towards capital market instruments globally† by John Marshall and â€Å"Investment analysis and Portfolio management’† by Punithavathy Pandian. John Marshall’s study was at global scale and it explains the perception of people across globe towards capital market instruments and Pandian explains the theoretical aspects of capital market instruments and use of various investment avenues to build a strong portfolio. 2. 4 NEED FOR STUDY Investing money is a crucial and deciding the avenues where to invest needs a lot of planning. In India people are more conservative and hence prefer investments that are less risky.Similarly there are other demographic factors like age, income level, gender which affect their decision. As the availability of financial products increase, perception of investors towards such avenues changes over a period of time. It becomes important for a marketer to understand the perception of investors towards investment avenues to successfully pitch the product. Marketing is known as meeting needs profitably. If the marketer is able to understand the mindset of investor towards a product then he/she will be in a position to market the product. This report attempts to study the behavior of Indian investors while making an investment. Here we also look upon other factors that influence them while making investment decisions.Innovations in financial products like derivatives, unit linked insurance products, fund of funds likewise are not easily understood by the investor. Hence the need for this study arises t o understand what exactly an Indian investor thinks before investing his/her money and how much risk he/she is willing to take. This report gives the marketer and other peers to successfully market the financial products which are more popular, as it gives information regarding the perception of investors towards investment avenues in India. 2. 5 OBJECTIVES OF THE STUDY 2. 5. 1 Primary Objectives ? ? ? ? ? ? ? To study the investment characteristics of investors To study the objectives of investment plan of an investors To study the demographic information of investors 2. 5. Secondary Objectives To know the preferred investment avenues of investors To identify the preferred sources of information influencing investment decisions To understand the risk tolerance level of the investors and suggest a suitable portfolio To study the dependence/independences of the demographic factors (Gender, Age, income level) of the investor and his/her risk tolerance level 2. 6 SCOPE OF STUDY Based o n previous research in related areas, a questionnaire was constructed to measure the investment pattern of individuals on the basis of demographic characteristics and the risk tolerance of investors was also calculated. It helped us to understand how an Indian investor behaves while investing.This study will be helpful to mutual fund companies and other investment companies to understand individual behaviour of investors so that they could build suitable investment options for them individually. Also this study will help the investor to decide the areas where they could invest. 2. 7 HYPOTHESIS A hypothesis describes the relationship between or among variables. A good hypothesis is one that can explain what it claims to explain, is testable and has greater range, probability and simplicity than its rivals. There are two approach of hypothesis testing: 1) Classical or sampling theory statistics and 2) The Bayesian approach In the present dissertation chi square test has been used to f ind out the dependence/independence of various factors that influence investment decision.Hypothesis has been found between following factors: ? ? ? ? ? Gender and risk tolerance of respondents Age and preferred investment avenues by the respondents Income and investment avenues preferred by the respondents Age of respondents and time horizon for investment Age and risk tolerance of the respondents 2. 8 RESEARCH DESIGN Research methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. ? Research type Many investors were reluctant to reveal their investment details especially the amount of money invested so, referral sampling method is used for this study. Sample description The sample was drawn from the population of the potential investors from Tamil Nadu. A survey was conducted to understand the investor’s behaviour with the help of questionnaire. It was carried out with a sample siz e of 100 investors. 2. 9 TOOLS FOR DATA COLLECTION Primary data: The data has been collected directly from respondent with the help of structured questionnaires. Secondary data: The secondary data has been collected from various magazines, journals, newspapers, text books and related websites. 2. 10 METHOD OF ANALYSIS Statistical techniques like Chi square test, simple percentage method are used to analyze and interpret raw data. Chi square was used to show the dependency/independency of various factors.After collecting the data its variable having defined character, it was tabulated and analyzed with the help of charts and graphs in Microsoft Excel 2007. 2. 11 LIMITATIONS OF STUDY †¢ †¢ †¢ †¢ Sample size is small because of the time constraint Respondent may be hesitant to provide their investment details Behaviour of investors doesn’t remain same for long time Time for the study is limited 3. 1 INDIAN FINANCIAL MARKET Money always flows from surplus sect or to deficit sector. That means persons having excess of money lend it to those who need money to fulfil their requirement. Similarly, in business sectors the surplus money flows from the investors or lenders to the businessmen for the purpose of production or sale of goods and services.So, we find two different groups, one who invest money or lend money and the others, who borrow or use the money. The financial markets act as a link between these two different groups. It facilitates this function by acting as an intermediary between the borrowers and lenders of money. So, financial market may be defined as ‘a transmission mechanism between investors (or lenders) and the borrowers (or users) through which transfer of funds is facilitated’. It consists of individual investors, financial institutions and other intermediaries who are linked by a formal trading rules and communication network for trading the various financial assets and credit instruments.Financial market talks about the primary market, FDIs, alternative investment options, banking and insurance and the pension sectors, asset management segment as well. India Financial market happens to be one of the oldest across the globe and is the fastest growing and best among all the financial markets of the emerging economies. The history of Indian capital markets spans back 200 years, around the end of the 18th century. It was at this time that India was under the rule of the East India Company. The capital market of India initially developed around Mumbai; with around 200 to 250 securities brokers participating in active trade during the second half of the 19th century. 3. 1. Scope of Indian Financial Market The financial market in India at present is more advanced than many other sectors as it became organized as early as the 19th century with the securities exchanges in Mumbai, Ahmedabad and Kolkata. In the early 1960s, the number of securities exchanges in India became eight – incl uding Mumbai, Ahmedabad and Kolkata. Apart from these three exchanges, there was the Madras, Kanpur, Delhi, Bangalore and Pune exchanges as well. Today there are 23 regional securities exchanges in India. The Indian stock markets till date have remained stagnant due to the rigid economic controls. It was only in 1991, after the liberalization process that the India securities market witnessed a flurry of IPOs serially. The market saw many new companies spanning across different industry segments and business began to flourish.The launch of the NSE (National Stock Exchange) and the OTCEI (Over the Counter Exchange of India) in the mid 1990s helped in regulating a smooth and transparent form of securities trading. The regulatory body for the Indian capital markets was the SEBI (Securities and Exchange Board of India). The capital markets in India experienced turbulence after which the SEBI came into prominence. The market loopholes had to be bridged by taking drastic measures. 3. 1. 2 Potential of Indian Financial Market India Financial Market helps in promoting the savings of the economy – helping to adopt an effective channel to transmit various financial policies.The Indian financial sector is welldeveloped, competitive, efficient and integrated to face all shocks. In the India financial market there are various types of financial products whose prices are determined by the numerous buyers and sellers in the market. The other determinant factor of the prices of the financial products is the market forces of demand and supply. The various other types of Indian markets help in the functioning of the wide India financial sector. 3. 1. 3 Features of Indian Financial Market ? ? India Financial Indices – BSE 30 Index, various sector indexes, stock quotes, Sensex charts, bond prices, foreign exchange, Rupee & Dollar Chart Indian Financial market news ?Stock News – Bombay Stock Exchange, BSE Sensex 30 index, S&P CNX-Nifty, company information, is sues on market capitalization, corporate earnings statements ? Fixed Income – Corporate Bond Prices, Corporate Debt details, Debt trading activities, Interest Rates, Money Market, Government Securities, Public Sector Debt, External Debt Service ? ? ? ? ? ? ? ? Foreign Investment – Foreign Debt Database composed by BIS, IMF, OECD,& World Bank, Investments in India & Abroad Global Equity Indexes – Dow Jones Global indexes, Morgan Stanley Equity Indexes Currency Indexes – FX & Gold Chart Plotter, J. P. Morgan Currency Indexes National and Global Market Relations Mutual Funds Insurance Loans Forex and Bullion The main functions of financial market are: ? ? ? It provides facilities for interaction between the investors and the borrowers. It provides pricing information resulting from the interaction between buyers and sellers in the market when they trade the financial assets. It provides security to dealings in financial assets. It ensures liquidity by provid ing a mechanism for an investor to sell the financial assets. It ensures low cost of transactions and information. 3. 2 CLASSIFICATION OF FINANCIAL MARKETS Figure 3. 1: Classification of financial markets Source: Investment analysis and portfolio management Author: Prasanna Chandra Figure 3. 1 shows the classification of financial markets.From this figure we can interpret that there are different ways of classifying financial market. ? One is to classify financial market by the type of financial claim. The debt market is the financial market foe fixed claims (debt instrument) and the equity market is the financial market for residual claims (equity instruments) ? The second way is to classify financial markets by the maturity of claims. The market for short term financial claims is referred to as the money market and the market for long term financial claims is referred to as the capital market. ? The third way to classify financial markets is based on whether the claims represent n ew issues or outstanding issues.The market where issues sell new claims is referred as primary market and the market where issues sell outstanding claims is referred as secondary market. ? The fourth way to classify financial markets is by the timing of delivery. A cash or spot market is one where the delivery occurs immediately and forward or futures markets are those markets where the delivery occurs at a pre determined time in future. ? The fifth way to classify financial markets is by the nature of its organizational structure. An exchange traded market is characterized by a centralized organization with standardized procedures and an over the counter market is a decentralized market with customized procedures.These markets are further explained in detail. 3. 3 MONEY MARKET The money market is a market for short-term funds, which deals in financial assets whose period of maturity is up to one year. It should be noted that money market does not deal in cash or money as such but s imply provides a market for credit instruments such as bills of exchange, promissory notes, commercial paper, treasury bills, etc. These financial instruments are close substitute of money. These instruments help the business units, other organizations and the Government to borrow the funds to meet their short-term requirement. Money market does not imply to any specific market place.Rather it refers to the whole networks of financial institutions dealing in short-term funds, which provides an outlet to lenders and a source of supply for such funds to borrowers. Most of the money market transactions are taken place on telephone, fax or Internet. The Indian money market consists of Reserve Bank of India, Commercial banks, Co-operative banks, and other specialized financial institutions. The Reserve Bank of India is the leader of the money market in India. Some Non-Banking Financial Companies (NBFCs) and financial institutions like LIC, GIC, UTI, etc. also operate in the Indian money market. 3. 4 CAPITAL MARKET Capital Market may be defined as a market dealing in medium and long-term funds.It is an institutional arrangement for borrowing medium and long-term funds and which provides facilities for marketing and trading of securities. So it constitutes all long-term borrowings from banks and financial institutions, borrowings from foreign markets and raising of capital by issue various securities such as shares debentures, bonds, etc. The market where securities are traded known as Securities market. It consists of two different segments namely primary and secondary market. The primary market deals with new or fresh issue of securities and is, therefore, also known as new issue market; whereas the secondary market provides a place for purchase and sale of existing securities and is often termed as stock market or stock exchange. 3. 4. PRIMARY MARKET The Primary Market consists of arrangements, which facilitate the procurement of longterm funds by companies by mak ing fresh issue of shares and debentures. You know that companies make fresh issue of shares and/or debentures at their formation stage and, if necessary, subsequently for the expansion of business. It is usually done through private placement to friends, relatives and financial institutions or by making public issue. In any case, the companies have to follow a well-established legal procedure and involve a number of intermediaries such as underwriters, brokers, etc. who form an integral part of the primary market.You must have learnt about many initial public offers (IPOs) made recently by a number of public sector undertakings such as ONGC, GAIL, NTPC and the private sector companies like Tata Consultancy Services (TCS), Biocon, Jet-Airways and so on. 3. 4. 2 SECONDARY MARKET The secondary market known as stock market or stock exchange plays an equally important role in mobilizing long-term funds by providing the necessary liquidity to holdings in shares and debentures. It provide s a place where these securities can be encashed without any difficulty and delay. It is an organized market where shares and debentures are traded regularly with high degree of transparency and security.In fact, an active secondary market facilitates the growth of primary market as the investors in the primary market are assured of a continuous market for liquidity of their holdings. The major players in the primary market are merchant bankers, mutual funds, financial institutions, and the individual investors; and in the secondary market you have all these and t

Children literacy Essay

The purpose of this story is to improve children literacy. This story helps children to learn different animal names and different things. User can listen and read to story as well. Audience: The audience of this story are children age 4 – 7 and this story will help them to learn names of different things and animals and will improve their grammar. I found that by reading the story and it also has been mentioned on the website. The purpose of final product is to provide entertainment so I will need to include this feature however I will make sure that the text on my animation is appropriate and simple so that the audience can understand it easily. Techniques used: This animation has used a number of techniques to make it professional and attractive which eventually makes it successful. The animation has used buttons to navigate from scene to other by clicking the â€Å"story bear† or â€Å"next†. Users can start the story again if by clicking â€Å"back to the start†. This buttons are very useful as it allows the user to skip the scene or start the story again if they have missed any scene. I will also make that I use buttons on my animation so that user have some flexibility and can navigate easily. These features will make my animation professional and suitable for my audience. At the start of the animation there are two options to watch the story with sound or without sound. This is the technique used by most professional websites, it helps user to understand the story more easily and make the animation suitable for its purpose. This animation asks user to click on different things, when user click on an object the next scene can be watch. This means this animation has used different objects on different scenes as a button. I will use this technique on my animation as it will allow user to interact with the animation which will keep the user interested in the animation. This technique also makes the animation very professional which is a positive aspect about this animation. The object to click on An effect has been added to some objects so when a user is going to click on it and pointer is on it. The appearance of the object will change; a white border will surround this object. This technique will help users to show that this is the right object to click on to watch next scene. This technique is shown on the above screen shot. In this animation the objects has been used as buttons to make it interactive I will use this technique in my animation. I will also use objects or characters as buttons, which will allow users to watch next scene. I will use buttons on my animation and add effect so that the appearance of these buttons can be change when the pointer is on it. This technique will make my animation more eye-catching and aesthetic. The zoom in and out technique has been used several times in this animation. This technique helps user to see the close of the objects which will help them to understand the story. This is a very useful technique as it clearly shows what is happening in the story. I will use this technique where it is important. This will help me to meet the professional standard. This animation has used clouds and question mark to show that the characters are thinking. The face expression also shows that the characters are thinking because of the eye movement and hands position. Below the screen shots shows the two different characters of the story thinking. This animation is very professional because it shows the face expressions. The face of the Micky becomes red when he is angry. Below the screen shots are showing two different emotions. This is a high quality technique as this makes the story interesting and realistic. I will use this technique in my animation; I will show the facial expression of my characters to make my animation attractive to its audience and professional. This animation used a lot of motion tweens to show the movements. The legs of the characters move forward to show the walking effects, hands move to show that they are talking and thinking. At the start of the story the leaves are falling down. The bird’s beak is moving to show the talking effect, the eye balls of almost all characters are moving and the story bear is moving his one foot while thinking. This is a positive aspect on this animation as it makes the animation more interesting and realistic. I will definitely use motion tweens in my animation to show the characters walking and playing and to show the movements of objects. This will help me to create a realistic and appealing final product. Navigation and interaction: This animation is users friendly as its navigation is very effective. To watch the next scene users have to click â€Å"next† or â€Å"story bear† button, this button will also helps user to skip scene. There is another button â€Å"start the story again† which allow user to watch the story again. This gives the user some flexibility. This animation interacts with the users a lot as user have to click the button to watch the next scene and it also asks user to click on different objects. This animation allow user to get involve in the story which will keep their interest till the end. Strengths: Techniques: There are number of good points about this story. These strengths make the animation suitable for its purpose and audience. First of all the animation has used range of techniques. Such as motion tweens, zoom in, face expressions and user interaction. These techniques made the story interesting and professional. This animation also uses clouds to show what the characters are thinking. I will be using some of these techniques to ensure that my product is to the best possible standard. Another good point about this animation is that the scenes flow in a sequence which makes it suitable for its audience, as it is very easy for its audience to understand what is going in the story. I will make sure that the sequence of scenes of my animation is easy to understand and appropriate for my target audience so that they can enjoy the story. Characters and objects: This animation has got six different characters and used a lot of objects. The number of characters are appropriate as they not too much which makes the animation crowdy and audience would not be able to understand what’s happening in the story or there not very few characters which makes the story boring. I will also make sure that the number of characters in my animation is appropriate so that my animation is not boring or crowded. This will make my animation suitable for its audience. Sound and text: The story has an option which allow user to listen to the story as well as reading. This is a good point of this animation because it makes the animation suitable for the purpose it has made for by improving their listening skills. The text of this animation is appropriate for its audience and help to keep the user’s interest till the end. I will include sound and text on my animation so that the users can understand the story easily by listening or reading it. This will give users some flexibility. I will also include some other sounds for example sound of a ball kick to make my animation vibrant and professional.