MH SET Paper 2 Mock Test - 5 (Commerce) - MAHA TET MCQ

The correct answer is A ‐ lll, B ‐ lV, C ‐ ll, D ‐ l.

Key PointsHedging - By purchasing a second investment that you anticipate will perform in the opposite way, you can use the investment strategy known as hedging to offset a potential loss on the first one.

Important PointsEuropean option -  An option contract that only allows for the day of expiration for right exercise is known as a European option.

Option premium - The current market value of an option contract is known as an option premium. Thus, it is the money that the seller (writer) of an option contract receives from the opposite side. Premiums for in-the-money options are made up of intrinsic and extrinsic value.

In-money option- A call option that is in the money allows the holder to purchase the securities for less than its current market value. If a put option is in-the-money, it allows the holder to sell the security for a higher price than it is currently trading for.

American option - An American Option is a form of options contract (Call or Put) that allows the option holder to exercise the option whenever they choose prior to the expiration date. It enables the option holder to profit from the security or stock whenever it is advantageous to do so.

A company can be compared to a river, which maintains its identity. Although the parts from which it is made are constantly changing. The suitable characteristic here is Continuous succession.

• A company is capable to survive beyond the lives of its members.
• As a company is created by law therefore it can be dissolved only by law alone and it remains unaffected by the change, lunacy, retirement, death, or insolvency of its members
• The members of the company may come and go but a company goes on forever and remains the same entity
• The existence of the company continues even if its all members are dead.
• There can not be a succession forever without the incorporation.

1. Limited liability: An Limited Liability Company (LLC) is a type of business in which the owners are called members. The business entity is separate from the members so only the entity may be held liable if the company is sued or fails to pay its debts. An LLC contains elements of a sole proprietorship, a partnership, and a corporation.
2. An artificial person is an entity created by law and given similar legal rights and duties to that of a human being. It can be real or imaginary and for the purpose of legal reasoning is treated more or less as a human being. 

The correct answer is Option 3

Key Points 

Important PointsAbsolute Cost Advantage Theory:  

• According to Adam Smith, the father of economics, the basis of international trade is absolute cost advantage. 
• According to his hypothesis, trade between two nations would benefit both sides if one country could manufacture one product at an absolute advantage over the other, and the other countries could create another commodity at an absolute advantage over the first.
• The principle of absolute advantage refers to the ability of a party (an individual, or firm, or country) to produce a greater quantity of a good, product, or service than competitors, using the same amount of resources.

Comparative Cost Advantage Theory:

• The law of comparative advantage is widely credited to David Ricardo, an English political economist who published "On the Principles of Political Economy and Taxation" in 1817.
• The principle of comparative costs is based on the differences in production costs of similar commodities in different countries.
•  Production costs differ in countries because of geographical division of labour and specialisation in production
• According to this theory, Comparative differences in cost occur when one country has an absolute advantage in the production of both commodities, but a comparative advantage in the production of one commodity than in the other. 

Factor Endowment Theory:

• The H-O theory is also known as the factor-proportions theory or factor-endowment theory. Bertil Ohlin (1899–1979), a Swedish economist, created the idea based on the work of his master, Swedish economist Eli Filip Heckscher (1879–1952).
• The theory states that a nation will export the product that uses its most abundant factor intensively. 
• The H-O model explains comparative advantage in terms of the factor abundance of nations and the factor intensity of commodities.
• According to the H-O theory, a commodity will be produced more cheaply by a country that has a lot of the input that the commodity utilises the most. If a commodity requires a significant quantity of capital, capital-rich countries will have a comparative advantage in that commodity. A country will export the product that makes extensive use of its most abundant resource. This means that the country will import the product that makes extensive use of the country's scarce resource.

Leontief Paradox : 

• Leontief measured the labour and capital content of a representative basket of exports and import-competing goods. Leontief's result, known as the Leontief Paradox, was that the United States imports capital-intensive goods and exports labor-intensive goods, in direct opposition to the predictions of the H-O model
• In economics, the Leontief paradox states that a country with more capital per worker has a lower capital/labour ratio in exports than in imports.

Key Points

• A stereotype is a fixed, overly generalised belief about a certain group or class of people that is used in social psychology.
• Stereotyping implies that an individual possesses a wide range of characteristics and abilities that we presume all members of that group share.
• For instance, a "hells angel" biker wears leather clothing.

Important Points

Stereotyping: 

• A stereotype is a preconceived idea that is fixed and overly generalised about a certain group or class of individuals.
• These presumptions rest on the false assumption that each member of the group shares a particular set of traits.
• Many stereotypes are a direct result of numerous political, social, or economic events and have a lengthy and occasionally contentious history.
• Making assumptions about a person or group of individuals based on criteria such as gender, race, religion, or physical characteristics is known as stereotyping.

Additional Information

1. Halo effect: A form of cognitive bias known as the "halo effect" occurs when our overall opinion of a person affects how we feel and think about their character. In essence, your assessment of a person's general impression ("He is kind!") affects your assessment of that person's specific characteristics ("He is also brilliant!"). People's perceptions of one quality can influence their perceptions of other characteristics. Our perception of celebrities as a whole is a terrific illustration of the halo effect in action. People prefer to view them as bright, kind, and amusing since they are viewed as attractive, successful, and frequently likeable.
2. Attribute: The word "pay tribute" and "attribute" have a similar meaning. In this way, a prize winner who honours a motivational lecturer is in a way crediting her success to the professor.
3. Assimilation: In anthropology and sociology, assimilation refers to the process through which people or groups with different ethnic ancestries are assimilated into the dominant culture of a society.

Economists use the Lerner Index to measure monopoly power, also called market power. The index is the percent markup of price over marginal cost. The Lerner Index is a positive number (L >= 0), increasing in the amount of market power.

The correct answer is ​A- I, B- III, C- II, D- IV

Key Points

Normal distribution:

• A normal distribution, also known as a Gaussian distribution, is a probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean.
• In graphical form, the normal distribution appears as a "bell curve".
• The height of individuals in a population often follows a bell-shaped curve, where the majority of individuals cluster around the mean height, with fewer individuals at the extreme ends.

Weibull distribution:

• The Weibull distribution is a continuous distribution that can be used to model the time to failure of a product.
• It has two parameters, shape and scale, that can be used to fit the distribution to the data.
• The shape parameter determines the shape of the distribution, and the scale parameter determines the scale of the distribution.
• The Weibull distribution is often used to model the lifetimes or failure times of devices or systems.
• It can describe both the early failure period characterized by a decreasing failure rate (infant mortality) and the later failure period characterized by an increasing failure rate (wear-out).

Exponential distribution:

• The period before a certain event occurs is frequently the focus of the continuous probability distribution known as the exponential distribution.
• Events occur continually, independently, and at a steady average pace during this process.
• The Exponential distribution is commonly used to model the time between events in a Poisson process.
• In the context of daily sales, it can represent the time intervals between consecutive sales events.

Poisson distribution:

• The Poisson distribution is a discrete distribution that can be used to model the number of events that occur in a fixed interval of time or space.
• It has one parameter, lambda, which is the expected number of events in the interval.
• The Poisson distribution is a good choice for modeling the number of defects in a production line because it can model a variety of defect patterns.
• The Poisson distribution is commonly used to model the number of rare events occurring in a fixed interval of time or space.
• In the context of defects in a production line, it can represent the number of occurrences of defects within a given time or space interval.

Hence, the correct answer is A- I, B- III, C- II, D- IV. 

Capital structure designing has nothing to do with transferability. Capital Structure refers to the amount of debt and/or equity employed by a firm to fund its operations and finance its assets. There are very strong and positive relationships (over 0.5) between ROE and debt-to-equity.

The correct answer is Both Assertion (A) and Reasoning (R) are true, and Reasoning (R) is the correct explanation for Assertion (A).

Key Points Both the assertion (A) and the reasoning (R) are correct.

Assertion (A): Demand forecasting is indeed a crucial aspect of supply chain management. It involves estimating the future demand for products or services. Proper demand forecasting helps in aligning production and inventory levels with customer demand. It allows businesses to plan their production schedules, allocate resources efficiently, and ensure that products are available when customers want to purchase them.

Reasoning (R): The reasoning is accurate. Accurate demand forecasting is essential because it reduces the risk of overstocking or stockouts. When inventory levels are aligned with actual demand, businesses can avoid excess inventory, which can lead to storage costs and obsolescence, as well as stockouts, which can result in lost sales and dissatisfied customers. By optimizing inventory management through accurate demand forecasting, businesses can minimize costs and enhance customer satisfaction.

Therefore, both the assertion and reasoning are correct, and the reasoning provides a valid explanation for the assertion. Demand forecasting plays a vital role in optimizing inventory management and ensuring a balanced supply chain.

The correct answer is David Ricardo.

Key Points

•  The quote "The laborers are paid to enable them to subsist and perpetuate the race without increase or diminution" is often attributed to David Ricardo, a British economist who lived from 1772 to 1823.
• This quote reflects Ricardo's theory of wages, which argued that wages tend to remain at a subsistence level, as employers will only pay workers enough to cover their basic needs and to maintain a stable population level.
• According to Ricardo, any increase in wages would result in an increase in the population, which would eventually drive wages back down to subsistence levels.

The correct answer is Both Assertion and Reasoning are true, and Reasoning is the correct explanation of Assertion.

Key Points

• In the passage, "Psychographic segmentation is crucial for tailoring marketing strategies. It helps marketers connect with specific consumer segments based on their preferences and values."
• The passage directly supports both the Assertion and the Reasoning.
• Psychographic segmentation is deemed crucial for tailoring marketing strategies, and the reasoning correctly explains that it facilitates connecting with specific consumer segments based on preferences and values.

Additional InformationThe other options (2. Both Assertion and Reasoning are true, but Reasoning is not the correct explanation of Assertion, 3. Assertion is true, but Reasoning is false, 4 Both Assertion and Reasoning are false) are ruled out based on the accurate alignment of the Assertion and Reasoning with the passage.

The correct answer is Psychological elements.

Key Points

• In the passage, "On an internal level, psychological factors such as perception, motivation, and attitudes play a pivotal role in shaping an individual's response to marketing stimuli."
• The passage explicitly states that psychological factors are internal elements shaping consumer behavior, supporting option 3.
• The other options (1. Cultural influences, 2. Economic considerations, 4. Environmental factors) do not accurately reflect the internal factors mentioned in the passage.

Additional InformationThe mention of perception, motivation, and attitudes as psychological factors provides a more detailed understanding of the internal elements influencing consumer behavior.

The correct answer is It has raised ethical concerns in data privacy.

Key Points

• In the passage, "However, this sophistication comes with its own set of challenges, as navigating the ethical considerations of data privacy and the potential for manipulation requires careful scrutiny."
• The passage mentions that big data has raised ethical concerns in data privacy, aligning with option b.
• The other options (1. It has simplified the analysis of small datasets, 3. It is ineffective in discerning patterns and trends, 4. It has limited applications in marketing) do not accurately represent the challenges associated with big data, as described in the passage.

The correct answer is AI Ethicist.

Key Points

As per the passage:

It’s mentioned in the passage that "It has also given birth to the occupation of AI ethicists," signifying the origin of a new job role concurrent with the rise of AI developments.

The correct answer is Both Assertion and Reasoning are incorrect.

Key Points

As per the passage:

"Chat GPT and AI offer tools to augment human roles rather than just substitute them," indicating that the assertion that AI should purely replace human roles is incorrect. Also, the efficiency of AI is intended to aid humans in undertaking tasks more effectively, not necessarily implying it's more efficient than humans in every aspect, making the reasoning incorrect too.

The correct answer is Both Assertion and Reasoning are correct and Reasoning is the correct explanation for Assertion.

Key Points

As per the passage:

The sentence, "AI-driven automation could potentially replace repetitive and manual roles, leading to job displacement," demonstrates that automating repetitive and manual tasks using AI like Chat GPT could indeed displace jobs, making both the assertion and the reasoning correct.

The correct answer is Economic environment.

Key PointsEnvironment - Environment can be summarized as the effects of all the living and non-living things that have an impact on human life. Non-living or abiotic elements include water, land, sunshine, rocks, and air, whereas all live or biotic elements are animals, plants, forests, fisheries, and birds.

Important Points Economic environment -

• The business is directly and significantly impacted by the economic environment.
• An organization in the business world completely depends on its economic environment for its survival, expansion, and success.
• Economic conditions, economic policies, and economic systems make up the bulk of the economic environment. Infrastructure, income nationally, and fundamental economic principles.
• In addition to being major components of the overall economic environment, money supply, economic phases associated with saving, and trade cycles are all thought to be important.

Legal relationship between the middleman and the businessperson is governed by the law of agency.

The agency is the agreement in which one party entrusts another party to conduct business on their behalf. The agency agreement comes in the following forms: Express agreement (both oral and written) Implication.

The correct answer is Organising.

Key Points Among the given options, the managerial function of staffing is most closely related to "organizing."

Here's how they are connected:

Staffing: Staffing involves acquiring and organizing the workforce to ensure that the right people are in the right positions. This process includes recruitment, selection, training, and development to structure the organization's human resources effectively.

Organizing: Organizing is one of the primary functions of management and is concerned with designing the structure of the organization. This includes defining roles and responsibilities, establishing reporting relationships, and ensuring that resources, including personnel, are allocated appropriately to achieve the organization's goals.

While staffing is specifically focused on acquiring and managing human resources, the broader process of organizing sets the framework for how those human resources are integrated into the organizational structure.

A) Fair Value = Rs. 1,80,000

B) Municipal Value = Rs. 1,50,000

C) Higher of A and B = Rs. 1,80,000

D) Standard Rent = Rs. 1,60,000

E) Expected Rent (Lower Of C and D) = Rs. 1,60,000

F) Actual Rent = Rs. 2,40,000 (20000 12 Months)

GROSS ANNUAL VALUE (Higher Of E and F) = Rs. 2,40,000

NET ANNUAL VALUE = Gross Annual Value (2,40,000) - Unrealised Rent (40,000) - Municipal Tax (30,000) = Rs. 1,70,000

The following are some of Section 87A of the Income Tax Act of 1961 important points:

1. The maximum deduction allowed by this clause is Rs. 2,500 or 100% of the tax liability (whichever is lower).
2. The rebate is available on the total tax amount before the 4% educational cess.
3. Under this clause, only individuals are eligible to get a rebate. Neither businesses nor the Hindu Undivided Family may apply for this rebate.
4. Senior citizens are eligible for a rebate (individuals above the age of 60 years and below 80 years)
5. Individuals who are super senior citizens (those who are over 80 years old) are not qualified for a rebate under Section 87A.
6. This rebate is only available to Indian citizens; NRIs are not allowed rebates under Section 87A.

So, Under Section 87A of the Income Tax Act, 1961, an individual who is resident in India and whose total income does not exceed Rs. 3,50,000 is entitled to claim a rebate up to a maximum of Rs 2500.

Key-Points

A unimodal distribution:

• A unimodal distribution has only one clear peak.
• Initially, the value goes on increasing up to a certain highest point and then starts decreasing.
• A unimodal distribution can either be symmetric or unsymmetric distribution. 

A symmetric distribution:

• A symmetric distribution is where all the values of mean, median, mode are equal.
• In such distribution, the interval of gains and losses display the same frequency.
• A distribution that differs from symmetrical distribution is known as unsymmetrical distribution and that is where we get positive skewness and negative skewness.

If the distribution is symmetric then the mean is equal to the median and the distribution will have zero skewness. And in addition to this, if the distribution is unimodal then mean = median = mode.

Therefore, in a unimodal and symmetric distribution, the relationship between averages is like mean = median = mode.

Trade-Related Aspects of Intellectual Property Rights (TRIPs) - Doha Ministerial Conference.

Intellectual property rights are the rights given to persons over the creations of their minds. They usually give the creator an exclusive right over the use of his/her creation for a certain period of time.  

The Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement requires members of the WTO to set minimum standards of legal protection, but its objective to have a “one-fits-all” protection law on Intellectual Property has been viewed with controversies regarding differences in the development level of countries.

Despite the controversy, the agreement has extensively incorporated intellectual property rights into the global trading system for the first time in 1995, and has prevailed as the most comprehensive agreement reached by the world.

The correct answer is Audit Programme

Key PointsAudit memorandum means a memorandum or letter issued during the course of an audit for eliciting information, confirmation of facts, or any other matter considered necessary by the audit officer in the conduct of an audit.

Audit Planning refers to the design of an audit describing the overall audit strategy and guidelines to follow while performing the audit. It helps in the successful completion of the audit process.

An audit notebook is maintained by the staff of the auditor to record the difficulties, mistakes, and errors noticed during the course of the audit to discuss further with the seniors or auditor before finalizing the audit report.

An audit programme is an action plan that documents what procedures an auditor will follow to validate that an organization is in conformance with compliance regulations.

Additional Information An audit program also called an audit plan, is an action plan that documents what procedures an auditor will follow to validate that an organization is in conformance with compliance regulations.

The goal of an audit program is to create a framework detailed enough for any outside auditor to understand. It should contain the following information:

• the official examinations that have been completed;
• conclusions reached; and
• the reasoning behind each conclusion.

Correct match: