Investor Attitudes Towards Risk on Stock Market

Investor poses Towards Risk on Stock MarketFor the abnormal return in stock grocery, investor places will become increasingly important. This paper attempts to snap the contact of investor spatial relation towards hazard that eat up a greater influence on stock merchandise .In this contemplate researcher foc utilize on ill-tempered Islamabad stock trade place place and obtain primary data based on five point Likert scale from investor of ISE. The data indicate that investors ask comfortably different attitudes toward various investments. However, there atomic number 18 signifi tail assemblyt statistical differences between attitudes of the investor groups in their attitudes toward three assay types. These data likewise show signifi dissolvet differences in attitudes toward take chances of infection. After analyzing the data through the Regression and Correlation, including ANOVA test, the result found the signifi johnce violation of varyings on stock market.I ntroductionThe whole financial hypothesis is based on the basic hypothesis of rational investor on the financial markets. This rationality is characterized by a continuous quest of the investors to maximize their utility sound (actually maximizing the return of the investment for a given attempt level or minimizing the hazard for an expected return level). In spite their rationality investors have a different perception over guess, its bearing having an important psychological factor. Most investors show different attitude towards jeopardy of exposure like motivated guess detestation, but we endure find on the financial markets. While seek sort has been studied intensely and a large number of guess perception. through attention to risk perception and risk propensity which argon mediators in attitude transaction, financial institutions lay round realize the core groups on investor demeanour and their returns expectations. The rootage section of this paper is the int roduction, the second section is the literature review, the third section establishes hypothesis model, the fourth section presents the mull over results and the fifth section is the conclusion and recommendations.Different Studies atomic number 18 available far less research exists regarding peoples sense-sets towards risk taking, i.e., risk attitudes, such as, risk hatred, risk valuation account and risk neutral. These washstand be conceptualized as both poles of a one-dimensional attitude towards risk-taking but excessively as both separate concepts. It is widely assumed that people differ considerably in their attitude towards risks, ranging from good sense to risk-seeking and even pleasure in risk-taking.The first-year trial of conceptualizing the investors risk aversion belongs to Milton Friedman and Leonard Savage (Milton Friedman, Leonard Savage Utility Analysis of Choices Involving Risk, JPE, 1948) who defined the risk aversion by using the following decisional s ituation an investor who can chose among comparable investments will always chose the one with the lowest risk. Explaining the investment behavior using the returns of uncivilised financial investments utility head for the hills brought a new perspective to the risk aversion possibleness. Further studies showed that there be excessively other factors with direct impact over the attitude towards risk (economic growth forecasts of a market, the level of training and the experience gained, fluctuations of the exchange market, psychological factors, twistes and heuristics etc.).This paper follows studies conducted with investors to examine investor attitudes and behavior towards inherent risk and potential returns in stock market.Statement of the ProblemThe problem statement of research was Impact of Investor mental attitude towards Risk on Stock Market?. major variable quantitys apply in this study include stock market return volatility and risk attitude i.e risk tolerance, r isk aversive, risk neutral variables that argon the indicators of investor attitude.Objective the objectives of research argon-To study how these attitude types be affecting the stock market.To find whether there is any relationship between stock market index and investor behavior.Significance of the StudyThe market return fluctuate according to events and trends , the human legal opinion withal have some psychological factor that can be influenced or might directs towards good or bad decision make regarding investment. From this study case-by-case investor can get knowledge how their behavior that can maximize or minimize their utility in investment plan in market portfolio. They can change their behavior accordingly. Every Kind of undivided like small investor including Man, Women with different status i.e. single or Martial with different age can change their mind set and able to empathize how they should make decision to see the market trends or events.Review of Literatur eThere is lot tempt has been make so far in this regard. at one time we have overview some of researcher civilizes in this section of the paper as review literature. With the reference of research topic, some of studies are being done in which all the variables includes Risk attitude factors i.e Risk Aversion, Risk adjustment, Risk are taken into consideration to define the impact of those variables on stock market.Levin, Synder and chapman (1975) were touch on with the differences between men and women in accepting the risks of financial investments, they focused on a group of 110 students using a questionnaire regarding lotteries to check the more risk aversive according to gender differentiation. the results indicating that women are more risk aversive than menPowell and Ansic (1997) questioned a small group regarding property insurance and the exchange market and again found that women are more aversive than men (this study was among the first which go badd individual ave rsion towards speculative and pure risks) using teaching regarding the weight of the funds invested in groundless assets.Jaimie Sung and Hannna (1996) analyzed the risk tolerance corresponding to four ethnic groups Caucasian, Hispanic, Black and others. Given the substantial differences among risk tolerance capacities of these groups (the Caucasians have the highest risk tolerance and theBlacks the lowest) we may assert that this factor has a direct impact on the way investors accept and perceive the risk attached to financial investments. Education also has a direct influence on risk tolerance, as several studies prove a direct touch onup between higher education and the acceptance of higher risk related to investments. The analysis was conducted on four education levels primary school, high school, college and postgraduate studies. The results raise an intense and direct impact on accepting financial risk the higher the subjects education, the higher his tolerance to risk.Sit kin and Pablo (1992) developed a model of determinants of risk behavior. In this model, personal risk preferences and past experiences form an important risk factor in which to frame the problem, and social influence also affects the individuals perception. Sitkin and Weingart (1995) extend the Sitkin-Pablo model prima(p) to the definition that risk perception and propensity are the mediators in risk behaviors of uncertainty decision- do.Shyan-Rong Chou, Gow-Liang Huang, Hui-Lin Hsu (2010) has done research on Investor Attitudes and Behavior towards Inherent Risk and capableness Returns in Financial Products?. They establish a model by which to measure attitudes and behavior towards investment risk.They used variables Risk propensity, Risk perception, Behavior finance, Decision making. They study to form a framework (framing) for interpretation of their respective populations attitudes and behaviors. Empirical results found no difference by gender to investor propensity to take ri sk, nor in cognitive perception of such. However, higher and lower perceptions of risk were indicated by investors according to their personal investment experience. Investors with little experience in stocks and structured notes were found to have importantly sensitive perception of risk. Thus the model proposed is relevant in finding a positive correlativity between experience and propensity of risk, though the sagacity of such remains uncertain. In respect to financial products other than mutual funds, investor propensity and perception of risk tend to show a negative correlation coefficient.Amos Tversky Daniel Kahneman (1974) defines in their research Judgment under Uncertainty Heuristics and Biases? that Heuristics that are important feature of the individual decision-making process which may be considered to include thought representativeness and availability. They founded that there is primeing prepossession in the decision-making process which arises due to factors such as overconfidence, loss aversion, status quo bias, mental accountancy, framing and so on. Investors in the process of assessing the risks and returns are influenced by this secure event.All these studies proved the complexity of risk aversion and its subjective dimension, as the estimates are difficult to obtain accurately. Investors have ultimately a unique behavior which results in un balanced price, no matter how adverse they are to risk. Understanding risk aversion offers another perspective for constructing and optimizing risky financial portfolios.Theoretical border workOur theoretical frame work is as under(In mutualist versatiles)Risk AversionRisk security depositRisk Neutral(Dependent unsettled)Stock Market descriptionThe possibility of physical or social or financial harm /detriment / loss due to a exposure. This is the (dominating) negative perspective however, there is also a neutral perspective, i.e., risk = uncertainty most the outcomes (good and/or bad ones) o f a decision and a positive perspective. A persons opinion belief about how large the risk associated with a hazard is (regarding negative outcomes)A general perspective of humans mind towards taking or avoiding a risk when decision making how to proceed in situations with uncertain outcomes. Risk Attitude towards taking risks or avoiding risk are i.e, Risk aversion, Risk Tolerance, Risk Neutral. So, all decisions about how pleasant a risk is in individual or societal terms deepened on market events or trends. The actual behavior of people when facing a risk situation, each investor has unique personal risk tendencies, investment style, and level of risk awareness. These characteristics, in addition to the expectation of returns, help investment decision making and portfolio construction. According to traditional finances capital asset pricing model, due to investor risk aversion, rational investors control that increased investment risk demands return with a higher premium.Diag rammatical Expression of Variable1Purpose of the study (Hypothesis Testing)Hypothesis testing offers an enhanced misgiving of the relationship that exists among variables. It could also established casual and effect relationship. The research Impact of Investor attitude towards risk on Stock Market?, includes there are certain variables upon which the growth of Stock Market depends these are come to rate, Risk Aversion, Risk Tolerance, Risk Neutral ,Uncertainty.Research is being carried out to analyze the nature of the relationship between all these variables.HypothesisRisk Tolerance Investor Investors who tend towards higher risk are more adventurous and so are impulsive to attempt high-risk, high reward investments.H1 Investor who has a higher tolerance to risk that have world-shattering impact on stock market volatilityH2 Investor who has a higher tolerance to risk that have no profound impact on stock market volatilityRisk Aversive Investor People who tend towards lower ris k behavior are less unstrained to engage in risky adventurous behavior due to their low risk tolerance. That is, this kind of investor has a high degree of risk perception in financial products.H3 Investor who are risk aversive has profound impact on stock market volatilityH4 Investor who are risk aversive has no solid impact on stock market volatilityRisk Neutral InvestorSomeone is completely indifferent to the risk involved an investment and is only pertain about expected return.H5 Investor who are risk neutral has significant impact on stock market volatilityH6 Investor who are risk neutral has no significant impact on stock market volatilityMethodology (Sample Data Collection)Sample is taken from Islamabad stock exchange and data solicitation is based on primary data using questionnaire consist of five likert scale including Strongly Agree, Agree, No Strong Opinion, Disagree, Strongly Disagree to analyze the bloodsucking and non inter interdependent variables. The questio nnaire sample obtained from the valid source The Scottish Life Risk Attitude Profiling Questionnaire is based on the Byrne Blake Risk Profile Questionnaire?2. The Respondents which have obtained during the research work are 30 that included 20 brokers, 10 small investors i.e Man, Woman having different qualification, age and income groups. To analyze the data being a researcher we used Regression and correlation in SPSS to see the impact and relationship between variables.Data Analysis and DiscussionThe results drawn from statistical analysis is based on regression analysis. As the independent variable is comprised of three facets i.e, risk aversion, risk taking and risk neutral so several hierarchical regression analyses are performed to formally check the hypothesis. Separate regression analyses are run for analyzing independent-dependent relationship.Regression has been used in order to measure that how much variation in dependent variables has been caused by independent variable . The results are as followsRisk Aversion(a) representative Summary exerciseRR public squareAdjusted R fledgeStd. Error of the Estimate1.467(a).218.048.48900InterpretationTable illustrate that value of R Square is 0.218 which is equal to 21.8 %. This means that independent variable i.e. risk aversion is accounting system for 21.8 % of variation in the dependent variable i.e stock market.(b) ANOVAModelSum of SquaresdfMean SquareF1Regression1.5355.3071.284 equalizer5.50023.239Total7.03428a. Predictors (Constant), risk aversionb. Dependent Variable Stock marketInterpretationF ( 1. 101) = 1.284 P Since the value of P is less than 0.01, so we can say that the overall effect of this independent variable is highly significant.RISK Tolerance(a) Model SummaryModelRR SquareAdjusted R SquareStd. Error of the Estimate1.442(a).195-.025.50735Predictors (Constant), risk toleranceInterpretationTable illustrate that value of R Square is 0.195 which is equal to 19.5 %. This means that independen t variable i.e. risk tolerance is accounting for 19.5 % of variation in the dependent variable i.e. stock market.(b) ANOVAModelSum of SquaresdfMean SquareF1Regression1.3726.229.888 oddment5.66322.257Total7.03428a. Predictors (Constant), risk toleranceb. Dependent Variable Stock marketInterpretationF ( 1. 101) = 0.888 P Since the value of P is less than 0.01, so we can say that the overall effect of this independent variable is highly significant.Risk Neutral(a) Model SummaryModelRR SquareAdjusted R SquareStd. Error of the Estimate1.687(a).472-.056.51517Predictors (Constant), risk toleranceInterpretationTable illustrate that value of R Square is 0.472 which is equal to 47.2 %. This means that independent variable i.e. risk neutral is accounting for 19.5 % of variation in the dependent variable i.e. stock market.(b) ANOVAModelSum of SquaresdfMean SquareF1Regression3.31914.237.893Residual3.71614.265Total7.03428Predictors (Constant), risk neutralDependent Variable Stock marketInterpret ationF (1. 101) = 0.893 P CONCLUSIONThis study uses the questionnaire undertake to test the risk attitudes and returns expectations of investors of limited Islamabad stock exchange. There are different trends and economic crisis that rapidly changed the attitude of investors of male and female. Variance analysis also found that less experienced investors have lower risk propensity and higher risk perception. However, considering individual attitude and perception about returns of stock market either influenced positively or negatively that assessed during research questionnaire. In the test model, investor experience and their risk propensity is in positive correlation. So, the conclusion of this study is legitimate with recent literature, however the relationship between risk attitude and expected returns has not yet been determined as successful and strong empirical result.RECOMMENDATIONS research worker recommended the followings ways to gain higher return from their investing attitude. Compare current stock value with historical results of securities or bonds markets. If you are risk aversive and guide higher income during shorter period of time and at low risk, you will hire to find other financial instruments. As we know that, there is direct correlation between risk and income. The higher is income, the higher is risk so investor should ensure about their instruments worth in which he/she going to invest such can be divided as follows bank savings, bonds and shares. Another issue is that somehow media reports negatively about stock market return so, investor rapidly change their mind set as the framing heuristic applied without thinking the validity of education. So investor should protect his or her investments. Having bribed securities, keep monitoring securities market periodically. Other Recommendations are that Do not spread the whole money in the market and prefer to invest in only those companies that pay a dividend and that have a history of raising their dividend every year. Investor should forget making a profit instead focus on the income provided from the stock portfolio and make every stock purchase with the intent that the purchase will be a long-term investment. Develop a savings plan to add to your holdings each quarter to help dividend reinvestments to hoard more shares on a cost averaging basis.REFERENCESAmos Tversky Daniel Kahneman Science, New Series, Vol. 185, No. 4157. (Sep. 27, 1974), pp. 1124-1131.Jaimie Sung, Sherman Hanna, Factors related to risk tolerance, Financial Counseling and Planning, Vol. 7,1996, pag. 14).Levin Irwin P., Mary A. Snyder and Daniel P. Chapman (1975), The Interaction of Experiential and Situational Factors and Gender in a Simulated Risky Decision-Making Task, Journal of Psychology, 1988, 122(2),pp. 173-181)Powell Melanie, and David Ansic (1997), Gender Differences in Risk Behaviour in Financial Decision-Making An Experimental Analysis, Journal of Economic Psychology, 18(6), 1998, pp. 605-628.Risk Attitude Profiling questionnairehttp//www.scottishlife.co.uk/scotlife/nmsruntime/saveasdialog.asp?fileName=Risk_Attitude_Questionnaire.pdfSourcehttp//www.emeraldinsight.com/books.htm?chapterid=1760442show=htmlSitkin and Pablo (1992) Review of management Review-1992.vol 17, No.1, p-38).Shyan-Rong Chou, Gow-Liang Huang, Hui-Lin Hsu (2010) International Research Journal of Finance and Economics ISSN 1450-2887 Issue 44 (2010) Euro Journals Publishing, Inc. 2010. http//www.eurojournals.com/finance.html)Investor Attitudes Towards Risk on Stock MarketInvestor Attitudes Towards Risk on Stock MarketFor the abnormal return in stock market, investor attitudes will become increasingly important. This paper attempts to analyze the impact of investor attitude towards risk that have a greater influence on stock market .In this study researcher focused on particular Islamabad stock market and obtain primary data based on five point Likert scale from investor of ISE. The data indicate that investors have well different attitudes toward various investments. However, there are significant statistical differences between attitudes of the investor groups in their attitudes toward three risk types. These data also show significant differences in attitudes toward risk. After analyzing the data through the Regression and Correlation, including ANOVA test, the result found the significance impact of variables on stock market.IntroductionThe whole financial theory is based on the basic hypothesis of rational investor on the financial markets. This rationality is characterized by a continuous quest of the investors to maximize their utility function (actually maximizing the return of the investment for a given risk level or minimizing the risk for an expected return level). In spite their rationality investors have a different perception over risk, its bearing having an important psychological factor. Most investors show different attitude towards risk like moti vated risk aversion, but we can find on the financial markets. While risk behavior has been studied intensely and a large number of risk perception. done attention to risk perception and risk propensity which are mediators in attitude transaction, financial institutions can realize the effects on investor behavior and their returns expectations. The first section of this paper is the introduction, the second section is the literature review, the third section establishes hypothesis model, the fourth section presents the study results and the fifth section is the conclusion and recommendations.Different Studies are available far less research exists regarding peoples mind-sets towards risk taking, i.e., risk attitudes, such as, risk aversion, risk tolerance and risk neutral. These can be conceptualized as two poles of a one-dimensional attitude towards risk-taking but also as two separate concepts. It is widely assumed that people differ considerably in their attitude towards risks, ranging from good sense to risk-seeking and even pleasure in risk-taking.The first trial of conceptualizing the investors risk aversion belongs to Milton Friedman and Leonard Savage (Milton Friedman, Leonard Savage Utility Analysis of Choices Involving Risk, JPE, 1948) who defined the risk aversion by using the following decisional situation an investor who can chose among comparable investments will always chose the one with the lowest risk. Explaining the investment behavior using the returns of risky financial investments utility function brought a new perspective to the risk aversion theory. Further studies showed that there are also other factors with direct impact over the attitude towards risk (economic growth forecasts of a market, the level of training and the experience gained, fluctuations of the exchange market, psychological factors, biases and heuristics etc.).This paper follows studies conducted with investors to examine investor attitudes and behavior towards inhere nt risk and potential returns in stock market.Statement of the ProblemThe problem statement of research was Impact of Investor Attitude towards Risk on Stock Market?. major variables used in this study include stock market return volatility and risk attitude i.e risk tolerance, risk aversive, risk neutral variables that are the indicators of investor attitude.Objective the objectives of research are-To study how these attitude types are affecting the stock market.To find whether there is any relationship between stock market index and investor behavior.Significance of the StudyThe market return fluctuate according to events and trends , the human mind also have some psychological factor that can be influenced or might directs towards good or bad decision making regarding investment. From this study individual investor can get knowledge how their behavior that can maximize or minimize their utility in investment plan in market portfolio. They can change their behavior accordingly. E very Kind of individual like small investor including Man, Women with different status i.e. single or Martial with different age can change their mind set and able to understand how they should make decision to see the market trends or events.Review of LiteratureThere is lot work has been done so far in this regard. this instant we have overview some of researcher works in this section of the paper as review literature. With the reference of research topic, some of studies are being done in which all the variables includes Risk attitude factors i.e Risk Aversion, Risk Tolerance, Risk are taken into consideration to define the impact of those variables on stock market.Levin, Synder and chapman (1975) were bear on with the differences between men and women in accepting the risks of financial investments, they focused on a group of 110 students using a questionnaire regarding lotteries to check the more risk aversive according to gender differentiation. the results indicating that wo men are more risk aversive than menPowell and Ansic (1997) questioned a small group regarding property insurance and the exchange market and again found that women are more aversive than men (this study was among the first which analyzed individual aversion towards speculative and pure risks) using information regarding the weight of the funds invested in risky assets.Jaimie Sung and Hannna (1996) analyzed the risk tolerance corresponding to four ethnic groups Caucasian, Hispanic, Black and others. Given the substantial differences among risk tolerance capacities of these groups (the Caucasians have the highest risk tolerance and theBlacks the lowest) we may assert that this factor has a direct impact on the way investors accept and perceive the risk attached to financial investments. Education also has a direct influence on risk tolerance, as several studies prove a direct link between higher education and the acceptance of higher risk related to investments. The analysis was condu cted on four education levels primary school, high school, college and postgraduate studies. The results try out an intense and direct impact on accepting financial risk the higher the subjects education, the higher his tolerance to risk.Sitkin and Pablo (1992) developed a model of determinants of risk behavior. In this model, personal risk preferences and past experiences form an important risk factor in which to frame the problem, and social influence also affects the individuals perception. Sitkin and Weingart (1995) extend the Sitkin-Pablo model leash to the definition that risk perception and propensity are the mediators in risk behaviors of uncertainty decision-making.Shyan-Rong Chou, Gow-Liang Huang, Hui-Lin Hsu (2010) has done research on Investor Attitudes and Behavior towards Inherent Risk and say-so Returns in Financial Products?. They establish a model by which to measure attitudes and behavior towards investment risk.They used variables Risk propensity, Risk percepti on, Behavior finance, Decision making. They study to form a framework (framing) for interpretation of their respective populations attitudes and behaviors. Empirical results found no difference by gender to investor propensity to take risk, nor in cognitive perception of such. However, higher and lower perceptions of risk were indicated by investors according to their personal investment experience. Investors with little experience in stocks and structured notes were found to have significantly sensitive perception of risk. Thus the model proposed is relevant in finding a positive correlation between experience and propensity of risk, though the understanding of such remains uncertain. In respect to financial products other than mutual funds, investor propensity and perception of risk tend to show a negative correlation.Amos Tversky Daniel Kahneman (1974) defines in their research Judgment under Uncertainty Heuristics and Biases? that Heuristics that are important feature of the in dividual decision-making process which may be considered to include thought representativeness and availability. They founded that there is anchoring bias in the decision-making process which arises due to factors such as overconfidence, loss aversion, status quo bias, mental accounting, framing and so on. Investors in the process of assessing the risks and returns are influenced by this anchor effect.All these studies proved the complexity of risk aversion and its subjective dimension, as the estimates are difficult to obtain accurately. Investors have ultimately a unique behavior which results in un balanced price, no matter how adverse they are to risk. Understanding risk aversion offers another perspective for constructing and optimizing risky financial portfolios.Theoretical body workOur theoretical frame work is as under(Independent Variables)Risk AversionRisk ToleranceRisk Neutral(Dependent Variable)Stock Market accountThe possibility of physical or social or financial harm /detriment / loss due to a exposure. This is the (dominating) negative perspective however, there is also a neutral perspective, i.e., risk = uncertainty about the outcomes (good and/or bad ones) of a decision and a positive perspective. A persons opinion belief about how large the risk associated with a hazard is (regarding negative outcomes)A general perspective of humans mind towards taking or avoiding a risk when deciding how to proceed in situations with uncertain outcomes. Risk Attitude towards taking risks or avoiding risk are i.e, Risk aversion, Risk Tolerance, Risk Neutral. So, all decisions about how pleasurable a risk is in individual or societal terms deepened on market events or trends. The actual behavior of people when facing a risk situation, each investor has unique personal risk tendencies, investment style, and level of risk awareness. These characteristics, in addition to the expectation of returns, help investment decision making and portfolio construction. Ac cording to traditional finances capital asset pricing model, due to investor risk aversion, rational investors understand that increased investment risk demands return with a higher premium.Diagrammatical Expression of Variable1Purpose of the study (Hypothesis Testing)Hypothesis testing offers an enhanced understanding of the relationship that exists among variables. It could also established casual and effect relationship. The research Impact of Investor attitude towards risk on Stock Market?, includes there are certain variables upon which the growth of Stock Market depends these are cheer rate, Risk Aversion, Risk Tolerance, Risk Neutral ,Uncertainty.Research is being carried out to analyze the nature of the relationship between all these variables.HypothesisRisk Tolerance Investor Investors who tend towards higher risk are more adventurous and so are willing to attempt high-risk, high reward investments.H1 Investor who has a higher tolerance to risk that have significant impact on stock market volatilityH2 Investor who has a higher tolerance to risk that have no significant impact on stock market volatilityRisk Aversive Investor People who tend towards lower risk behavior are less willing to engage in risky adventurous behavior due to their low risk tolerance. That is, this kind of investor has a high degree of risk perception in financial products.H3 Investor who are risk aversive has significant impact on stock market volatilityH4 Investor who are risk aversive has no significant impact on stock market volatilityRisk Neutral InvestorSomeone is completely indifferent to the risk involved an investment and is only implicated about expected return.H5 Investor who are risk neutral has significant impact on stock market volatilityH6 Investor who are risk neutral has no significant impact on stock market volatilityMethodology (Sample Data Collection)Sample is taken from Islamabad stock exchange and data collection is based on primary data using questionnai re consist of five likert scale including Strongly Agree, Agree, No Strong Opinion, Disagree, Strongly Disagree to analyze the dependent and nondependent variables. The questionnaire sample obtained from the valid source The Scottish Life Risk Attitude Profiling Questionnaire is based on the Byrne Blake Risk Profile Questionnaire?2. The Respondents which have obtained during the research work are 30 that included 20 brokers, 10 small investors i.e Man, Woman having different qualification, age and income groups. To analyze the data being a researcher we used Regression and correlation in SPSS to see the impact and relationship between variables.Data Analysis and DiscussionThe results drawn from statistical analysis is based on regression analysis. As the independent variable is comprised of three facets i.e, risk aversion, risk taking and risk neutral so several hierarchical regression analyses are performed to formally check the hypothesis. Separate regression analyses are run for analyzing independent-dependent relationship.Regression has been used in order to measure that how much variation in dependent variables has been caused by independent variable. The results are as followsRisk Aversion(a) Model SummaryModelRR SquareAdjusted R SquareStd. Error of the Estimate1.467(a).218.048.48900InterpretationTable illustrate that value of R Square is 0.218 which is equal to 21.8 %. This means that independent variable i.e. risk aversion is accounting for 21.8 % of variation in the dependent variable i.e stock market.(b) ANOVAModelSum of SquaresdfMean SquareF1Regression1.5355.3071.284Residual5.50023.239Total7.03428a. Predictors (Constant), risk aversionb. Dependent Variable Stock marketInterpretationF ( 1. 101) = 1.284 P Since the value of P is less than 0.01, so we can say that the overall effect of this independent variable is highly significant.RISK Tolerance(a) Model SummaryModelRR SquareAdjusted R SquareStd. Error of the Estimate1.442(a).195-.025.50735Predictor s (Constant), risk toleranceInterpretationTable illustrate that value of R Square is 0.195 which is equal to 19.5 %. This means that independent variable i.e. risk tolerance is accounting for 19.5 % of variation in the dependent variable i.e. stock market.(b) ANOVAModelSum of SquaresdfMean SquareF1Regression1.3726.229.888Residual5.66322.257Total7.03428a. Predictors (Constant), risk toleranceb. Dependent Variable Stock marketInterpretationF ( 1. 101) = 0.888 P Since the value of P is less than 0.01, so we can say that the overall effect of this independent variable is highly significant.Risk Neutral(a) Model SummaryModelRR SquareAdjusted R SquareStd. Error of the Estimate1.687(a).472-.056.51517Predictors (Constant), risk toleranceInterpretationTable illustrate that value of R Square is 0.472 which is equal to 47.2 %. This means that independent variable i.e. risk neutral is accounting for 19.5 % of variation in the dependent variable i.e. stock market.(b) ANOVAModelSum of SquaresdfM ean SquareF1Regression3.31914.237.893Residual3.71614.265Total7.03428Predictors (Constant), risk neutralDependent Variable Stock marketInterpretationF (1. 101) = 0.893 P CONCLUSIONThis study uses the questionnaire start out to test the risk attitudes and returns expectations of investors of particular Islamabad stock exchange. There are different trends and economic crisis that rapidly changed the attitude of investors of male and female. Variance analysis also found that less experienced investors have lower risk propensity and higher risk perception. However, considering individual attitude and perception about returns of stock market either influenced positively or negatively that assessed during research questionnaire. In the test model, investor experience and their risk propensity is in positive correlation. So, the conclusion of this study is accordant with recent literature, however the relationship between risk attitude and expected returns has not yet been determined as s uccessful and strong empirical result.RECOMMENDATIONS research worker recommended the followings ways to gain higher return from their investing attitude. Compare current stock value with historical results of securities or bonds markets. If you are risk aversive and need higher income during shorter period of time and at low risk, you will need to find other financial instruments. As we know that, there is direct correlation between risk and income. The higher is income, the higher is risk so investor should ensure about their instruments worth in which he/she going to invest such can be divided as follows bank savings, bonds and shares. Another issue is that somehow media reports negatively about stock market return so, investor rapidly change their mind set as the framing heuristic applied without thinking the validity of information. So investor should protect his or her investments. Having purchased securities, keep monitoring securities market periodically. Other Recommendatio ns are that Do not spread the whole money in the market and prefer to invest in only those companies that pay a dividend and that have a history of raising their dividend every year. Investor should forget making a profit instead focus on the income provided from the stock portfolio and make every stock purchase with the intent that the purchase will be a long-term investment. Develop a savings plan to add to your holdings each quarter to help dividend reinvestments to conglomerate more shares on a cost averaging basis.REFERENCESAmos Tversky Daniel Kahneman Science, New Series, Vol. 185, No. 4157. (Sep. 27, 1974), pp. 1124-1131.Jaimie Sung, Sherman Hanna, Factors related to risk tolerance, Financial Counseling and Planning, Vol. 7,1996, pag. 14).Levin Irwin P., Mary A. Snyder and Daniel P. Chapman (1975), The Interaction of Experiential and Situational Factors and Gender in a Simulated Risky Decision-Making Task, Journal of Psychology, 1988, 122(2),pp. 173-181)Powell Melanie, and D avid Ansic (1997), Gender Differences in Risk Behaviour in Financial Decision-Making An Experimental Analysis, Journal of Economic Psychology, 18(6), 1998, pp. 605-628.Risk Attitude Profiling questionnairehttp//www.scottishlife.co.uk/scotlife/nmsruntime/saveasdialog.asp?fileName=Risk_Attitude_Questionnaire.pdfSourcehttp//www.emeraldinsight.com/books.htm?chapterid=1760442show=htmlSitkin and Pablo (1992) Review of management Review-1992.vol 17, No.1, p-38).Shyan-Rong Chou, Gow-Liang Huang, Hui-Lin Hsu (2010) International Research Journal of Finance and Economics ISSN 1450-2887 Issue 44 (2010) Euro Journals Publishing, Inc. 2010. http//www.eurojournals.com/finance.html)