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Unit VI Investor Protection For Financial Planning Mcom Sem 1 Delhi University Complete Notes

Unit VI Investor Protection For Financial Planning Mcom Sem 1 Delhi University Complete Notes

Unit VI Investor Protection For Financial Planning MCOM Sem 1 Delhi University : Here Cakart.in website team members provide direct download links for Unit VI Investor Protection For Financial Planning MCOM Sem 1 Delhi University notes in pdf format. Download these Unit VI Investor Protection For Financial Planning MCOM Sem 1 Delhi University Complete notes in pdf format and read well.

Unit VI Investor Protection For Financial Planning Mcom Sem 1 Delhi University Complete Notes

Unit VI Investor Protection For Financial Planning MCOM Sem 1 Delhi University :  Investor Protection  noun legislation to protect small investors from unscrupulous investment brokers and advisers. An investor allocates capital with the expectation of a future financial return. Types of investments include: equity, debt securities, real estate, currency, commodity, token, derivatives such as put and call options, futures, forwards, etc. This definition makes no distinction between those in the primary and secondary markets. That is, someone who provides a business with capital and someone who buys a stock are both investors. An investor who owns a stock is a shareholder.

inˈvestor proˌtection1actions to encourage honest advertising of financial products, and to prevent FRAUDThe New York Stock Exchange’s market regulation is a proactive form of investor protection against fraud and other illicit stockmarket activity.2actions to make sure that investors do not lose money if their investments DEFAULT (=are not repaid)These securities often come with investor protection, such as bond insurance and letters of credit

Download here Unit VI Investor Protection For Financial Planning MCOM Sem 1 Delhi University Complete Notes in pdf format 

Unit VI Investor Protection For Financial Planning MCOM Sem 1 Delhi University Complete Notes

Unit VI Investor Protection For Financial Planning MCOM Sem 1 Delhi University : A component of the Wall Street Reform and Consumer Protection Act of 2009 designed to expand the powers of the Securities and Exchange Commission (SEC). The act established a whistleblower reward for reporting financial fraud, increased liability for aiding and abetting, doubled funding to the SEC over a five-year period, and more. The act was part of regulators’ attempt to prevent some of the problems that caused the financial crisis of 2008-2009 from reoccuring in the future.

BREAKING DOWN ‘Investor Protection Act’

The Wall Street Reform and Consumer Protection Act of 2009 was created to improve accountability and transparency in the financial system. It included a Consumer Financial Protection Agency that would regulate mortgages, auto loans and credit cards.

Unit VI Investor Protection For Financial Planning MCOM Sem 1 Delhi University Complete Notes

Unit VI Investor Protection For Financial Planning MCOM Sem 1 Delhi University :  Actions to encourage honest advertising of financial products, and to prevent fraud to make sure that investors do not lose money if their investments default (are not repaid).

Source: Longman Business English Dictionary

Investor protection is defined by the extent to which the commercial law and its enforcement protect investors from expropriation by company insiders.

Investor protection is usually measured by indicators that quantify explicit protections awarded to shareholders and creditors by corporate, bankruptcy, and reorganisation laws, as well as the quality of law enforcement.

Examples of such explicit protections are those that impact the shareholders’ ability to vote down directors, including whether to allow shareholders to vote by proxy or vote by mail. Allowing shareholders to vote by proxy or by mail decreases the costs for small shareholders to manifest their dissent.

There are also provisions that impact the ability of secured creditors to take possession of their collateral in bankruptcy. In many countries there is an automatic stay upon bankruptcy, meaning that creditors cannot repossess their collaterals and reduces creditor protection.

Differences in investor protection across countries are substantial and are believed to be responsible for differences in the development of financial markets and ultimately for differences in economic development.

Example
In April 2002 investor protection in Italy worsened as a result of a decree issued by Berlusconi’s government, which downgraded the crime of ”false communication by corporate executives” from felony (serious crime) to misdemeanor (minor offence), punishable at most with a pecuniary fine. This reform lowered corporate executives’ incentives to tell investors the truth about the state of their companies.

What are Disclosures and Investor protection guidelines?

The primary issuances are governed by SEBI in terms of SEBI (Disclosures and Investor protection) guidelines. SEBI framed its DIP guidelines in 1992. Many amendments have been carried out in the same in line with the market dynamics and requirements. In 2000, SEBI issued “Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000” which is compilation of all circulars organized in chapter forms. These guidelines and amendments thereon are issued by SEBI India under section 11 of the Securities and Exchange Board of India Act, 1992. SEBI (Disclosure and investor protection) guidelines 2000 are in short called DIP guidelines. It provides a comprehensive framework for issuances buy the companies.

Unit VI Investor Protection For Financial Planning MCOM Sem 1 Delhi University Complete Notes

Unit VI Investor Protection For Financial Planning MCOM Sem 1 Delhi University : 

Types of investors

There are two types of investors, retail investors and institutional investors:

Retail investor

  • Individuals gambling in games of chance.
  • Individual investors (including trusts on behalf of individuals, and umbrella companies formed by two or more to pool investment funds)
  • Collectors of art, antiques, and other things of value
  • Angel investors (individuals and groups)
  • Sweat equity investor

Institutional investor

  • Venture capital and private equity funds, which serve as investment collectives on behalf of individuals, companies, pension plans, insurance reserves, or other funds.
  • Businesses that make investments, either directly or via a captive fund
  • Investment trusts, including real estate investment trusts
  • Mutual funds, hedge funds, and other funds, ownership of which may or may not be publicly traded (these funds typically pool money raised from their owner-subscribers to invest in securities)
  • Sovereign wealth funds

Investors might also be classified according to their styles. In this respect, an important distinctive investor psychology trait is risk attitude.

Investor protection

The term “investor protection” defines the entity of efforts and activities to observe, safeguard and enforce the rights and claims of a person in his role as an investor. This includes advice and legal action. The assumption of a need of protection is based on the experience that financial investors are usually structurally inferior to providers of financial services and products due to lack of professional knowledge, information or experience. Countries with stronger investor protections tend to grow faster than those with poor investor protections. Investor protection includes accurate financial reporting by public companies so the investors can make an informed decision. Investor protection also includes fairness of the market which means all participants in the market have access to the same information.

Through government

Investor protection through government is regulations and enforcements by government agencies to ensure that market is fair and fraudulent activities are eliminated. An example of a government agency that provides protection to investors is the U.S. Securities and Exchange Commission (SEC), which works to protect reasonable investors in America.

As individuals

Investor protection through individual is the strategy that one utilizes to minimize loss. Individual investors can protect themselves by purchasing only shares of businesses that they understand, or only those that remain calm through market volatility.

An individual investor may be protected by the strategy he uses in investment. The strategy includes an appropriate price of the stocks or assets in the right time he enters. It’s hard to fix what “an appropriate price” is, and when it is appropriate because no one makes a purchase or a sale absolutely in his most favorable situation. However, determination may be made when the price of such share or assets are “undervalued” comparing to its potentiality. This is called the margin of safety where an investor can feel at ease when the price of the stocks is alarmingly down.

Understand the investor plan

In various instances, the term “investor” is associated with a means of getting rich quickly. Historically, the road to successful investment is founded on preparation, with various short-term goals that help smooth the journey to the ultimate and determined financial achievement. To be successful, authorities such as Investopedia advise that an investment plan must include a defined objective, a determined period of time for completion, and the resources needed. A planned investment structure would be dependent on the desired investment target.

Knowledge, related to the various aspects of the investment process, and the optimization of portfolios, is emphasized by the need for diversification, which influences the investment procedure towards the fundamentals of finance. For an investor, understanding the influencing factors related to finance is a valuable asset which can be gained from various sources. A financial awareness will help any investor learn and understand the mechanism of the investment marketplace, with the rules and guidelines that can prove successful. Warren Buffett, an established and recognized expert on the subject of successful investing, has a simple philosophy; “If I cannot understand it, I will not invest in it.”

Various researches conducted support the approach of Warren Buffett, with the most favorable results related to investment portfolios being achieved by the individual investor who has a developed analytical behavior pattern and confidence. Investment success is achievable with the appropriate strategy and core assets being managed with systematic and disciplined methods.

Unit VI Investor Protection For Financial Planning MCOM Sem 1 Delhi University Complete Notes

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