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

The correct answer is 18 per cent

Key Points Sustainable Growth Rate:

• The maximum rate of growth that a business or social enterprise may maintain without needing to raise more capital or take on more debt is known as the sustainable growth rate (SGR).
• It measures how quickly a business can expand using only internal revenue and without borrowing money from other sources.

Important Points

The sustainable growth rate of the company that enjoys return on equity = 30 percent and a dividend payout ratio of 40 percent is 18%

Complex Buying Behavior is spotted when there are significant differences between brands and also there is high involvement.

• Complex buying behavior occurs when the consumer is highly involved with the purchase and when there are significant differences between brands.
• This behavior can be associated with the purchase of a new home or a personal computer.
• Such tasks are complex because the risk is high (significant financial commitment), and the large differences between brands or products require gathering a substantial amount of information prior to purchase.
• This may include informing the consumer about the product category and its important attributes, providing detailed information about product benefits, and motivating sales personnel to influence final brand choice.

1. Variety Seeking Buying Behavior:

• Variety-seeking buyer behavior is the buying tendency of those consumers that do not have a high involvement with a product when there is a significant difference between brands.
• These types of consumers seek variety for no valid reasons at all and become bored quite easily with products.

2. Dissonance Reducing Buying Behavior:

• Dissonance-reducing buying behavior occurs when the consumer is highly involved but sees little difference between brands.
• This is likely to be the case with the purchase of a lawnmower or a diamond ring.
• After making a purchase under such circumstances, a consumer is likely to experience the dissonance that comes from noticing that other brands would have been just as good, if not slightly better, in some dimensions.
• A consumer in such a buying situation will seek information or ideas that justify the original purchase.

3. Habitual Buying Behavior:

• Habitual buying is that kind of buying behavior of customers where they don't think much before buying the product and involvement in the decision-making is very low.
• The product is perceived as a commodity and doesn't provide much difference from its rivals.

Agriculture Income earned by a taxpayer in India is exempt under Section 10(1) of the Income Tax Act, 1961. Agricultural income is defined under section 2(1A) of the Income-tax Act.

As per section 2(1A), agricultural income generally means 

1. Any rent or revenue derived from land which is situated in India and is used for agricultural purposes.
2. Any income derived from such land by agriculture operations including processing of agricultural produce so as to render it fit for the market or sale of such produce.
3. Any income attributable to a farmhouse subject to satisfaction of certain conditions specified in this regard in section 2(1A).
4. Any income derived from saplings or seedlings grown in a nursery shall be deemed to be agricultural income.

Price skimming is a product pricing strategy by which a firm charges the highest initial price that customers will pay and then lowers it over time.

• As the demand of the first customers is satisfied and competition enters the market, the firm lowers the price to attract another, a more price-sensitive segment of the population.
• Price skimming is often used when a new type of product enters the market. The goal is to gather as much revenue as possible while consumer demand is high and competition has not entered the market.
• The skimming strategy gets its name from "skimming" successive layers of cream, or customer segments, as prices are lowered over time.

The European Legislative Council is not associated with the EU organization.

The European Union adopts legislation through a variety of legislative procedures. The procedure used for a given legislative proposal depends on the policy area in question.

Most legislation needs to be proposed by the European Commission and approved by the Council of the European Union and European Parliament to become law. Therefore, there is no such body as the European legislative council.

It performs the following functions as per the Reserve Bank of India Act, 1934:

1. Banking functions:

• The Reserve Bank acts as the Banker, Agent, and Adviser to the Government of India and states. It performs all the banking functions of the State and Central Government and it also tenders useful advice to the government on matters related to economic and monetary policy. It also manages the public debt of the government.
• It performs the same functions for the other commercial banks as the other banks ordinarily perform for their customers. RBI lends money to all the commercial banks of the country.

2. Supervisory functions:

• It supervises other banks and governments into various economic conditions and guides them at the time of inflation or deflation in the economy.

3. Promotional functions:

• The central bank also performs promotional functions which include integrating with world economies and maintaining foreign reserves. They represent the country's economy internationally.

The correct answer is Assertion is incorrect, but Reasoning is correct.

Key PointsAs per the passage, "Despite these advantages, there are challenges, particularly the restriction on individual countries' monetary policies as monetary policy is decided by the ECB, not individual countries."

The correct answer is It reduces transaction costs.

Key PointsAs per the passage, "For businesses, it provides pricing transparency and reduces transaction costs, aiding in the increase of cross-border trade within the Eurozone."

The correct answer is the European Central Bank.

Key PointsAs per the passage, "Managed by the European Central Bank (ECB) and the Eurosystem which comprises the central banks of the Eurozone, it currently serves as the official currency for 19 of the 27 EU member states collectively known as the Eurozone."

Key-Points

Masala Bonds

• Masala Bonds are rupee-denominated bonds issued outside India by Indian entities. They are debt instruments that help to raise money in local currency from foreign investors.
• Masala bonds are bonds issued outside India but denominated in Indian Rupees, rather than the local currency. Masala is an Indian word and it means spices. The term was used by the International Finance Corporation to evoke the culture and cuisine of India. 
• It is a debt instrument issued by an Indian entity in foreign markets to raise money, in Indian currency, instead of dollars or local denomination. In 2019, Kerala became the first Indian state to issue Masala Bonds worth Rs. 2,150 crore on the London Stock Exchange.
• Masala bonds allow Indian companies to raise overseas debt in the Indian currency. The instrument shields the issuers from currency fluctuations mainly because interest payments and redemption are in rupees. At the same time, investors get interest rates that are higher than in their domestic markets. In the third statement, the most popular market for Masala bonds currently in London.

Therefore Option 3 is not a correct statement with respect to Masala Bonds.

The correct answer is MRTP.

Important Points

• The Competition Act, 2002 was enacted by the Parliament of India and governs Indian competition law.
• It replaced the archaic The Monopolies and Restrictive Trade Practices Act, 1969.
• Under this legislation, the Competition Commission of India was established to prevent the activities that have an adverse effect on competition in India.
• This act extends to whole of India.

Statement II is also correct for the fact that the reviews posted on the websites of the e-commerce companies are not always true and there is no way to find out if they are true or fake or even the discounts are not always for real. Refer to, “There are no authentic ways to figure out if product reviews, ratings or even discounts are genuine.”

Indian Accounting Standards (abbreviated as Ind-AS) were issued under the supervision and control of the Accounting Standards Board (ASB), which was constituted as a body in the year 1977. The new Ind AS was notified on February 16, 2015. Ind AS are named and numbered in the same way as the corresponding International Financial Reporting Standards (IFRS). National Advisory Committee on Accounting Standards (NACAS) has recommended these standards to the Ministry of Corporate Affairs (MCA). MCA has to spell out the accounting standards applicable to companies in India. As of date, MCA has notified 39 Ind AS. This shall be applied to the companies of the financial year 2015-16 voluntarily and from 2016-17 on a mandatory basis.

Therefore, customer portfolio analysis helps the business to identify the Most Valuable Customer.

Reducing the capital of the company is called internal reconstruction. Internal reconstruction of a company is done through the reorganization of its share capital. It is a scheme of reorganization in which all interested parties in the capital structure volunteer to sacrifice.

The correct match is given below-

• Differential pricing - Low prices for early and evening movies, weekends discounts for car parking rentals.
• Complimentary service - Customer lounges to sit in while waiting for a table at service centers, etc.
• Reservation system - Airlines, hotel, physician employ extensively.
• Non-peak demand cultivation - Breakfast service by McDonald's and mini-vacation and weekends by hotels.

The concept of the law of diminishing returns states that if one factor of production is increased while other factors are held constant, then the output per unit of the variable factor will eventually diminish. Laws of increasing and constant returns are temporary phases of the law of diminishing returns because returns increase and remain the same temporarily, as the business expands.

HRD does not focus on autonomous workgroups. HRD focuses on all the human resources of the organisation i.e. individual staff members.

The correct answer is Larry Ellison.

Key Points

• Oracle is an American multinational computer technology corporation headquartered in Austin, Texas. The company was formerly headquartered in Redwood Shores, California until December 2020 when it moved its headquarters to Texas.
• It was started by Larry Ellison, Bob Miner and Ted Oates on 16 June, 1977.
• Oracle offered first commercial SQL Relational Database Management System (RDBMS).

Additional Information

• Larry Page along with Sergey Brin founded Google on 4th September 1998. It is the most popular search engine in the world.
• Sean Parker is an American entrepreneur and philanthropist, most notable for co-founding the file-sharing computer service Napster, and serving as the first president of the social networking website Facebook.
• Bill Gates and Paul Allen started Microsoft on 4th April, 1975. It has since been an important part of the tech world as it has offered the widely used Windows UI, MS- Office and its CRM app known as Dynamics CRM.

The correct answer is 283.

Important Points

• ITNS Challan Number 283 is used for payment of Fringe Benefits Tax.
• Fringe benefit tax (FBT) was a form of tax that companies paid in lieu of benefits they offered their employees in addition to the compensation paid to them. It was included by the Finance Act 2005 with effect from April 1, 2006.
• The Income Tax Department's Challan ITNS 284 is used to pay Income Tax on Corporations (Corporation Tax) and Income Tax on Other than Corporations.
• The Income Tax Department's Challan ITNS 283 is used to pay the Banking Cash Transaction Tax and Fringe Benefits Tax.
• To deposit gift tax, estate duty, spending tax, and other miscellaneous taxes use the ITNS 282 form. 

Managerial Grid is not a demand forecasting method of human resource planning.

Managerial Grid model identified five different leadership styles based on the concern for people and the production. There is a number of techniques estimating human resource demand:

(a) Managerial Judgement

(b) Work-Study Technique

(c) Ratio-trend Analysis

(d) Econometric Models

(e) Delphi Model

(f) Other techniques

The correct answer is a - 1, b - 3, c - 2, d - 4.

Key PointsHere is an explanation of the four CSR models:

• Ethical model: This model is based on the idea that businesses have a moral responsibility to act in a responsible way towards their stakeholders. The ethical model argues that businesses should consider the interests of their stakeholders when making decisions, even if those decisions do not maximize profits.
• Statist model: This model is based on the idea that the state has a responsibility to regulate businesses and ensure that they act in a responsible way. The statist model argues that the state should set standards for businesses to meet, and that businesses should be held accountable for their actions.
• Liberal model: This model is based on the idea that businesses should be free to operate without government interference. The liberal model argues that businesses should be allowed to make their own decisions about how to operate, as long as they do not violate the law.
• Stakeholder model: This model is based on the idea that businesses have a responsibility to be accountable to their stakeholders and to work to meet their needs. The stakeholder model argues that businesses should consider the interests of all of their stakeholders when making decisions, and that they should be transparent about their activities.

The ethical model is the oldest of the four models, and it is still widely used today. The statist model is more common in countries with a strong government presence, such as China. The liberal model is more common in countries with a strong tradition of free enterprise, such as the United States. The stakeholder model is a more recent model, and it is becoming increasingly popular as businesses become more aware of the importance of sustainability and social responsibility.

Key Points

Zero interest Fully Convertible Debentures:

• These debentures are issued at a reduced price but do not have a coupon for periodic interest payments.
• Interest is applied to the difference between a bond's nominal price and issue price.
• For instance, a debt obligation with a nominal value of 100 rupees is issued at 70 rupees, and its redemption value is 100 rupees. Therefore, Rs. 30 is considered interest in this case, and it will be distributed during the life of the debenture.

Important Points

• These are zero interest fully convertible debentures will not have any interest accrued by the issuer throughout the lock-in term.
• Fully paid FCDs will, however, automatically and compulsorily convert into shares after a specified length of time.
• In case of 'Zero interest Fully Convertible Debentures', (ZFCD) return to debenture holders is available in the form of difference between the issue price of ZFCD and the market price of converted share.
• Return to debenture holders = Issue price of ZFCD - Market price of converted share.

​Hence, it can be concluded that in case of 'Zero interest Fully Convertible Debentures', (ZFCD) return to debenture holders is available in the form of difference between the issue price of ZFCD and the market price of converted share.

The correct answer is Competitive advantage.

Key Points

Trade secrets:

• Trade secrets refer to valuable, confidential, and non-public information that is kept secret within an organization.
• They can include formulas, processes, methods, customer lists, marketing strategies, and other proprietary information.
• Trade secrets are important for maintaining a competitive advantage in the market.

Important Points

Competitive Advantage:

• Trade secrets provide a unique competitive advantage to companies.
• By keeping certain information secret, companies can differentiate themselves from competitors and have an edge in the market.
• Trade secrets allow companies to maintain their unique processes, techniques, or information that gives them an advantage over others.

Confidentiality and Exclusivity:

• Trade secrets allow companies to protect valuable information from being disclosed to competitors or the public.
• This confidentiality and exclusivity give them an upper hand in the market, as competitors cannot replicate or imitate their secret methods or strategies.

Cost-effectiveness:

• Unlike other forms of intellectual property protection, such as patents or trademarks, trade secrets do not require formal registration or filing fees.
• They can be maintained and protected internally, making them a cost-effective way of safeguarding valuable information.

Longevity:

• Trade secrets can provide long-term protection, as long as the information remains confidential.
• Unlike patents or trademarks that have expiration dates, trade secrets can be kept indefinitely as long as they are not publicly disclosed.
• This allows companies to have a sustained competitive advantage over an extended period.

Overall, trade secrets are valuable assets for companies as they provide a competitive edge, maintain confidentiality and exclusivity, are cost-effective, and offer long-term protection.

Protecting trade secrets can help companies maintain their market position, enhance innovation, and preserve their unique know-how and techniques.

Debtor-Creditor, Agent-Principal, Licensor-Licensee, Bailor-Bailee, Pledger-Pledgee, etc. are various kinds of relationships between the banker and the customer.

Licensor-Licensee:

• When a banker provides the locker facility to a customer, the relationship between them is that of licensor and licensee or lessor and lessee.
• A bank is a licensor and the customer who hires the bank is the licensee.

Debentures:

• Section 71 of the Companies Act, 2013 permits a company to issue debentures with an option to convert debentures into shares either wholly or partially at the time of redemption.
• Provided that this conversion of the debenture to shares shall be approved by a special resolution passed at a general meeting.
• The Companies Act 1956, Section 2(12) defines debentures as, "Debenture includes debenture stock, bonds and any other securities of a company whether constituting a charge on the Company’s assets or not. Debenture means a document, which either creates a debt or acknowledges it, and any document which fulfills either of these two conditions is a debenture."
• Thus, debentures are governed by company law.

The correct answer is option 3

Key Points The correct match is given below:

Important PointsR. A. Fisher - Anova

• Developed by Ronald Fisher, ANOVA stands for Analysis of Variance. 
• The statistical approach of analysis of variance, or ANOVA, divides observed variance data into multiple components for use in additional tests.
• For three or more groups of data, a one-way ANOVA is used to learn more about the relationship between the dependent and independent variables.
• If there is no real variance between the groups, the F-ratio of the ANOVA should be near to 1.

Karl Pearson - Correlation

• The Pearson's product-moment correlation coefficient (abbreviated as r or rxy) is a measure of the strength of a linear link between two variables (x and y being the two variables involved).

Formula for Karl Pearson - Correlation is 

Spearman - Rank Correlation

• Spearman’s correlation coefficient is a statistical measure of the strength of a monotonic relationship between paired data
• Spearman's Rank correlation coefficient is a technique which can be used to summarise the strength and direction (negative or positive) of a relationship between two variables.​
• The result will always be between 1 and minus 1.

Formula for Spearman - Rank Correlation is

Gosset - Student’s t distribution

• The t test tells you how significant the differences between groups are; In other words, it lets you know if those differences (measured in means) could have happened by chance.
• The t score is a proportion of the difference between two groups divided by the difference between groups.
• The greater the t score, the greater the difference between groups. The smaller the t score, the closer the groups are related.

The process of adoption over time is typically illustrated as a classical normal distribution or "bell curve". The people to adopt a new product first are called innovators.