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Abstract

Investment in share market involves high level of risk. This risk is multiplied with the increase in volatility in stock prices. Therefore it is important for an investor to have proper knowledge of the risk and returns attached with various stocks so that a better risk-return trade off can be reached and a wise investment decision can be made. For quite a few years, Indian Stock Markets, driven by domestic as well as foreign institutional investors, have been growing at unprecedented rate and thus have given an opportunity for investors to earn superior returns. But, at the same time, the level of volatility has also been very high and this has increased the risk. Although an investor can construct diversified portfolio for reducing risk, this diversification may not help in dealing with the systematic risk attached with stocks selected in the portfolio. Therefore calculating only total risk of various stocks is not enough, rather one should also know how much of this risk is systematic risk and how much is unsystematic risk. This study aims at finding out the risk attached with the stocks of prominent companies of IT (Information Technology) and Banking Sector and beta factors of these companies. Authors have also found out the systematic and unsystematic risk attached with the shares of these companies.

Keywords

Risk, Systematic Risk, Unsystematic Risk, Beta Factor, Variance, Coefficient of Determination

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