Abstract
The basic purpose of this research paper is to find out the investors irrational behavior in
Islamabad Stock Exchange of Pakistan. The objective of this research is to analyze the different factors of an investor’s perception that affects stock selection decisions and stock exchanges.
For this purpose 100 questionnaires were sent to Islamabad Stock Exchange out of which 60
responses were received from total of 100 populations. In this research, we used the Convenience
sampling technique, in which we select respondents which are conventiently available. The data
was collected from the investors of Islamabad Stock Exchange of Pakistan. The returns for
two months were observed for both investor and stock exchange. In this study simple descriptive
statistic, regression and correlation are used. It is concluded that 66.9% irrationality of investor’s behavior is due to gut feelings which depressed the average returns of investors i.e., 12.5%
against the average return of the index i.e., 22%. The investors, while evaluating stocks they are
using the indicators of inflation rate, GDP etc. and ignoring the data available in annual reports
and prospectus, and the attractive discount rate available for non-stock investments.
Sadaf Naushad, Abdul Majid, Zainab Jamil. (2016) Relationship of Investors Behavior and Their Average Stock Returns in Islamabad Stock Exchanger, Journal of Rural Development & Administration, Volume 47, Issue 1.
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