Practice Questions for Innovation & Entrepreneurship - 2 | CMAT Mock Test Series - CAT PDF Download

Q1: What is the title of the Authorised Biography of J.R.D. TATA?
(a) My Times: An Autobiography
(b) Beyond the Last Blue Mountain
(c) Ace Against Odds
(d) Wings of Fire
Ans: (b)
The correct answer is option B, "Beyond the Last Blue Mountain." This book is the authorized biography of J.R.D. Tata, written by R.M. Lala. It provides insights into the life and journey of J.R.D. Tata, one of India's most influential industrialists.

Q2: The process of gathering information about market or socio-economic trends is called
(a) Need for achievement
(b) Tenacity
(c) Neuroticism
(d) Environmental Scanning
Ans: (d)
Environmental scanning is the process of gathering information about market or socio-economic trends. It involves monitoring, evaluating, and interpreting information from the external environment to identify opportunities and threats that may impact an organization or business.

Q3: India’s first live Payments Bank was launched by
(a) Aditya Birla Idea
(b) Cholamandalam
(c) Bharti Airtel
(d) Paytm
Ans: (c)
India’s first live Payments Bank was launched by Bharti Airtel. Payments banks are a new model of banks conceptualized by the Reserve Bank of India (RBI). They can accept a restricted deposit, which is currently limited to ₹1 lakh per customer, and provide banking services but cannot issue loans or credit cards.

Q4: Which one of the following Ministry publishes the Economic Survey of India?
(a) Ministry of Finance
(b) Ministry of External Affairs
(c) Ministry of Commerce and Industry
(d) Ministry of Statistics and Programme Implementation
Ans: (a)
The Economic Survey of India is published annually by the Ministry of Finance, Government of India. It is presented in the Parliament before the Union Budget and provides an overview of the country's economic performance during the previous financial year.

Q5: Which city is ranked as one of the world’s five fastest growing startup cities?
(a) Cochin
(b) Ahmedabad
(c) Bangalore
(d) Nagpur
Ans: (c)
Bangalore (now officially known as Bengaluru) is ranked as one of the world’s five fastest-growing startup cities. It has emerged as a major hub for startups and technology companies, earning it the nickname "Silicon Valley of India."

Q6: Which country is No 1 in ease of doing business from last four years from 2017?
(a) Canada
(b) Norway
(c) United States
(d) New Zealand
Ans: (d)
New Zealand has been ranked No. 1 in ease of doing business from the last four years from 2017 according to the Ease of Doing Business Index published by the World Bank. It is known for its business-friendly environment, efficient regulatory framework, and ease of starting and operating businesses.

Question: (7 - 15)
After reading the passage given below, choose the best answer to each question that follows:
In contrast to traditional analyses of minority business, the sociological analysis contends that minority business ownership is a grouplevel phenomenon, in that it is largely dependent upon social-group resources for its development. Specifically. this analysis indicates that support networksplay critical role in starting and maintaining minority business enterprises by providing owners with a range of assistance, from the informal encouragementof family members and friends to dependable sources of labor andclientele from the owner's ethnic group. Suchself-help networks, which encourage and support ethnic minority entrepreneurs, consist of “primary” institutions, those closest to the individual in shaping his or her behavior and beliefs. They are characterized by the face-to-face association and cooperation of persons united by ties of mutual concern. They form an intermediate social level between the individual and larger “secondary”institutions based on impersonal relationships. Primary institutions comprising the support network include kinship, peer. and neighborhood or community subgroups. A major function of self-help networks is financial support. Most scholars agree that minority business owners have dependedprimarily on family funds and ethnic community resources for investmentcapital. Personal savings have been accumulated, often through frugal living habits that require sacrifices by the entire family and are thus a product of long-term family financial behavior. Additional loans andgifts from relatives, forthcoming because of group obligation rather than narrow investment calculation, have supplemented personal savings. Individual entrepreneurs do not necessarily rely on their kin because they cannot obtain financial backing from commercial resources.
They may actually avoid banks because they assume that commercial institutions either cannot comprehend the special needs of minority enterprise or charge unreasonably high interest rates. Within the larger ethnic community, rotating credit associations have been usedto raise capital. These associations are informal clubs of friends and other trusted members of the ethnic group who make regular contributions to a fund that is given to each contributor in rotation. One author estimates that 40 percent of New York Chinatown firms established during 1900-1950 utilized such associations as their initial source of capital. However, recent immigrants andthird or fourth generationsof older groups now employrotating credit associations only occasionally to raise investment funds. Some groups, like Black Americans, found other means of financial support for their entrepreneurial efforts. The first Black-operated banks were created in the late nineteenth century as depositories for dues) collected from fraternal or lodge groups. which themselves had sprung from Black churches. Black banks made limited investments in other Black enterprises. Irish immigrants in American cities organized many building and loan associations to provide capital for home construction and purchase. They, in turn, provided work for many Irish home-building contractor firms. Other ethnic and minority groups followed similar practices in founding ethnic-directed financial institutions. (The passage taken from Book/News/Opensource)

Q7: According to the passage, once a minority-owned businessis established, self-help networks contribute which of the following to that business?
(a) Information regarding possible expansion of the business into nearby communities
(b) Encouragement of a business climate thatis nearly free of direct competition
(c) Opportunities for the business owner to reinvest profits in other minority-owned businesses
(d) Contact with people whoare likely to be customers of the new business
Ans: (d)
The passage highlights that self-help networks play a critical role in minority-owned businesses by providing assistance ranging from informal encouragement to dependable sources of clientele from the owner's ethnic group. These networks connect minority entrepreneurs with potential customers from their own communities, thus facilitating business growth and sustainability.

Q8: The passage best supports which of the following statements?
(a) A minority entrepreneur who had noassistance from family members would not be able to start a business
(b) Self-help networks have been effective in helping entrepreneurs primarily in the last 50 years
(c) Minority groups have developed a range of alternatives to standard financing of business ventures
(d) Successful minority-owned businesses succeed primarily because of the personal strengths of their founders
Ans: (c)
The passage discusses various alternative financing methods utilized by minority entrepreneurs, such as reliance on family funds, ethnic community resources, and rotating credit associations. This indicates that minority groups have developed a range of alternatives to traditional commercial financing for their business ventures, supporting option C.

Q9: The passage claims that small-scale individual entrepreneurs
(a) Actually avoid banks because they assume that commercial institutions charge unreasonably highinterest rates
(b) Rushes to banks and other financial institutions for loan
(c) Avoid National Banks butbelievein the private ones
(d) Never uses own savings for entrepreneurship and depends on Govt. loan
Ans: (a)
The passage mentions that individual entrepreneurs, particularly minority entrepreneurs, may avoid banks because they assume that commercial institutions either cannot comprehend the special needs of minority enterprise or charge unreasonably high interest rates. This supports option A.

Q10: Which of the following shows the working of a self-help support network,as it is described in the passage?
(a) A public high school offers courses in book-keeping and accounting as part of its open enrollment adult education program
(b) The local government in a small city sets up a program that helps teen-agers find summerjobs
(c) A neighborhood-based fraternal organization develops a program of on-the-job training for its members and their friends
(d) A community college offers country residents training programs that can lead to certification in a variety of technical
Ans: (c)
The passage describes self-help networks as consisting of primary institutions such as kinship, peer, and neighborhood or community subgroups. These networks provide assistance, including on-the-job training, to support ethnic minority entrepreneurs. Option C best illustrates the working of a self-help support network by describing an organization that offers on-the-job training for its members and their friends.

Q11: According to the passage the sociological analysis contends that
(a) Minority bustness ownership is a group-level phenomenon, in that it is largely dependent upon social-group resources for its development
(b) Minority business ownership is not a group-level phenomenon,in that it is largely dependent upon social-group resources for its development
(c) Minority business ownership is an individual phenomenon,in that it is not dependent upon social-group resources for its development
(d) Minority business ownership is an individual phenomenon,in that it is independent of social-group resources for its development
Ans: (a)
The passage argues that minority business ownership is a group-level phenomenon, heavily reliant on social-group resources for its development. Self-help networks play a crucial role by providing assistance, including financial support and clientele from the owner's ethnic group, to minority entrepreneurs. This supports option A.

Q12: Which of the following can be inferred from the passage about the Irish building and loan associations?
(a) They were started by third- or fourth-generation immigrants
(b) They originated as offshoots of church-related groups
(c) They frequently helped Irish entrepreneurs to finance business not connected with construction
(d) They contributed to the employment of many Irish construction workers
Ans: (d)
The passage mentions that Irish immigrants in American cities organized building and loan associations to provide capital for home construction and purchase. These associations, in turn, provided work for many Irish home-building contractor firms, thereby contributing to the employment of Irish construction workers. Option D correctly summarizes this inference.

Q13: Based on the information in the passage, it would be LEAST likely for which of the following persons to be part of a self-help network?
(a) The entrepreneur's childhood friend
(b) The entrepreneur's aunt
(c) The entrepreneur's religious leader
(d) The entrepreneur's banker
Ans: (d)
Self-help networks typically consist of individuals and groups closely associated with the entrepreneur, such as family members, friends, peers, and community members. The entrepreneur's banker, while important for financial transactions, is less likely to be directly involved in the entrepreneur's self-help network compared to the other options listed.

Q14: Which of the following statement is NOT correct as per the avove passage?
(a) A major function of self-help networks is financial support
(b) Within the larger ethnic community, rotating credit associations have been used to raise capital
(c) This analysis indicates that support networks play a critical role in starting and maintaining minority business enterprises by providing owners with a range of assistance
(d) When you need venture funding no one will give any money until you already have a marketable product; in other words, funding comes just when you donotneed it
Ans: (d)
Option D is not directly supported by the passage. The passage discusses the role of self-help networks in providing financial support and assistance to minority business owners. However, it does not explicitly mention the timing of venture funding or the concept of funding coming when it is not needed.

Q15: According to the passage that traditional analyses of minority business would be LEAST likely to do which ofthe following?
(a) Examine businesses primarily in their social contexts
(b) Focus on current, rather than historical, examples of business enterprises
(c) Focus on the maintenance of businesses, rather than means of starting them
(d) Focus on the role of individual entrepreneurs in starting a business
Ans: (a)
The passage contrasts the sociological analysis of minority business, which emphasizes the role of self-help networks and social-group resources, with traditional analyses. Traditional analyses are less likely to examine businesses primarily in their social contexts, as they may focus more on individual entrepreneurial traits, market dynamics, or financial aspects of business ventures.

Q16: A business where an individual is both the owner and conductorof the businessaffairs is called
(a) Proprietorship Firms
(b) Partnership Firms
(c) Private Limited Company
(d) None of the above
Ans: (a)
In a proprietorship firm, a single individual owns and manages the business. This individual is responsible for all aspects of the business, including its operations, finances, and decision-making. Since the question describes a scenario where one person is both the owner and conductor of the business affairs, the correct answer is (a) Proprietorship Firms.

Q17: A recently registered enterprise started first time the business of online food delivery services using drones in its locality. This type of business can be an example of
(a) A new enterprise based on new business concept
(b) An existing enterprise based on existing business concept
(c) A New enterprise based on existing business concept
(d) Existing Enterprise based on new business concept
Ans: (a)
The scenario describes a recently registered enterprise that is engaging in a novel business activity, which is online food delivery services using drones. Since this business involves a new and innovative concept (using drones for food delivery), it falls under the category of a new enterprise based on a new business concept, making option (a) the correct answer.

Q18: Which of the following is not one of the traits of an entrepreneur?
(a) Opportunity Exploration
(b) Perseverance
(c) External locus of control
(d) Risk Taking
Ans: (c)
Traits of successful entrepreneurs typically include qualities like opportunity exploration, perseverance, and risk-taking. However, an external locus of control, which means attributing one's successes or failures to external factors rather than personal abilities or efforts, is not a characteristic typically associated with successful entrepreneurs. Therefore, option (c) External locus of control is the correct answer.

Q19: The executive summary of business plan should be prepared
(a) Before writing the entire business plan
(b) To describe the proposed business in detail
(c) So that it is at least 10 pages in length
(d) After you have written the entire business plan
Ans: (d)
The executive summary of a business plan is a concise overview of the key points of the entire plan. It should provide a summary of the business concept, market analysis, financial projections, and other essential aspects of the plan. Since it is a summary of the entire business plan, it is typically prepared after the entire plan has been written. Therefore, option (d) After you have written the entire business plan is the correct answer.

Q20: Which of the following describes a mission statementof start up?
(a) It describes the viability of the business
(b) It provides direction and purpose for the start up
(c) It should be written as the first step in developing a business plan
(d) All of the above
Ans: (b)
A mission statement defines the purpose and objectives of a business. It provides direction, guiding principles, and a sense of purpose for the startup. While a mission statement may indirectly reflect the viability of the business by expressing its goals and values, its primary function is to provide a sense of direction. Therefore, option (b) It provides direction and purpose for the startup is the correct answer.

Q21: At the early stage of start-up, entrepreneurs often focus on sales, but then discover that they need to equally focus on
(a) Overtrading
(b) Outsourcing
(c) Managing Cash flow
(d) Taking loan
Ans: (c)
While sales are crucial for any business, especially in the early stages, entrepreneurs often realize the importance of managing cash flow as their business grows. Cash flow management involves ensuring that there is enough cash available to cover operational expenses, investments, and other financial obligations. Therefore, option (c) Managing Cash flow is the correct answer as entrepreneurs need to equally focus on this aspect to sustain and grow their businesses.

Q22:  _____ grants the holder the right to exclude others from making, selling, using or offering for sale or importing the invention.
(a) Trademark
(b) Patent
(c) Copy
(d) Trade secret
Ans: (b)
A patent grants the holder exclusive rights to an invention, preventing others from making, selling, using, or offering for sale the patented invention without permission. This protection encourages innovation by providing inventors with a limited monopoly over their creations. Therefore, option (b) Patent is the correct answer.

Q23: Innovation management involves managing
(a) People
(b) Ideas
(c) Information
(d) All of the above
Ans: (d)
Innovation management encompasses the process of managing people, ideas, information, and resources to foster innovation within an organization. Effective innovation management involves nurturing creativity, fostering collaboration, implementing processes for idea generation and evaluation, and leveraging information and resources to turn ideas into successful innovations. Therefore, option (d) All of the above is the correct answer.

Q24: The ——————— plan shows whether the businessis economically feasible or not.
(a) Human Resource
(b) Business
(c) Economic
(d) Operational
Ans: (b)
The business plan provides a comprehensive overview of a business, including its goals, strategies, operations, and financial projections. Within the business plan, the financial section assesses the economic feasibility of the business by outlining startup costs, revenue projections, break-even analysis, and other financial considerations. Therefore, option (b) Business is the correct answer.

Q25: Which of the following is NOT included in the financial section of a business plan?
(a) Projected income statements
(b) Break-even point
(c) Start-up costs
(d) None of the above
Ans: (d)
All the options listed—projected income statements, break-even point, and start-up costs—are typically included in the financial section of a business plan. This section is crucial for outlining the financial aspects of the business, including revenue forecasts, expense projections, funding requirements, and financial metrics. Therefore, option (d) None of the above is the correct answer.