Mutual Funds For Whom Who Do Not Knowledge at Stock Market

 Mutual funds for whom

 Mutual funds can survive and thrive only if they can live up to the hopes and trust of their individual members these hopes and trust echo the peculiarities which support the emergence and growth of such institutions irrespective of the nature of economy where these are to operate Mutual funds come to the rescue of those people who do not excel at stock market due to certain mistakes they commit which can be minimized with mutual funds such mistake can be viz. lack of sound investment strategies, unreasonable expectations of making money, untimely decisions of investment and disinvestment, acting on advice given by others, putting all their eggs in one basket i.e. failure to diversity Mutual funds come to the rescue of such investors who face followings problems while making direct investments

 

• Limited resources in the hands of investors quite often take them away from stock market transactions
• Lack of funds forbids investors to have a balanced and diversified portfolio
• Lack of professional knowledge associated with investments business enables investors to operate gainfully in the market Small investors can hardly afford to have expensive investment consultations
• To buy shares, investors have to engage share brokers who are the members of the stock exchange and have to pay their brokerage
• They hardly have access to price sensitive information in time
• It is difficult for him to know the developments taking place in share market and corporate sector
• Firm allotments are not possible for small investors when there is a trend of over subscription to public issues

Huge funds collected and many cases investors cheated

Capital market has witnessed a tremendous growth in recent times. Huge funds have been collected from the public and in many cases investors have been cheated by presenting rosy pictures about the security of investments, high dividends and capital appreciation which were not actually true. This necessitated the need for properly regulated securities market in India. As a consequence of this, Securities and exchange Board of India (SEBI) was setup to take care of the capital market. Accounting can play an effective role in the development of healthy capital market by proving accounting data to the prospective investors. By making an analysis and interpretation of the financial statements of an existing firm and other accounting information available in case of a new firm, the prospective investor can make a rational decision of the investment and there are chances that he will not be cheated. Some areas where accounting can be useful in capital market are:
Accountant’s Report in Prospectus; Schedule II Part II of the Companies Act, 1956 specifies that an accountant should report about the use of the proceeds or any part of the proceeds raised by issuing debentures or shares in his report. Any report by accountants mentioned in this schedule shall be made by accountants qualified under the Act for appointment as auditor of a company and shall not be made by any accountant who is an officer or servant, or a partner or in the employment of officer or servant of the company. A report by accountant must cover the
The profit or loss of the business for each of the last date to which the accounts of preceding the issue of prospectus
The assets and liabilities of the business at the last date to which the accounts of the business were made of, being the data not more than 120 days before the date of issue of the prospectus.
This Accountant’s report in the prospectus will be very useful to prospective investors in forming an opinion of the company which is issuing shares or debentures.
Furnishing Financial Results on Quarterly Basis by listed Companies: As per modified clause 41 of the Listing Agreement, all the listed companies are now required to publish unaudited financial results on a quarterly basis. Un- audited financial results prepared with the help of accounting records will be helpful to the prospective investors in making rational decision for investments in the capital market.