RCs: 31 to 40 Questions for CAT with Answers PDF

Direction: The passage below is accompanied by a set of questions. Choose the best answer to each question.
The collapse of the German banking giant Wirecard in June 2020, amid a roaring fraud scandal, shocked the public. Wirecard, once hailed as a 'German miracle', was found to be involved in various deceptions, including falsification of accounts and fake cash-flows.
This incident is not isolated; the explosive growth of finance has been accompanied by a dazzling scale of financial fraud, from the Enron scandal to Bernie Madoff’s pyramid scheme, and more recently, scams in cryptocurrency markets. These frauds are often supported by regulatory bodies and consultancies through action or inaction.
The case of Wire card, investigated by Financial Times reporter Dan McCrum, revealed that much of the bank’s business was conjured out of thin air. This raises questions about the nature of reality in finance and the blurred lines between authenticity and fakeness.
The article explores the history of financial alchemy, from the fin-de-siècle US stock touts to contemporary market alchemists like George Soros, and the role of distortion in finance. It argues that financial fraud is not a deviation but a reflection of the norm in a world where the boundaries between real and fake are porous.
Q1: What was the public's reaction to the Wire card scandal?
(a) Indifference, as such scandals are common.
(b) Shock, as Wire card was once considered a 'German miracle'.
(c) Relief, as it was expected.
(d) Happiness, as it exposed the fraudulent nature of finance.
Ans: (b)
Sol: The passage states that the public was shocked by the Wire card scandal because the company had been widely seen as a 'German miracle'.

Q2: According to the passage, what is a common factor in financial frauds?
(a) Lack of technological advancement.
(b) Support from regulatory bodies and consultancies.
(c) Involvement of low-level employees.
(d) Absence of media coverage.
Ans: (b)
Sol: The passage mentions that financial frauds are often supported by regulatory bodies and consultancies through action or inaction.

Q3: What did Dan McCrum's investigation into Wire card reveal?
(a) Wirecard was a victim of external fraud.
(b) Wirecard's business was largely legitimate.
(c) Much of Wirecard’s business was fabricated.
(d) Wirecard was involved in charitable activities.
Ans: (c)
Sol: The passage discusses Dan McCrum's investigation, which revealed that much of Wirecard’s business had been conjured out of thin air.

Q4: The article suggests that the nature of reality in finance is characterized by:
(a) Clear distinctions between real and fake.
(b) Strict regulations preventing fraud.
(c) Blurred lines between authenticity and fakeness.
(d) Complete transparency in financial transactions.
Ans: (c)
Sol: The passage talks about the blurred lines between authenticity and fakeness in finance, reflecting the nature of reality in this field.

Q5: What role does distortion play in finance, according to the article?
(a) It is a minor issue that is easily resolved.
(b) It is a critical force that creates absorbing other-worlds.
(c) It has no significant impact on financial markets.
(d) It is a recent phenomenon due to technological advancements.
Ans: (b)
Sol: The passage argues that distortion in finance is not just about deception but about the capacity to create absorbing other-worlds, making it a critical force.

Q6: The primary purpose of the passage is to:
(a) Advocate for stricter regulations in the finance industry.
(b) Highlight the role of technology in preventing financial fraud.
(c) Argue that financial fraud reflects the norm rather than being an anomaly.
(d) Provide a historical account of financial frauds.
Ans: (c)
Sol: The passage focuses on arguing that financial fraud is not a deviation but a reflection of the norm in a world where the boundaries between real and fake are porous.