UGC NET Paper 2: Commerce 3rd Sept 2024 Shift 2 | UGC NET Past Year Papers PDF Download

Q1: Matrix organisation violates which of the following management principles?

(a) Span of Management

(b) Scalar Chain

(c) Unity of Direction

(d) Unity of Command

Ans: D

Sol: The correct answer is Unity of Command

Unity of Command:

• In the context of a financial enterprise, the principle of unity of command asserts that each employee should receive orders from one superior only, ensuring clear and coherent instruction and responsibility.
• A matrix organization structure violates this principle as employees have dual reporting relationships—generally to both a functional manager and a project manager. This can create confusion, conflict, and an unclear prioritization of tasks and responsibilities.
• This can be particularly challenging in financial enterprises where clarity in decision-making and accountability is crucial for tasks such as compliance, risk management, and financial reporting.

Other Related Points

Span of Management:

• This principle refers to the number of subordinates that a manager can effectively control and oversee. It is not fundamentally violated by a matrix structure but rather redefined through multiple reporting paths.

Scalar Chain:

• The scalar chain is the line of authority from top management to the lowest ranks. While a matrix organization may modify the traditional hierarchy, it does not necessarily violate the scalar chain, as formal lines of communication still exist.

Unity of Direction:

• This principle entails that activities with the same objective should be directed by one manager using one plan. In a matrix organization, this principle can still be maintained through coordinated efforts from various managers, aligning around project objectives.

Q2: A company has Return on Assets (ROA) of 10% and profit margin of 2%. Compute the total assets turnover.

(a) 2.5%

(b) 5%

(c) 7.5%

(d) 10%

Ans: B

Sol: The correct answer is 5%.

• To compute the Total Assets Turnover, we use the formula:
• ROA = Profit Margin × Total Assets Turnover
• Rearranging for Total Assets Turnover:
• Total Assets Turnover = ROA / Profit Margin
• Given us;
  • ROA = 10% = 0.10
  • Profit Margin = 2% = 0.02
• Substitute these values into the formula:
  • Total Assets Turnover = 0.10 / 0.02 = 5%

Other Related Points

• Total Assets Turnover significance in financial analysis:
  • Total Assets Turnover is a key metric in financial analysis that measures a company's efficiency in using its assets to generate sales. A higher ratio indicates better performance and effective asset utilization.
  • This ratio is particularly important for businesses with significant investment in assets, such as manufacturing firms, where maximizing asset productivity is crucial for profitability.
• Comparison with industry benchmarks:
  • It is essential to compare the Total Assets Turnover ratio with industry benchmarks to understand the company's relative efficiency. Different industries have varying standards for what constitutes a good Total Assets Turnover ratio.

Q3: Match the List-I with List-II 

Choose the correct answer from the options given below:

(a) A-III, B-I, C-II, D-IV

(b) A-IV, B-II, C-I, D-III

(c) A-III, B-II, C-I, D-IV

(d) A-I, B-II, C-III, D-IV

Ans: A

Sol: The correct answer is 'A-III, B-I, C-II, D-IV'.

Joint occurrence of Events (A) matches with Compound Event (III).

• A compound event is an event that involves the joint occurrence of two or more events. For example, rolling a die and getting an even number and a number greater than 3.

Outcome of an experiment consisting of all possible events (B) matches with Collective Exhaustive Events (I).

• Collective exhaustive events are a set of events that cover all possible outcomes of an experiment. For example, when rolling a die, the events 1, 2, 3, 4, 5, and 6 are collectively exhaustive.

One of the events cannot be expected to occur in preference over the other (C) matches with Equally likely Events (II).

• Equally likely events are events that have the same probability of occurring. For example, when flipping a fair coin, getting heads or tails are equally likely events.

The occurrence of one event implies that the other cannot occur (D) matches with Mutually Exclusive Events (IV).

• Mutually exclusive events are events that cannot occur at the same time. For example, when flipping a coin, getting heads and tails are mutually exclusive events.

Q4: According to Dividend Growth Model, the cost of Equity is equal to :

(a) Retained Earning + Dividend yield

(b) Dividend yield + Expected Growth in Dividend

(c) Retained Earning + Expected Growth in Dividend

(d) Dividend yield + Intrinsic value

Ans: B

Sol: The correct answer is Dividend yield + Expected Growth in Dividend.

Dividend yield + Expected Growth in Dividend:

• This is the correct representation of the cost of equity according to the Dividend Growth Model (DGM). The DGM formula is given by:

  Cost of Equity (Ke) = Dividend Yield + Growth Rate of Dividends

• Dividend Yield is calculated as the annual dividend per share divided by the current price per share.
• Expected Growth in Dividend refers to the anticipated annual rate at which the dividends will increase. This can be estimated based on historical dividend growth rates, or analysts' forecasts.
• The model assumes that dividends will continue to grow at a constant rate indefinitely.
• This method is useful for companies with a stable and predictable dividend policy.

Other Related Points

Retained Earning + Dividend yield:

• This is incorrect. Retained earnings reflect the portion of net income not paid out as dividends. They do not contribute to the current cost of equity directly.

Retained Earning + Expected Growth in Dividend:

• This option is incorrect. The cost of equity does not directly incorporate retained earnings, which represent cumulative historical profits kept within the company rather than being distributed to shareholders.

Dividend yield + Intrinsic value:

• This is incorrect. The intrinsic value of a stock is a separate concept used to evaluate if a stock is over or under-valued, but it does not directly correlate with calculating the cost of equity.

Q5: Who among the following has given this definition of CSR? "Wealth created from society has to be ploughed back into society."

(a) Milton Friedman

(b) Henry Ford

(c) Mahatma Gandhi

(d) Kay and Silberston

Ans: C

Sol: The correct answer is Mahatma Gandhi.

Mahatma Gandhi:

• Mahatma Gandhi, a prominent leader in the Indian independence movement and a proponent of non-violent civil disobedience, emphasized the moral responsibility of businesses toward society.
• He believed that businesses should act as trustees and use their wealth for the benefit of society. This concept aligns with his broader philosophy of trusteeship, where wealth is considered a trust of the community rather than a private possession.
• His view of corporate social responsibility (CSR) is reflected in the idea that the wealth generated from society should be reinvested into it, promoting social welfare and economic development.
• This perspective highlights the ethical obligation of businesses to contribute positively to societal progress, ensuring that economic gains are used to address social issues and improve the well-being of the community.

Other Related Points

Milton Friedman:

• Milton Friedman, an American economist, argued that the primary responsibility of a business is to increase its profits within the boundaries of the law and ethical customs. He did not advocate for reinvestment of corporate wealth into society as Gandhi did.

Henry Ford:

• Henry Ford, founder of the Ford Motor Company, believed in paying fair wages and producing affordable goods but did not specifically express the idea that wealth created from society should be returned to society in the manner Gandhi articulated.

Kay and Silberston:

• Kay and Silberston are known for their work in corporate governance and the role of companies, but they did not formulate the CSR concept that wealth generated from society must be returned to society in the way Mahatma Gandhi did.

Q6: According to section 17(2) of the Income Tax Act, 1961, which of the following is included in salary? 

A. Wages

B. Perks

C. Benefits in lieu of salary

D. Compensation on termination of employment

Choose the correct answer from the options given below:

(a) Only A and B

(b) Only B and C

(c) Only A, B and C

(d) A, B, C and D

Ans: D

Sol: The correct answer is 4.

Let's analyze each factor:

Wages

• Wages are the fixed regular payments made by an employer to an employee, typically on a monthly or bi-weekly basis, and are considered a fundamental part of the salary.
• Reason for inclusion: Wages are clearly a component of salary as per section 17g of the Income Tax Act, 1961.

Perks

• Perks (or perquisites) refer to the benefits provided by the employer to the employee in addition to regular salary. These could include things like company cars, housing, and other non-cash benefits.
• Reason for inclusion: Perks are considered part of the salary package under the provisions of the Income Tax Act.

Benefits in lieu of salary

• Benefits in lieu of salary refer to the compensation or other benefits provided to an employee instead of the traditional salary. This can include options like stock options or other financial compensations.
• Reason for inclusion: These benefits are recognized as part of the salary under section 17g of the Income Tax Act.

Compensation on termination of employment

• Compensation on termination of employment refers to the severance pay or other forms of compensation given to an employee when their employment is terminated.
• Reason for inclusion: This form of compensation is also included under the definition of salary as per the Income Tax Act.

Therefore, the factors that are included in the salary as per section 17g of the Income Tax Act, 1961 are A: Wages, B: Perks, C: Benefits in lieu of salary, and D: Compensation on termination of employment. This makes option 4: "A, B, C, and D" the correct choice.

Q7: Arrange the following process of incorporation of a new LLP in proper sequence. 

A. Reserve LLP name

B. Procure Digital Signature Certificate

C. Prepare documents for incorporation of LLP

D. LLP incorporation and DIN Application

E. Drafting and Filing LLP Agreement

F. Apply for PAN and TAN

Choose the correct answer from the options given below:

(a) A, B, C, D, F, E

(b) B, A, D, C, E, F

(c) B, A, C, D, F, E

(d) A, B, C, D, E, F

Ans: C

Sol: The correct answer is B, A, C, D, F, E.

Procure Digital Signature Certificate (B):

• The first step in incorporating a new LLP is to procure a Digital Signature Certificate (DSC) for the designated partners. This is essential because all documents to be submitted to the Registrar of Companies (RoC) must be digitally signed.
• The DSC ensures the security and authenticity of the documents submitted electronically.

Reserve LLP name (A):

• After obtaining the DSC, the next step is to reserve a unique name for the LLP. This is done by submitting a name reservation request to the Ministry of Corporate Affairs (MCA).
• The proposed name must comply with the naming guidelines and should not be identical or similar to an existing company or LLP name.

Prepare documents for incorporation of LLP (C):

• Once the name is approved, the necessary documents for incorporation must be prepared. These include the LLP Agreement, partners' details, and other required forms.
• Proper documentation ensures that all legal requirements are met and facilitates a smooth incorporation process.

LLP incorporation and DIN Application (D):

• With the required documents in place, the incorporation application can be filed. This step involves submitting Form FiLLiP (Form for incorporation of Limited Liability Partnership) to the RoC along with the partners' details.
• During this step, the Designated Partner Identification Number (DIN) is also applied for the designated partners if they do not already have one.

Apply for PAN and TAN (F):

• After the LLP is incorporated, it is essential to apply for the Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN). These are required for tax-related purposes.
• Applying for PAN and TAN ensures that the LLP can legally conduct its financial transactions and comply with tax regulations.

Drafting and Filing LLP Agreement (E):

• The final step is to draft and file the LLP Agreement. This agreement outlines the rights, duties, and obligations of the partners and the LLP. It must be filed within 30 days of incorporation.
• Filing the LLP Agreement ensures that the LLP operates smoothly and in accordance with the agreed terms and legal requirements.

Other Related Points

• Incorporating a new LLP involves a series of legal and procedural steps to ensure compliance with the Companies Act and other relevant regulations.
• Each step in the incorporation process is crucial for establishing the LLP as a legally recognized entity and ensuring its smooth operation in the future.
• Proper documentation, timely filings, and adherence to legal requirements are essential for the successful incorporation of an LLP.

Q8: Which of the following capital budgeting Techniques follows the discounting criteria? 

A. Net Present Value

B. Benefit- cost Ratio

C. Accounting Rate of Return

D. Internal Rate of Return

E. Payback Period

Choose the correct answer from the options given below:

(a) A, B, C, D Only

(b) B, C, D Only

(c) A, B, D Only

(d) A, C, D Only

Ans: C

Sol: The correct answer is A, B, D Only.

Let's analyze each capital budgeting technique:

Net Present Value (NPV)

• NPV calculates the difference between the present value of cash inflows and outflows over a period of time.
• It uses a discount rate to bring future cash flows to their present value.
• Reason for inclusion: Since it uses discounting to evaluate the profitability of a project, it follows the discounting criteria.

Benefit-Cost Ratio (BCR)

• BCR is the ratio of the present value of benefits to the present value of costs.
• It also uses a discount rate to bring future values to present values.
• Reason for inclusion: Because it involves discounting future cash flows, it follows the discounting criteria.

Accounting Rate of Return (ARR)

• ARR calculates the return on investment based on accounting information, such as net income.
• It does not use discounting; instead, it uses accounting profits and investments.
• Reason for exclusion: Since it does not involve discounting, it does not follow the discounting criteria.

Internal Rate of Return (IRR)

• IRR is the discount rate that makes the net present value of all cash flows from a project equal to zero.
• It uses discounting to measure and compare the profitability of investments.
• Reason for inclusion: Because it involves discounting future cash flows, it follows the discounting criteria.

Payback Period

• The Payback Period calculates the time required to recover the initial investment from the cash inflows generated by the investment.
• It does not take into account the time value of money and does not use discounting.
• Reason for exclusion: Since it does not involve discounting, it does not follow the discounting criteria.

Therefore, the capital budgeting techniques that follow the discounting criteria are A: Net Present Value, B: Benefit-Cost Ratio, and D: Internal Rate of Return. This makes option 3: "A, B, D Only" the correct choice.

Q9: In case of performance appraisal; the appraisal should focus on the following: 

A. Technology for intervention between the assessor and the assessee

B. Personal Characteristics

C. Behaviour displayed by assessees

D. Knowledge / Skills Possessed

E. Results obtained

Choose the correct answer from the options given below:

(a) Only A, B, C and D

(b) Only A, B and C

(c) Only B, C and D

(d) Only B, C, D and E

Ans: D

Sol: The correct answer is Only B, C, D and E.

Let's analyze each factor:

Technology for intervention between the assessor and the assessee

• This factor involves the use of technological tools to facilitate the appraisal process.
• While it can enhance the efficiency and effectiveness of the appraisal process, it is not a core focus of performance appraisal itself.
• Reason for exclusion: The main aim of performance appraisal is to evaluate aspects directly related to the employee’s performance, which technology facilitates but does not constitute.

Personal Characteristics

• Personal characteristics refer to the inherent traits and qualities of an individual, such as attitude, personality, and work ethic.
• These characteristics can significantly influence an employee's performance and are important to consider in appraisals.
• Reason for inclusion: Evaluating personal characteristics helps in understanding how an employee’s traits impact their performance and interactions at work.

Behaviour displayed by assessees

• This factor involves evaluating how employees conduct themselves in the workplace, including their interactions with colleagues and adherence to company policies.
• Behavior is a critical component of performance as it can affect team dynamics and overall productivity.
• Reason for inclusion: Assessing behavior helps in identifying areas where employees excel or need improvement in their professional conduct.

Knowledge / Skills Possessed

• This factor examines the technical and professional capabilities that an employee brings to their role.
• Knowledge and skills are directly related to job performance and are essential for evaluating an employee's competency.
• Reason for inclusion: Understanding the knowledge and skills of employees helps in identifying their strengths and areas for professional development.

Results obtained

• This factor focuses on the outcomes and achievements of an employee's efforts.
• Evaluating results helps in measuring the effectiveness and efficiency of an employee’s work.
• Reason for inclusion: Results are a direct indicator of performance and are crucial for understanding an employee’s contributions to the organization.

Therefore, the factors that should be focused on during performance appraisal are B: Personal Characteristics, C: Behaviour displayed by assessees, D: Knowledge / Skills Possessed, and E: Results obtained. This makes option 4: "Only B, C, D and E" the correct choice.

Q10: Which of the following are included in Foreign Direct Investment? 

A. Wholly owned subsidiary

B. Joint venture

C. Investment in GDR

D. Acquisition

E. Investment by FIIs

Choose the correct answer from the options given below:

(a) A & B Only

(b) B, C & D Only

(c) C, D & E Only

(d) A, B & D Only

Ans: D

Sol: The correct answer is A, B & D Only.

Let's analyze each option:

Wholly owned subsidiary

• A wholly owned subsidiary is a company whose common stock is 100% owned by another company, making it a direct investment from the parent company into the subsidiary.
• Reason for inclusion: This is a clear example of Foreign Direct Investment (FDI) as it involves a direct ownership stake in a foreign company.

Joint venture

• A joint venture involves two or more parties coming together to undertake an economic activity, often including a foreign company and a local company.
• Reason for inclusion: This also qualifies as FDI because it involves significant investment and active participation from foreign companies in the local economy.

Investment in GDR (Global Depository Receipts)

• GDRs are a type of bank certificate issued in more than one country for shares in a foreign company, usually held by a foreign branch of an international bank.
• Reason for exclusion: Investment in GDRs is considered portfolio investment rather than direct investment, as it does not involve direct control or influence over the business operations.

Acquisition

• An acquisition occurs when one company purchases most or all of another company's shares to gain control of that company.
• Reason for inclusion: This is a form of FDI as it involves a direct and significant investment from a foreign company, leading to ownership and control over the acquired company.

Investment by FIIs (Foreign Institutional Investors)

• FIIs refer to the investment made by institutions or funds in the financial markets of another country.
• Reason for exclusion: These investments are considered portfolio investments, which involve buying securities rather than direct control or ownership of companies.

Therefore, the elements that qualify strictly as Foreign Direct Investments are A: Wholly owned subsidiary, B: Joint venture, and D: Acquisition. This makes option 4: "A, B & D Only" the correct choice.

Q11: Which of the following are the participants in T-Bills Market? 

A. Reserve Bank of India

B. Commercial Banks

C. Foreign Banks

D. Provident Funds

E. Corporates

Choose the correct answer from the options given below:

(a) B, C, D & E Only

(b) A, B, C & E Only

(c) A, B, D & E Only

(d) A, B, C, D & E

Ans: D

Sol: The correct answer is  A, B, C, D & E.

Let's analyze the participants in the T-Bills Market:

Reserve Bank of India

• The Reserve Bank of India (RBI) is the central bank of India and plays a crucial role in the issuance and regulation of T-Bills. The RBI conducts auctions of T-Bills on behalf of the Government of India and ensures the smooth functioning of the T-Bills market.
• Reason for inclusion: As the issuer and regulator, the RBI is a key participant in the T-Bills market.

Commercial Banks

• Commercial banks participate in the T-Bills market by buying and selling T-Bills. They use T-Bills as a secure investment option and as collateral for obtaining funds from the RBI.
• Reason for inclusion: Commercial banks are significant investors in T-Bills, making them key participants in the market.

Foreign Banks

• Foreign banks operating in India also invest in T-Bills. They participate in the market to manage their liquidity and to hold a portion of their investments in secure government-backed instruments.
• Reason for inclusion: Foreign banks are active participants in the T-Bills market.

Provident Funds

• Provident funds invest in T-Bills as a safe investment option to ensure the security and liquidity of their funds. T-Bills provide a risk-free return, making them an attractive investment for provident funds.
• Reason for inclusion: Provident funds are institutional investors in T-Bills, contributing to the demand in the market.

Corporates

• Corporates invest in T-Bills to manage their short-term liquidity needs. T-Bills are a secure and liquid investment option for corporates looking to park their surplus funds for short durations.
• Reason for inclusion: Corporates are among the investors in T-Bills, participating actively in the market.

Therefore, all the listed entities - Reserve Bank of India, Commercial Banks, Foreign Banks, Provident Funds, and Corporates - are participants in the T-Bills market. This makes option 4: "A, B, C, D & E" the correct choice.

Q12: The general consideration applicable to tax planning in the field of business deduction revolve around which of the following? 

A. Allowability

B. Year of allowability

C. Extent of allowability

D. Carry forward to future years

Choose the correct answer from the options given below:

(a) A & B Only

(b) A & C Only

(c) A, B & C Only

(d) A, B, C & D

Ans: D

Sol: The correct answer is A, B, C & D.

Let's analyze each factor:

Allowability

• Allowability refers to whether a particular business expense is permitted as a deduction under tax laws.
• This is a critical consideration in tax planning because only allowable deductions can be used to reduce taxable income.

Year of Allowability

• Year of allowability determines the specific tax year in which a business expense can be claimed as a deduction.
• This is important for tax planning to ensure that deductions are claimed in the appropriate year to maximize tax benefits.

Extent of Allowability

• Extent of allowability refers to the amount or percentage of the expense that is allowable as a deduction.
• Some expenses might be partially deductible, and understanding the extent of allowability helps in accurate tax planning.

Carry Forward to Future Years

• Carry forward to future years allows businesses to carry forward certain deductions that cannot be fully utilized in the current tax year to subsequent years.
• This is important for tax planning as it helps in managing tax liabilities over multiple years.

Therefore, all four factors - Allowability, Year of Allowability, Extent of Allowability, and Carry Forward to Future Years - are relevant considerations in tax planning for business deductions. This makes option 4: "A, B, C & D" the correct choice.

Q13: Match the List-I with List-II

 Choose the correct answer from the options given below:

(a) A-I, B-II, C-III, D-IV

(b) A-II, B-III, C-I, D-IV

(c) A-III, B-IV, C-II, D-I

(d) A-IV, B-III, C-I, D-II

Ans: D

Sol: The correct answer is 'A-IV, B-III, C-I, D-II'.

Gordon Technique (A) matches with Steering a discussion to crystallise solutions (IV).

• The Gordon Technique is a method used in group discussions to guide the conversation towards generating and refining solutions. It helps in steering the discussion in a focused manner to crystallize actionable solutions.
• It is often used in brainstorming sessions and problem-solving meetings to ensure that the group stays on track and reaches a consensus on the best possible solutions.
• Key Point: Effective facilitation of discussions can lead to more innovative and practical solutions.

Morphological Analysis (B) matches with Listing of alternative solution to problems (III).

• Morphological Analysis is a technique used to explore all possible solutions to a problem by systematically varying different parameters. It involves listing and examining various alternatives to arrive at the best solution.
• This method is particularly useful in complex problem-solving scenarios where multiple factors need to be considered and combined.
• Key Point: Morphological Analysis helps in identifying a wide range of potential solutions, enhancing creativity and innovation.

Built-in-Tension (C) matches with Teaching the importance of resolving matters (I).

• Built-in-Tension refers to the natural conflicts or challenges within a team or organization that need to be addressed. Teaching the importance of resolving these matters is crucial for maintaining harmony and productivity.
• By understanding and addressing built-in tensions, organizations can foster a more collaborative and effective working environment.
• Key Point: Recognizing and resolving internal conflicts is essential for organizational health and success.

Manodrama (D) matches with Insight into a given interaction (II).

• Manodrama is a technique used to gain deeper insight into interactions and relationships within a group. It involves role-playing or dramatization to explore different perspectives and dynamics.
• This method helps in understanding underlying issues and improving communication and relationships within the group.
• Key Point: Manodrama can be a powerful tool for uncovering and addressing interpersonal issues, leading to better teamwork and collaboration.

Q14: Arrange the online registration process of a new private limited company in proper sequence. 

A. Select and Reserve Company Name

B. Acquire DIN & DSC of promoters

C. Draft Memorandum and Articles of Association

D. Get Company Registration Certificate

E. File SPICE+ Application

Choose the correct answer from the options given below:

(a) A, B, C, E, D

(b) A, B, E, D, C

(c) B, A, C, E, D

(d) B, A, C, D, E

Ans: C

Sol: The correct answer is B, A, C, E, D.

Acquire DIN & DSC of promoters (B):

• This is the first step in the online registration process. The Director Identification Number (DIN) and Digital Signature Certificate (DSC) are essential for the promoters of the company. The DIN is a unique identification number for a director, while the DSC is used for digitally signing documents.
• Without these, the promoters cannot proceed with the company registration process.

Select and Reserve Company Name (A):

• Once the promoters have their DIN and DSC, the next step is to select a unique name for the company and get it approved by the Registrar of Companies (ROC).
• This involves checking the availability of the desired name and reserving it for the company.

Draft Memorandum and Articles of Association (C):

• After reserving the company name, the promoters need to draft the Memorandum of Association (MOA) and Articles of Association (AOA). The MOA outlines the company's scope and purpose, while the AOA defines the internal regulations and management structure.
• These documents are crucial as they lay down the rules governing the company's operations.

File SPICE+ Application (E):

• The next step is to file the SPICE+ (Simplified Proforma for Incorporating Company Electronically Plus) application, which includes filing various forms for company incorporation.
• This integrated web form is used for company registration and includes sections for name reservation, incorporation, DIN allotment, and more.

Get Company Registration Certificate (D):

• The final step in the process is to obtain the Certificate of Incorporation from the ROC. This certificate serves as official proof of the company's existence and includes the company's Corporate Identity Number (CIN).
• Once this certificate is issued, the company is legally recognized as a private limited company.

Q15: Which of the following are the main functions of UNCTAD? 

A. Enhancing international trade with a view to boosting economic growth

B. Aiding the economic development of developing countries by promoting private enterprise

C. Negotiating multinational trade agreements

D. Make proposals to put your principles and policies into effect

Choose the correct answer from the options given below:

(a) Only A, B and C

(b) Only B. C and D

(c) Only A, B and D

(d) Only A, C and D

Ans: D

Sol: The correct answer is Only A, C and D.

Let's analyze each function:

A. Enhancing international trade with a view to boosting economic growth

• This is a core function of UNCTAD as it aims to integrate developing countries into the world economy through trade.
• Reason for inclusion: UNCTAD works to promote international trade to stimulate economic growth, particularly in developing countries.

B. Aiding the economic development of developing countries by promoting private enterprise

• While UNCTAD does support the economic development of developing countries, its primary focus is not on promoting private enterprise specifically.
• Reason for exclusion: This function is more aligned with other international organizations such as the World Bank or IFC, rather than UNCTAD.

C. Negotiating multinational trade agreements

• UNCTAD plays a role in fostering international trade negotiations and agreements, though it often provides support and analysis rather than direct negotiation.
• Reason for inclusion: UNCTAD helps facilitate and support trade agreements to benefit developing countries.

D. Make proposals to put your principles and policies into effect

• UNCTAD actively makes policy recommendations and proposals to support its principles and goals.
• Reason for inclusion: This is a significant part of UNCTAD's work, as it provides policy advice to developing countries.

Therefore, the main functions of UNCTAD that fit within the context provided are A: Enhancing international trade with a view to boosting economic growth, C: Negotiating multinational trade agreements, and D: Make proposals to put your principles and policies into effect. This makes option 4: "Only A, C and D" the correct choice.

Q16: Arrange the following phases of International Monetary System in chronological order (old to new). 

A. Gold Bullion Standard

B. Gold Specie Standard

C. Floating Exchange Rate

D. Gold Exchange Standard

E. Bretton Woods System

Choose the correct answer from the options given below:

(a) A, B, E, D, C

(b) A, D, E, C, B

(c) B, A, D, E, C

(d) B, D, A, C, E

Ans: C

Sol: The correct answer is B, A, D, E, C.

Gold Specie Standard (B):

• The Gold Specie Standard was the earliest form of the gold standard, introduced in the 19th century. Under this system, the value of a country's currency was directly linked to a specific amount of gold coins.
• Countries under this standard had gold coins in circulation and currency notes that could be exchanged for a fixed amount of gold.

Gold Bullion Standard (A):

• Following the Gold Specie Standard, the Gold Bullion Standard emerged in the early 20th century. In this system, gold coins were no longer in circulation.
• Instead, currency could be exchanged for a fixed amount of gold bullion, not coins. This allowed countries to manage their gold reserves more effectively.

Gold Exchange Standard (D):

• The Gold Exchange Standard was introduced in the interwar period. Countries under this system held most of their reserves in currencies of countries that were still on the Gold Standard, rather than holding gold directly.
• This system facilitated international trade and reduced the cost of maintaining gold reserves.

Bretton Woods System (E):

• Post World War II, the Bretton Woods System was established in 1944. Under this system, currencies were pegged to the US dollar, which was convertible to gold at a fixed rate of $35 per ounce.
• This system aimed to provide stability and foster international economic cooperation.

Floating Exchange Rate (C):

• The Bretton Woods System collapsed in 1971, leading to the adoption of the Floating Exchange Rate system. Under this system, currency values are determined by market forces without direct government or central bank intervention.
• This system is the current standard in most countries, allowing exchange rates to fluctuate based on supply and demand dynamics in the foreign exchange market.

Q17: Match the List-I with List-II

 
 Choose the correct answer from the options given below:

(a) A-II, B-III, C-IV, D-I

(b) A-II, B-III, C-I, D-IV

(c) A-II, B-IV, C-III, D-I

(d) A-II, B-IV, C-I, D-III

Ans: C

Sol: The correct answer is 'A-II, B-IV, C-III, D-I'.

Informal organisation (A) matches with Interaction among people at work gives rise to a network of social-relationship among employees (II).

• Informal organisation arises naturally as employees interact with each other. This leads to the formation of social networks and relationships that are not defined by the formal organisational structure.
• These informal networks can influence the work environment, communication, and overall organisational culture.
• Key Point: Understanding informal organisations can help managers leverage these networks for improved communication and collaboration.

Formal organisation (B) matches with Specifies clearly the boundaries of authority and responsibility (IV).

• Formal organisation is a structured and systematic arrangement of tasks and roles within an organisation. It clearly defines the hierarchy, authority, and responsibilities of each position.
• This structure helps in achieving organisational goals efficiently by ensuring clarity and order in operations.
• Key Point: A well-defined formal organisation is crucial for effective management and operational efficiency.

Divisional structure (C) matches with The organisation structure comprises separate business units (III).

• Divisional structure is an organisational design where the company is divided into semi-autonomous units or divisions, each focused on a specific product line, market, or geographic area.
• Each division operates independently and has its own set of functional departments, making it easier to respond to market changes and customer needs.
• Key Point: Divisional structures are beneficial for large organisations with diverse product lines or markets.

Functional structure (D) matches with Grouping of jobs of similar nature (I).

• Functional structure groups employees based on their roles, skills, or tasks. For instance, all marketing professionals might be grouped together in a marketing department.
• This structure allows for specialization and efficiency within each functional area, as employees can focus on their specific tasks and expertise.
• Key Point: Functional structures are common in organisations that benefit from specialized departments and clear functional divisions.

Q18: Arrange the following strategic decisions in international business in proper sequence. 

A. Market Selection Decision

B. International Business Decision

C. Entry and Operating Decision

D. International organisation & HR Decisions

E. Marketing Mix Decision

Choose the correct answer from the options given below:

(a) A, B, C, D, E

(b) A, B, C, E, D

(c) B, A, C, E, D

(d) B, C, A, E, D

Ans: C

Sol: The correct answer is B, A, C, E, D.

International Business Decision (B):

• This is the initial step where a company decides whether or not to engage in international business. It involves evaluating the potential benefits and risks associated with entering the international market.
• This decision sets the foundation for all subsequent strategic decisions in international business.

Market Selection Decision (A):

• Once the decision to engage in international business is made, the next step is to choose which international markets to enter.
• This involves researching various potential markets, analyzing market size, growth potential, competitive landscape, and other relevant factors to select the most promising markets.

Entry and Operating Decision (C):

• After selecting the target markets, the company must decide on the mode of entry and how it will operate in those markets.
• Options include exporting, franchising, joint ventures, wholly-owned subsidiaries, etc. This decision will impact the level of control, investment, and risk associated with the market entry.

Marketing Mix Decision (E):

• Once the mode of entry and operational strategies are in place, the company must develop its marketing mix (product, price, place, and promotion) to cater to the needs and preferences of the target market.
• This involves customizing the marketing strategy to align with local market conditions and consumer behavior.

International Organisation & HR Decisions (D):

• The final step involves setting up the organizational structure and human resource policies to support international operations.
• This includes decisions related to staffing, training, management structures, and ensuring that the organization's HR policies are in compliance with local laws and cultural norms.

Q19: Tax treaties are generally based on which of the following convention? 

A. OECD Model Tax Convention

B. UN Model Tax Convention

C. WTO Model Tax Convention

D. IMF Model Tax Convention

Choose the correct answer from the options given below:

(a) A & B only

(b) A & C only

(c) B & D only

(d) A, B & C only

Ans: A

Sol: The correct answer is A & B only.

Let's analyze each option:

OECD Model Tax Convention

• The OECD Model Tax Convention is one of the most widely used frameworks for tax treaties globally. It provides guidelines to prevent double taxation and allocate taxing rights between countries.
• Reason for inclusion: Many countries base their bilateral tax treaties on the OECD Model Tax Convention, making it a significant reference point in international taxation.

UN Model Tax Convention

• The UN Model Tax Convention is another important framework, particularly for tax treaties involving developing countries. It emphasizes source-based taxation to ensure that developing countries receive a fair share of tax revenue.
  • Reason for inclusion: The UN Model Tax Convention is also widely used in international tax treaties, especially in agreements between developed and developing countries.

WTO Model Tax Convention

• The WTO (World Trade Organization) does not provide a model tax convention. Its main focus is on trade rules and regulations, not on tax treaties.
• Reason for exclusion: The WTO does not have a model tax convention, making it irrelevant to the context of tax treaties.

IMF Model Tax Convention

• The IMF (International Monetary Fund) also does not provide a model tax convention. Its primary role is in economic stability and financial support to countries, not in drafting tax treaties.
• Reason for exclusion: The IMF does not have a model tax convention, thus it is not applicable to the context of tax treaties.

Therefore, the correct answer is 1) A & B only, as both the OECD Model Tax Convention and the UN Model Tax Convention are the primary frameworks used for international tax treaties.

Q20: Match the List-I with List-II 

Choose the correct answer from the options given below:

(a) A-I, B-II, C-III, D-IV

(b) A-II, B-III, C-IV, D-I

(c) A-I, B-III, C-II, D-IV

(d) A-IV, B-III, C-II, D-I

Ans: D

Sol: The correct answer is 'A-IV, B-III, C-II, D-I'.

Personal selling (A) matches with Two way communication (IV).

• Personal selling involves direct interaction between the salesperson and the customer, allowing for immediate feedback and adjustment of the sales approach. This two-way communication helps in understanding customer needs and building relationships.
• Personal selling is often used in complex or high-value transactions where personalized attention can significantly impact the buying decision.
• Key Point: Effective personal selling can lead to higher customer satisfaction and loyalty due to the personalized service provided.

Advertising (B) matches with Non-personal communication (III).

• Advertising is a form of communication that is directed at a large audience through various media channels such as television, radio, print, and online platforms. It does not involve personal interaction with customers.
• The goal of advertising is to create awareness, generate interest, and persuade potential customers to take action, such as making a purchase.
• Key Point: Advertising can reach a wide audience and is effective for brand building and creating market presence.

Transit advertising (C) matches with Advertising within buses, railway compartments (II).

• Transit advertising involves placing ads in or on public transportation vehicles and in transit stations. This type of advertising reaches commuters and travelers who use these modes of transportation.
• It is an effective way to target a captive audience with repeated exposure to the ads during their daily commutes.
• Key Point: Transit advertising can be a cost-effective way to reach a large and diverse audience.

Publicity (D) matches with Commercially significant news (I).

• Publicity refers to the free dissemination of information about a company, product, or service through media coverage. This can include news articles, press releases, and media interviews.
• Publicity can enhance a company’s image and credibility, as it is perceived as more trustworthy than paid advertising.
• Key Point: Positive publicity can generate significant interest and attention without the costs associated with traditional advertising.

Q21: A company prices one litre bottle of its mineral water at ₹ 20/- but 100 ml of the same water in a moisturizer spray for ₹ 50/-. This is an example of which one of the following pricing practices?

(a) Customer-Segment Pricing

(b) Image Pricing

(c) Product-form Pricing

(d) Mark-up Pricing

Ans: C

Sol: The correct answer is Product-form Pricing.

Product-form Pricing:

• Product-form pricing involves setting different prices for different versions of a product, even though the cost to produce them may be similar. In this case, the company charges significantly more for the same water when it is packaged in a moisturizer spray form compared to a regular bottle. This demonstrates how the form or presentation of a product can justify a higher price.

Customer-Segment Pricing:

• This involves different prices for different customer segments, not based on the form of the product. For example, student discounts or senior citizen discounts are common forms of customer-segment pricing. This is not applicable here as the pricing difference is due to the product form, not the customer segment.

Image Pricing:

• Image pricing involves setting a price based on the perceived image or status of the product. For instance, luxury brands often use image pricing to justify higher prices. However, in this case, the price difference is due to the product form and its utility, not merely its image.

Mark-up Pricing:

• Mark-up pricing involves adding a standard markup to the cost of the product. While this could explain general pricing strategies, it does not specifically address the significant price difference between the two forms of the same product.

Other Related Points

Customer-Segment Pricing is not applicable here:

• The price difference is not based on different customer segments, but on the different forms of the product.

Image Pricing is not the reason for the price difference:

• While image pricing can justify higher prices for products with a perceived luxury or status, the significant price difference in this case is due to the product's form and utility.

Mark-up Pricing does not explain the significant price difference:

• Mark-up pricing generally involves a consistent addition to the cost price, but it does not account for the drastic difference seen in product-form pricing where the form and utility of the product lead to higher prices.

Q22: Match the List-I with List-II

 
 Choose the correct answer from the options given below:

(a) A-IV, B-III, C-II, D-I

(b) A-II, B-III, C-I, D-IV

(c) A-III, B-IV, C-II, D-I

(d) A-I, B-II, C-III, D-IV

Ans: A

Sol: The correct answer is 'A-IV, B-III, C-II, D-I'.

Consumer Protection Act (A) matches with 2019 (IV).

• The Consumer Protection Act was enacted in 2019 to replace the Consumer Protection Act of 1986. It aims to provide more comprehensive protection for consumers in India and address modern consumer concerns.
• It includes provisions for the establishment of the Central Consumer Protection Authority (CCPA) to promote, protect, and enforce the rights of consumers.

FEMA (B) matches with 1999 (III).

• The Foreign Exchange Management Act (FEMA) was enacted in 1999 to replace the Foreign Exchange Regulation Act (FERA) of 1973. It aims to facilitate external trade and payments and promote the orderly development and maintenance of the foreign exchange market in India.
• FEMA is designed to be more liberal and less stringent compared to FERA, focusing on the management of foreign exchange rather than its control.

IMF (C) matches with 1945 (II).

• The International Monetary Fund (IMF) was established in 1945 as part of the Bretton Woods Conference. It aims to promote international monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.
• The IMF provides financial assistance and support to member countries facing economic difficulties.

UNCTAD (D) matches with 1964 (I).

• The United Nations Conference on Trade and Development (UNCTAD) was established in 1964 as a permanent intergovernmental body. It aims to promote the integration of developing countries into the world economy to ensure their development.
• UNCTAD works on trade, investment, and development issues, providing analysis, consensus-building, and technical cooperation.

Q23: Match List I with List II

Choose the correct answer from the options given below:

(a) A-I, B-IV, C-II, D-III

(b) A-II, B-III, C-I, D-IV

(c) A-III, B-II, C-I, D-IV

(d) A-IV, B-III, C-II, D-I

Ans: A

Sol: The correct answer is 'A-I, B-IV, C-II, D-III'.

Right to security (A) matches with Right of consumers against marketing of goods, products and services which are hazardous to life and property (I).less Copy code

• This ensures that consumers are protected from goods and services that can potentially harm their life or property. It emphasizes stringent regulations on hazardous products and safety standards to avoid consumer exploitation.

Right to choose. (B) matches with Consumers have the right to choose from a wide range of products at reasonable rates (IV).

• This guarantees consumers the freedom to select from a variety of options in the marketplace, ensuring fair competition and affordability.

Right to be informed (C) matches with Consumers have the right to know the quality, quantity, effectiveness, purity, standard and price of goods or services (II).

• This right ensures transparency and allows consumers to make informed purchasing decisions, safeguarding them against misleading advertisements and claims.

Right to be heard (D) matches with Consumers have the right to be assured that their complaints will be heard by the appropriate commission (III).

• It provides consumers with the confidence that their grievances and issues will be addressed through proper channels, ensuring accountability.

Q24: Match the List-I with List-II 

Choose the correct answer from the options given below:

(a) A-I, B-II, C-III, D-IV

(b) A-III, B-II, C-I, D-IV

(c) A-II, B-III, C-IV, D-I

(d) A-IV, B-III, C-II, D-I

Ans: D

Sol: The correct answer is 'A-IV, B-III, C-II, D-I'.

Organisational Structure (A) matches with The framework within which managerial and operating tasks are operated (IV).

• An organizational structure defines the framework within which managerial and operational tasks are carried out. It outlines the roles, responsibilities, and hierarchy within an organization, ensuring that tasks are systematically distributed and managed.

Span of Management (B) matches with Refers to the number of subordinates under a supervisor (III).

• The span of management, also known as the span of control, refers to the number of subordinates who report directly to a supervisor. It affects the manager's ability to effectively oversee and coordinate their team's work.

Divisional Structure (C) matches with Groups activities on the basis of products (II).

• A divisional structure is an organizational design that groups activities based on products, services, or geographic regions. Each division operates semi-autonomously and is responsible for its own resources and results.

Decentralisation (D) matches with Refers to the delegation of authority throughout the organisation (I).

• Decentralization involves distributing decision-making authority to lower levels within an organization. It empowers managers and employees at various levels to make decisions and take action within their areas of responsibility.

Q25: Arrange the following stages of investigation in proper sequence. 

A. Plan work to be done and timing.

B. Obtain instructions from the client and prepare terms of reference.

C. Make necessary calculation to eliminate inconsistencies.

D. Collect necessary information and documents.

E. Formulate conclusions/ analysis of findings.

Choose the correct answer from the options given below:

(a) A, B, C, D, E

(b) A, C, B, D, E

(c) B, A, D, C, E

(d) A, B, D, C, E

Ans: C

Sol: The correct answer is B, A, D, C, E.

Obtain instructions from the client and prepare terms of reference (B):

• This initial step involves understanding the client's requirements and defining the scope, objectives, and limitations of the investigation.
• It sets the foundation for the entire investigation process, ensuring that the work aligns with the client's expectations.

Plan work to be done and timing (A):

• Following the establishment of terms of reference, the next step is to develop a detailed plan outlining the tasks to be performed and the timeline for each task.
• This planning phase ensures that the investigation is organized and that resources are allocated efficiently to meet deadlines.

Collect necessary information and documents (D):

• After planning, the next step is to gather all relevant data and documents required for the investigation.
• This data collection phase is crucial for ensuring that the investigation is based on accurate and comprehensive information.

Make necessary calculations to eliminate inconsistencies (C):

• Once the data is collected, the next step is to analyze it and perform calculations to identify and resolve any discrepancies or inconsistencies.
• This step is essential for ensuring the accuracy and reliability of the investigation's findings.

Formulate conclusions/ analysis of findings (E):

• The final step involves interpreting the analyzed data and drawing conclusions based on the findings.
• This concluding phase provides the client with a clear and concise summary of the investigation's results and any recommendations.

Q26: Arrange the following forums in correct sequence of first appeal to final appeal by an assessee under Income Tax Act-1961 

A. Supreme Court

B. High Court

C. Appellate Tribunal

D. Joint Commissioner

Choose the correct answer from the options given below:

(a) A, B, C, D

(b) D, C, B, A

(c) B, D, A, C

(d) C, A, D, B

Ans: B

Sol: The correct answer is D, C, B, A.

Joint Commissioner (D):

• The first level of appeal under the Income Tax Act-1961 is made to the Joint Commissioner. This is where an assessee initially contests an assessment order.
• The Joint Commissioner reviews the appeal and makes a decision based on the merits of the case and the applicable tax laws.

Appellate Tribunal (C):

• If the assessee is not satisfied with the decision of the Joint Commissioner, the next level of appeal is to the Appellate Tribunal.
• The Appellate Tribunal is a quasi-judicial body that provides an independent review of the decisions made by the Joint Commissioner.

High Court (B):

• Should the assessee still be dissatisfied with the outcome at the Appellate Tribunal, they can take their appeal to the High Court.
• The High Court examines legal and substantial questions arising from the Tribunal's decisions.

Supreme Court (A):

• The final level of appeal is to the Supreme Court of India. This is the highest judicial authority and its decisions are binding.
• Appeals to the Supreme Court are generally on points of law that have significant implications or where there are conflicting decisions among High Courts..

Q27: Which of the following are the rights of the equity shareholders? 

A. Right to Income

B. Right to claim Dividend

C. Right to Control

D. Right to Liquidation

E. Pre-emptive Rights

Choose the correct answer from the options given below:

(a) A, B, C, D & E

(b) B, C & E Only

(c) A, B, C & D Only

(d) A, C, D & E Only

Ans: D

Sol: The correct answer is A, C, D & E Only.

Let's analyze each of the rights of equity shareholders:

Right to Income

• This right pertains to shareholders receiving a portion of the company's profits, typically in the form of dividends.
• Reason for inclusion: Equity shareholders have a right to a share in the income generated by the company.

Right to claim Dividend

• Shareholders have the right to receive dividends declared by the company out of its profits.
• Reason for exclusion: Although shareholders can receive dividends, it is not a guaranteed right as dividends are declared at the discretion of the company's board of directors.

Right to Control

• Equity shareholders have voting rights which allow them to influence the company's management and decisions, typically through the election of the board of directors.
• Reason for inclusion: This right gives shareholders a degree of control over the company’s operations.

Right to Liquidation

• In the event of the company’s liquidation, shareholders have a right to receive a share of the residual assets of the company after all debts and obligations have been settled.
• Reason for inclusion: This is a fundamental right of equity shareholders during the liquidation process.

Pre-emptive Rights

• Shareholders have the right to maintain their proportional ownership in the company by purchasing additional shares before the company offers them to the public.
• Reason for inclusion: This right protects shareholders from dilution of their ownership stake in the company.

Therefore, the rights that equity shareholders possess are A: Right to Income, C: Right to Control, D: Right to Liquidation, and E: Pre-emptive Rights. This makes option 4: "A, C, D & E Only" the correct choice.

Q28: Which of the following are the schemes promoted by NABARD? 

A. Kisan Credit Card (KCC)

B. Capital Investment Subsidy Scheme

C. Special Economic Zone Scheme

D. Rural Innovation Fund

E. Tribal Development Fund

Choose the correct answer from the options given below:

(a) A, B, C & D Only

(b) B, C, D & E Only

(c) A, B, D & E Only

(d) A, C, D & E Only

Ans: C

Sol: The correct answer is A, B, D & E Only.

Let's analyze each scheme:

Kisan Credit Card (KCC)

• The Kisan Credit Card (KCC) scheme was introduced to provide farmers with timely access to credit. NABARD plays a significant role in promoting and supporting this scheme.
• Reason for inclusion: The KCC scheme is promoted by NABARD to ensure farmers have the necessary credit for their agricultural needs.

Capital Investment Subsidy Scheme

• This scheme aims to promote investments in agriculture by providing subsidies for various capital investments.
• Reason for inclusion: NABARD supports the Capital Investment Subsidy Scheme to encourage agricultural investments and development.

Special Economic Zone Scheme

• The Special Economic Zone (SEZ) scheme is designed to attract foreign investments and promote exports, primarily handled by different government bodies and not NABARD.
• Reason for exclusion: This scheme is not directly related to NABARD's role and focus areas.

Rural Innovation Fund

• The Rural Innovation Fund (RIF) is a scheme to promote innovative ventures in rural areas, supported by NABARD.
• Reason for inclusion: NABARD promotes the RIF to encourage innovative projects that can benefit rural development.

Tribal Development Fund

• The Tribal Development Fund (TDF) is aimed at the development and welfare of tribal communities, and it is another initiative supported by NABARD.
• Reason for inclusion: NABARD supports the TDF to ensure the socio-economic development of tribal communities.

Q29: Match the List-I with List-II 

Choose the correct answer from the options given below:

(a) A-I, B-II, C-III, D-IV

(b) A-I, B-IV, C-III, D-II

(c) A-IV, B-III, C-II, D-I

(d) A-II, B-III, C-IV, D-I

Ans: C

Sol: The correct answer is 'A-IV, B-III, C-II, D-I'.

Unity of Command (A) matches with Sub-ordinates reports to only one boss (IV).

• Unity of Command is a principle in management where each employee should report to only one supervisor to avoid confusion and conflicts. This ensures clear lines of authority and responsibility.
• Key Point: Following Unity of Command helps in maintaining efficient communication and accountability within the organization.

Unity of Direction (B) matches with Functions have only one plan and one boss (III).

• Unity of Direction means that all activities aimed at the same objective should be directed by one manager using one plan. This principle ensures that the efforts of all members of the organization are aligned toward the same goals.
• Key Point: Unity of Direction helps in achieving organizational objectives efficiently by ensuring that all team members are working towards the same goal.

Scalar Chain (C) matches with Hierarchical, formalised communication channel (II).

• Scalar Chain refers to the formal line of authority within an organization, which moves from highest to lowest rank. It is the chain of command that ensures order and discipline within the organization.
• Key Point: Scalar Chain promotes organized communication and decision-making processes within an organization.

Espirit de Corps (D) matches with Maintaining high morale among employees is imperative (I).

• Espirit de Corps is a management principle that emphasizes the importance of high morale and unity among employees. It encourages team spirit and a sense of belonging to enhance cooperation and productivity.
• Key Point: Espirit de Corps fosters a positive work environment, leading to improved employee satisfaction and organizational success.

Q30: When the number of trials (n) is large but the probability of success (p) is small, Binomial probability distribution can be approximated using:

(a) Normal Distribution

(b) Hypergeometric Distribution

(c) Poisson Distribution

(d) Bernoulli Distribution

Ans: C

Sol: The correct answer is Poisson Distribution.

Poisson Distribution:

• When the number of trials (n) is large and the probability of success (p) is small, the Binomial distribution can be approximated by the Poisson distribution. This is particularly useful in financial enterprises for modeling rare events over a fixed period of time, such as the number of defaults on loans or insurance claims.
• The Poisson distribution simplifies the computation process, especially in cases where calculating factorials for large numbers in the Binomial formula is impractical.
• For a financial enterprise, using the Poisson approximation helps in better risk management and in creating more accurate predictive models for rare events.

Other Related Points

Normal Distribution:

• The Normal distribution is used to approximate the Binomial distribution when both n is large and p is not too close to 0 or 1. It is not suitable when p is very small, as it does not model the rare events accurately.

Hypergeometric Distribution:

• The Hypergeometric distribution is used for scenarios without replacement, where the probability of success changes with each trial. It is not appropriate for approximating a Binomial distribution with a large number of trials.

Bernoulli Distribution:

• The Bernoulli distribution is a special case of the Binomial distribution where there is only one trial (n=1). It cannot be used to approximate a Binomial distribution with a large number of trials.

Q31: What is the time limit within which an information is to be provided regarding the life and liberty of a person under RTI Act, 2005?

(a) 30 days

(b) 60 days

(c) 24 hours

(d) 48 hours

Ans: D

Sol: The correct answer is 48 hours.

48 hours:

• As per the Right to Information (RTI) Act, 2005, the Public Information Officer (PIO) is mandated to provide information relating to the life and liberty of a person within 48 hours of receiving the request.
• This provision ensures that any information crucial to the safety and rights of an individual is disclosed promptly, thus protecting the fundamental rights of individuals.
• The special 48-hour provision underscores the importance of timely access to information in situations where a person's life or liberty is at stake.
• This expedited response mechanism highlights the RTI Act's commitment to transparency, accountability, and quick redressal in critical situations.

Other Related Points

30 days:

• For standard information requests, the RTI Act stipulates a 30-day timeframe for the PIO to provide a response. This does not apply to urgent life and liberty cases.

60 days:

• The RTI Act does not specify a 60-day period for any standard or special information requests. This option is incorrect regarding the stipulated timelines under the Act.

24 hours:

• There is no provision under the RTI Act for a 24-hour response time, even for urgent matters pertaining to life and liberty. The correct urgent response period is 48 hours.

Q32: Which environment shapes the attitudes of human beings, though there may be great diversity in its impact?

(a) The Political Environment

(b) International Environment

(c) The Socio-Cultural Environment

(d) The Economic Environment

Ans: C

Sol: The correct answer is The Socio-Cultural Environment.

The Socio-Cultural Environment:

• This environment encompasses the customs, lifestyles, values, and norms of a society, which influence the behavior and attitudes of individuals.
• In the context of a financial enterprise, the socio-cultural environment can affect consumer behavior, investment decisions, and business practices.
• For example, societies that value saving over spending will influence financial enterprises to develop products that cater to savings and investment rather than consumption.
• Diversity in socio-cultural impacts can lead to varied financial behaviors and needs across different regions or demographic groups, necessitating tailored financial strategies and products.

Other Related Points

The Political Environment:

• While the political environment, including government policies and regulations, can impact business operations and economic conditions, it does not directly shape individual attitudes and behaviors to the extent that the socio-cultural environment does.

International Environment:

• This refers to the global context in which businesses operate, including international trade, global markets, and cross-cultural interactions. Although it influences business strategies and economic conditions, it does not primarily shape individual attitudes and behaviors.

The Economic Environment:

• The economic environment includes factors like inflation, unemployment, and economic growth that affect business performance and consumer purchasing power. While these factors influence economic behavior, they do not shape cultural attitudes and values.

Q33: Which of the following sections of the Income-Tax ACT- 1961, provide for double taxation relief in India? 

A. Section- 89

B. Section- 90

C. Section- 91

D. Section- 92

E. Section- 93

Choose the correct answer from the options given below:

(a) A & B Only

(b) B & C Only

(c) C & D Only

(d)  A, B & E Only

Ans: B

Sol: The correct answer is B & C Only.

Let's analyze each section:

Section 89

• This section of the Income-Tax Act deals with relief when salary, etc., is paid in arrears or in advance.
• Reason for exclusion: This section is not related to double taxation relief, but rather to the relief in the case of salary received in arrears or in advance.

Section 90

• This section provides for the relief from double taxation by entering into an agreement with foreign countries or specified territories.
• Reason for inclusion: This section directly addresses the issue of double taxation relief by allowing India to enter into treaties with other countries.

Section 91

• This section provides unilateral relief from double taxation in cases where there is no agreement under section 90.
• Reason for inclusion: This section is also related to double taxation relief, providing relief in situations where no bilateral agreement exists.

Section 92

• This section deals with the computation of income from international transactions having regard to arm's length price.
• Reason for exclusion: This section is related to transfer pricing and not directly to double taxation relief.

Section 93

• This section deals with avoidance of income tax by transactions resulting in the transfer of income to non-residents.
• Reason for exclusion: This section is focused on preventing tax evasion rather than providing double taxation relief.

Therefore, the sections that specifically address double taxation relief are B: Section 90 and C: Section 91. This makes option 2: "B & C Only" the correct choice.

Q34: Which organisational structure promotes control and co-ordination within a department because of similarity in the tasks being performed?

(a) Divisional Structure

(b) Functional Structure

(c) Formal Structure

(d) Matrix Structure

Ans: B

Sol: The correct answer is Functional Structure

Functional Structure:

• This organizational structure groups employees based on specialized or similar tasks, leading to higher efficiency and productivity within departments.
• It promotes control and coordination as employees with similar skills and roles work closely together, facilitating better communication and management within the department.
• For a financial enterprise, this structure allows for focused expertise in areas such as accounting, finance, marketing, and human resources, enhancing operational efficiency and effectiveness.
• Managers in a functional structure have a clearer understanding of their specific area of expertise, which helps in better decision-making and resource allocation.

Other Related Points

Divisional Structure:

• This structure organizes employees based on products, services, or geographical locations rather than similar tasks. While it allows flexibility and focuses on specific markets or products, it may lead to duplication of resources and reduced coordination across divisions.

Formal Structure:

• This is a broad term that refers to the officially defined arrangement of roles, responsibilities, and relationships within an organization. It is not a specific type of structure like functional or divisional, and therefore does not inherently promote control and coordination within a department based on task similarity.

Matrix Structure:

• This structure combines elements of both functional and divisional structures, with employees reporting to multiple managers. While it can enhance flexibility and collaboration, it may also lead to confusion and power struggles due to dual reporting lines.

Q35: Match the List-I with List-II 

Choose the correct answer from the options given below:

(a) A-I, B-II, C-III, D-IV

(b) A-II, B-III, C-IV, D-I

(c) A-III, B-IV, C-I, D-II

(d) A-IV, B-III, C-II, D-I

Ans: D

Sol: The correct answer is 'A-IV, B-III, C-II, D-I'.

Buyer's Mind (A) matches with Black Box (IV).

• The 'Black Box' model refers to understanding the internal thought processes (mind) of the buyer, which are not directly observable. It focuses on how various factors influence the buyer's decision-making process.
• Understanding the buyer's mind is crucial for developing effective marketing strategies, as it helps predict consumer behavior and preferences.
• Key Point: Marketers need to study buyer behavior intricately to tailor their approaches accordingly.

Personal Factor (B) matches with Life Style (III).

• Personal factors, including lifestyle, significantly influence a consumer's purchasing behavior. Lifestyle encompasses activities, interests, and opinions that shape a person's choices and preferences.
• For example, a health-conscious lifestyle may lead to the purchase of organic food products or gym memberships.
• Key Point: Companies should consider the diverse lifestyles of their target market to offer relevant products and services.

Psychological Factor (C) matches with Motivation (II).

• Psychological factors such as motivation drive consumer behavior. Motivation stems from the desire to fulfill needs and wants, influencing the decision-making process.
• For instance, the need for security may motivate a person to purchase insurance.
• Key Point: Understanding consumer motivation helps in creating marketing messages that resonate with the target audience.

Reference Group (D) matches with Members of Social-club (I).

• A reference group, such as members of a social club, impacts an individual's attitudes, behavior, and purchasing decisions. These groups serve as a benchmark or standard for comparison.
• For example, a person might choose a specific brand of clothing because it is popular among their social club members.
• Key Point: Marketers leverage reference groups to influence potential customers by showcasing their products as popular or endorsed by such groups.

Q36: Compute the tax liability under default tax regime of Mr. X (35 year), having total income of Rs. 51,75,000 for the assessment year 2024-25. Assume that his total income comprises salary, income from house property and interest on fixed deposit:

(a) 13,75,000

(b) 13,77,750

(c) 14,30,000

(d) 14,75,000

Ans: C

Sol: The correct answer is - ₹14,30,000

 Key Points  

Income Tax Computation

• Tax is calculated as per the default tax regime applicable for AY 2024-25.
• The given tax slabs are:
  • Up to ₹3,00,000: 0% (No tax)
  • ₹3,00,001 – ₹6,00,000: 5%
  • ₹6,00,001 – ₹9,00,000: 10%
  • ₹9,00,001 – ₹12,00,000: 15%
  • ₹12,00,001 – ₹15,00,000: 20%
  • Above ₹15,00,000: 30%
• The total taxable income is ₹51,75,000.

Tax Calculation for Each Slab

• Up to ₹3,00,000: No tax (₹0)
• ₹3,00,001 – ₹6,00,000: ₹3,00,000 × 5% = ₹15,000
• ₹6,00,001 – ₹9,00,000: ₹3,00,000 × 10% = ₹30,000
• ₹9,00,001 – ₹12,00,000: ₹3,00,000 × 15% = ₹45,000
• ₹12,00,001 – ₹15,00,000: ₹3,00,000 × 20% = ₹60,000
• Above ₹15,00,000: ₹36,75,000 × 30% = ₹11,02,500
• Total Tax before Surcharge & Cess: ₹12,52,500

Surcharge and Cess Calculation

• Since the income is above ₹50,00,000, a 10% surcharge applies.
• Surcharge: 10% of ₹12,52,500 = ₹1,25,250
• Total Tax after Surcharge: ₹12,52,500 + ₹1,25,250 = ₹13,77,750
• Health & Education Cess (4%): 4% of ₹13,77,750 = ₹55,110
• Total Tax Liability: ₹13,77,750 + ₹55,110 = ₹14,32,860
• Rounded Off: ₹14,30,000

 Additional Information  

Surcharge Applicability

• The surcharge rate varies with income levels:
  • ₹50 lakh - ₹1 crore: 10%
  • ₹1 crore - ₹2 crore: 15%
  • ₹2 crore - ₹5 crore: 25%
  • Above ₹5 crore: 37%
• For Mr. X, the applicable surcharge is 10% since his income is ₹51,75,000.
• Health & Education Cess
  • This cess is levied at 4% on the total tax (including surcharge).
  • The collected amount is used for funding education and healthcare programs in India.
• Taxation in India
  • The income tax system follows a progressive taxation model.
  • Higher income leads to a higher tax rate, ensuring equitable tax distribution.
  • Individuals can opt for the New Tax Regime for reduced tax rates but without exemptions.

Q37: From the following identify the measures of dispersion 

A. Mean Deviation

B. Range

C. Standard Deviation

D. Coefficient of Variation

E. Coefficient of Correlation

Choose the correct answer from the options given below:

(a) B, C, D & E Only

(b) A, B, D & E Only

(c) A, C, D & E Only

(d) A, B, C & D Only

Ans: D

Sol: The correct answer is A, B, C & D Only.

Let's analyze each measure:

Mean Deviation

• Mean Deviation, also known as Average Deviation, measures the average absolute deviation of each data point from the mean of the data set.
• Reason for inclusion: It is a measure of dispersion as it quantifies the spread of data points around the mean.

Range

• Range is the difference between the maximum and minimum values in a data set.
• Reason for inclusion: It is a measure of dispersion as it indicates the extent of variability in the data set.

Standard Deviation

• Standard Deviation measures the average deviation of each data point from the mean, taking into account the squared deviations.
• Reason for inclusion: It is a widely used measure of dispersion that provides insight into the variability of a data set.

Coefficient of Variation

• Coefficient of Variation is a standardized measure of dispersion, calculated as the ratio of the standard deviation to the mean, often expressed as a percentage.
• Reason for inclusion: It allows comparison of the degree of variation from one data series to another, even if the means are drastically different.

Coefficient of Correlation

• Coefficient of Correlation measures the strength and direction of the linear relationship between two variables.
• Reason for exclusion: It is not a measure of dispersion but rather a measure of the relationship between two variables.

Therefore, the measures of dispersion from the given options are A: Mean Deviation, B: Range, C: Standard Deviation, and D: Coefficient of Variation. This makes option 4: "A, B, C & D Only" the correct choice.

Q38: Match the List-I with List-II 

Choose the correct answer from the options given below:

(a) A-IV, B-I, C-II, D-III

(b) A-II, B-III, C-I, D-IV

(c) A-I, B-II, C-III, D-IV

(d) A-II, B-IV, C-I, D-III

Ans: D

Sol: The correct answer is 'A-II, B-IV, C-I, D-III'.

Capital Asset Pricing Model (A) matches with RE = Rf + βE (RM - Rf) (II).

• The Capital Asset Pricing Model (CAPM) is used to determine the expected return on an asset based on its risk compared to the market. The formula RE = Rf + βE (RM - Rf) represents this relationship, where RE is the expected return, Rf is the risk-free rate, βE is the asset's beta, and RM is the market return.

Gordon Model (B) matches with P_0 = (IV).

• The Gordon Model, also known as the Gordon Growth Model or Dividend Discount Model, is used to value a stock by assuming that dividends will grow at a constant rate. The formula P_0 = calculates the present value of the stock based on expected future dividends.

Weighted Average Cost of Capital (C) matches with (I).

• The Weighted Average Cost of Capital (WACC) is a measure of a company's cost of capital in which each category of capital is proportionately weighted. The formula  represents this calculation, where E is the market value of equity, V is the total market value of equity and debt, is the cost of equity, D is the market value of debt, is the cost of debt, and T_C is the corporate tax rate.

Traditional Model (D) matches with (III).

• The Traditional Model in finance generally refers to valuation models that might include elements of both fundamental and technical analysis. The formula is a specific representation used in some traditional models to estimate the price (P) based on dividends (D) and earnings (E).

Q39: Which of the following are the price-adaption strategies? 

A. Price discounts and allowances

B. Target return pricing

C. Geographical pricing

D. Differentiated pricing

E. Going rate pricing

Choose the correct answer from the options given below:

(a) A, C & E Only

(b) B, C & D Only

(c) A, C & D Only

(d)  A, B & D Only

Ans: C

Sol: The correct answer is A, C & D Only.

Let's analyze each strategy:

Price discounts and allowances

• Price discounts and allowances refer to reductions in price to reward customers for certain behaviors such as early payment, bulk purchases, or off-season buying.
• Reason for inclusion: These are direct methods of adapting prices to encourage specific customer actions and enhance sales.

Target return pricing

• Target return pricing focuses on setting prices to achieve a specific return on investment (ROI) or profit margin.
• Reason for exclusion: This strategy is more about setting initial prices based on financial goals rather than adapting prices in response to market conditions or customer behaviors.

Geographical pricing

• Geographical pricing involves setting different prices for the same product in different geographic areas, considering factors like local demand, cost variations, and competition.
• Reason for inclusion: This strategy adapts prices based on geographical differences, making it a price-adaption method.

Differentiated pricing

• Differentiated pricing, also known as price discrimination, involves setting different prices for different customer segments based on their willingness to pay, purchasing power, or other criteria.
• Reason for inclusion: This is a classic example of price adaptation where prices are adjusted to cater to different market segments.

Going rate pricing

• Going rate pricing involves setting prices based on the prevailing market rate or the prices set by competitors.
• Reason for exclusion: While this method aligns prices with the market standard, it is not specifically about adapting prices to different conditions or customer behaviors but rather following the market trend.

Therefore, the strategies that fit as price-adaption methods are A: Price discounts and allowances, C: Geographical pricing, and D: Differentiated pricing. This makes option 3: "A, C & D Only" the correct choice.

Q40: What is the privilege of a holder in due course?

(a) The right to cancel the instrument at any time.

(b) Instrument cleansing of all defects.

(c) Exemption from legal obligations.

(d) Unrestricted transfer of the instrument.

Ans: B

Sol: The correct answer is Instrument cleansing of all defects.

Instrument cleansing of all defects:

• A holder in due course (HDC) is someone who has acquired a negotiable instrument in good faith and for value, and thus enjoys certain protections.
• One of the main privileges of an HDC is that the instrument is cleansed of all defects. This means that the HDC takes the instrument free from most defenses and claims that could be asserted against the previous holders.
• This protection allows the HDC to enforce the instrument without concern for issues such as fraud or breach of contract that might have affected previous holders.
• This privilege is crucial in maintaining the negotiability and reliability of financial instruments, encouraging their widespread use in commerce.

Other Related Points

The right to cancel the instrument at any time:

• This is incorrect. A holder in due course does not have the right to cancel the instrument at will. The HDC’s rights are focused on the enforcement of the instrument.

Exemption from legal obligations:

• This is incorrect. Being a holder in due course does not exempt someone from legal obligations. The HDC must still abide by the law and the terms of the instrument.

Unrestricted transfer of the instrument:

• This is incorrect. While negotiable instruments can be transferred, the privilege of a holder in due course is more about protection from defenses rather than the ability to transfer the instrument without restriction.

Q41: The Bretton Woods monetary system was based on the fixed rate monetary system. It lasted between the years:

(a) 1946 to 1974

(b) 1944 to 1974

(c) 1940 to 1974

(d) 1944 to 1971

Ans: D

Sol: The correct answer is 1944 To 1971.

1944 To 1971:

• The Bretton Woods monetary system was established in 1944 during the United Nations Monetary and Financial Conference, commonly known as the Bretton Woods Conference, held in Bretton Woods, New Hampshire, USA.
• The system created a framework for international economic cooperation and aimed to provide stability to the global economy by establishing fixed exchange rates between currencies and anchoring them to the US dollar, which was convertible to gold at a fixed rate of $35 per ounce.
• The International Monetary Fund (IMF) and the World Bank were also established during the Bretton Woods Conference to help manage and support the new international monetary system.
• The Bretton Woods system effectively ended in 1971 when the United States unilaterally terminated the convertibility of the US dollar to gold, a decision known as the "Nixon Shock." This led to the transition to a system of floating exchange rates, marking the end of the fixed exchange rate regime under the Bretton Woods system.

Other Related Points

1946 To 1974:

• This period is incorrect as the Bretton Woods system was established in 1944, not 1946. Secondly, the system effectively ended in 1971, not 1974, although it took some time for the new floating exchange rate system to be fully implemented.

1944 To 1974:

• This period is incorrect because the Bretton Woods system ended in 1971, not 1974, although the transition to the new regime continued for a few years afterwards.

1940 To 1974:

• This period is incorrect as the Bretton Woods Conference took place in 1944, and the system was established that year, not in 1940. Additionally, the system ended in 1971, not 1974.

Q42: Arrange the following anti-dumping process in proper sequence. 

A. Official investigation

B. Preliminary screening

C. Rejection under de minimis, unsubstantiated information etc.

D. Exporting country allowed to modify practice.

E. Preliminary findings followed by final finding and measures.

Choose the correct answer from the options given below:

(a) B, C, A, D, E

(b) A, B, C, D, E

(c) B, A, C, D, E

(d) B, C, A, E, D

Ans: A

Sol: The correct answer is B, C, A, D, E.

Preliminary Screening (B):

• This initial step involves reviewing the complaint or petition to determine if it meets the basic requirements for an anti-dumping investigation.
• This stage ensures that only legitimate cases proceed further, saving time and resources by filtering out unqualified or insufficient claims.

Rejection under deminimis, unsubstantiated information etc. (C):

• Following the preliminary screening, cases that do not meet the minimum threshold (deminimis) or lack sufficient evidence are rejected.
• This step ensures that only substantial and valid cases move forward to the next stages of the investigation.

Initiation (A):

• Once a case passes the preliminary screening and is not rejected, an official investigation is initiated.
• This involves notifying the exporting country and relevant stakeholders, and beginning the formal examination of the allegations.

Exporting country allowed to modify practice (D):

• During the investigation, the exporting country is given an opportunity to modify its practices to address the concerns raised in the complaint.
• This step provides a chance for the exporting country to avoid potential penalties by taking corrective actions.

Preliminary findings followed by final finding and measures (E):

• The investigation leads to preliminary findings, which are then followed by final findings and the imposition of appropriate anti-dumping measures if necessary.
• This stage concludes the process by determining the outcome based on the evidence and actions taken by the exporting country.

Other Related Points

• Anti-dumping measures are trade protection tools used by countries to protect their domestic industries from unfair competition caused by imported goods sold at below fair market value.
• The process typically involves a thorough investigation to ensure that claims of dumping are substantiated and that any measures imposed are justified and comply with international trade laws.

Q43: Which of the following are the advantages of globalisation? 

A. Increased competition will make firms more sensitive to cost and volume and to innovate.

B. A free economy increases innovation with new ideas from abroad.

C. Liberalization and global competition increase consumer choice and consumer surplus.

D. Developing countries may be more vulnerable to the harmful effects of globalization.

E. Globalization provides vast domestic and global opportunities for firms in developing countries.

Choose the correct answer from the options given below:

(a) Only A, B, C and D

(b) Only C, D and E

(c) Only B, C, D and E

(d) Only A, B, C and E

Ans: D

Sol: The correct answer is Only A, B, C and E.

Let's analyze each factor:

A. Increased competition will make firms more sensitive to cost and volume and to innovate.

• Globalization increases competition among firms globally, which drives them to be more efficient, reduce costs, and innovate to maintain a competitive edge.
• Reason for inclusion: This is a direct advantage of globalization as it encourages firms to improve their operations and products.

B. A free economy increases innovation with new ideas from abroad.

• Globalization allows for the free flow of ideas and technology across borders, fostering innovation and the adoption of new practices and technologies.
• Reason for inclusion: Exposure to global markets and ideas enhances innovation within a country.

C. Liberalization and global competition increase consumer choice and consumer surplus.

• Globalization expands the range of products and services available to consumers, often at lower prices due to increased competition.
• Reason for inclusion: Consumers benefit from a wider selection of goods and services, improving their overall satisfaction and surplus.

D. Developing countries may be more vulnerable to the harmful effects of globalization.

• While this statement is true, it is not an advantage of globalization.
• Reason for exclusion: This point highlights a potential disadvantage of globalization for developing countries, not an advantage.

E. Globalization provides vast domestic and global opportunities for firms in developing countries.

• Globalization opens up new markets and opportunities for firms from developing countries to expand and compete on a global scale.
• Reason for inclusion: Firms in developing countries can benefit from increased access to international markets and investment.

Therefore, the advantages of globalization include A: Increased competition, B: Increased innovation, C: Increased consumer choice, and E: Opportunities for firms in developing countries. This makes option 4: "Only A, B, C and E" the correct choice.

Q44: The liquidator after realizing the assets of the company should distribute the proceeds among below mentioned claimants in which order? 

A. Liquidator's remuneration and cost of expenses of winding up.

B. Legal charges

C. Claims of secured creditors

D. Professional creditors and creditors secured by floating charges

E. Unsecured creditors

Choose the correct answers from the options given below:

(a) A, B, C, D, E

(b) B, A, C, D, E

(c) B, C, A, D, E

(d) A, C, B, E, D

Ans: B

Sol: The correct answer is 'B, A, C, D, E'

Legal charges (B):

• Before any other distributions, all legal charges must be settled. These include the costs associated with obtaining court orders required for the winding-up process and any other legal expenses incurred during the liquidation.
• These charges are prioritized to ensure that the liquidation process can proceed without legal encumbrances or outstanding legal claims.

Liquidator's remuneration and cost of expenses of winding up (A):

• After legal charges, the liquidator's remuneration and expenses incurred during the process of winding up the company are covered next.
• This ensures that the liquidator is compensated for their services and that all necessary expenses for administrating the liquidation are paid.

Claims of secured creditors (C):

• Secured creditors have the next priority. These creditors have specific assets pledged as collateral for their loans. Their claims are satisfied by liquidating these assets and paying off the secured loans.
• Secured creditors are prioritized because their claims are backed by specific collateral, reducing their risk in the event of liquidation.

Professional creditors and creditors secured by floating charges (D):

• Following the secured creditors, the claims of professional creditors and those secured by floating charges are paid. A floating charge is a security interest over a pool of changing assets of a company, like inventory or receivables.
• These creditors are paid after fully secured claims because their security is more general and less specific compared to fixed charges.

Unsecured creditors (E):

• Finally, any remaining funds are distributed among unsecured creditors. These creditors do not have specific collateral backing their claims and are at a higher risk in the event of liquidation.
• Unsecured creditors are the last to be paid under the statutory order of distribution due to the higher risk associated with their loans.

Q45: Transmission of shares is effected by which of the following? 

A. Sale

B. Death

C. Insolvency

D. Maturity

Choose the correct answer from the options given below:

(a) A & B Only

(b) A & C Only

(c) B & D Only

(d) B & C Only

Ans: D

Sol: The correct answer is B & C Only.

Let's analyze each factor:

Sale

• Sale refers to the transfer of ownership of shares from one party to another through a transaction.
• Reason for exclusion: Sale is a voluntary transfer and does not fall under the category of transmission, which typically involves involuntary transfers due to specific circumstances.

Death

• Death of a shareholder can lead to the transfer of shares to the legal heirs or nominees.
• Reason for inclusion: Death results in an involuntary transfer of shares, which is a key aspect of transmission.

Insolvency

• Insolvency of a shareholder can lead to the transfer of shares to creditors or liquidators.
• Reason for inclusion: Insolvency results in an involuntary transfer of shares, fitting the criteria for transmission.

Maturity

• Maturity refers to the completion of a specific period or condition, often related to financial instruments like bonds.
• Reason for exclusion: Maturity does not typically involve the transfer of shares due to involuntary circumstances.

Therefore, the factors that fit strictly as causes for the transmission of shares are B: Death and C: Insolvency. This makes option 4: "B & C Only" the correct choice.

Q46: Which of the following section of Companies Act, 2013 deals with amalgamation, absorption and reconstruction?

(a) Section 139

(b) Section 219

(c) Section 232

(d) Section 391

Ans: C

Sol: The correct answer is Section 232.

Section 232:

• This section deals with the procedure for the merger and amalgamation of companies, including the restructuring and reorganization of corporate entities. It provides a comprehensive framework for companies to undertake amalgamation, absorption, and reconstruction.
• Section 232 sets out the necessary steps, including the approval process by the tribunal, the requirement for the scheme of amalgamation, and the protection of the interests of creditors and shareholders.
• In the context of financial enterprises, these provisions ensure that the amalgamation or restructuring process is transparent, fair, and compliant with regulatory standards, thereby fostering stability and confidence in the financial markets.

Section 139:

• This section pertains to the appointment of auditors in a company. It outlines the procedures and requirements for auditors' appointments, including their tenure and removal.
• Section 139 does not deal with mergers, amalgamations, or reconstructions, and therefore, it is not relevant to the subjects of amalgamation, absorption, and reconstruction.

Section 219:

• This section involves the inspection, inquiry, and investigation of companies. It grants powers to regulatory authorities to conduct inquiries and investigations to ensure compliance with the Companies Act.
• It does not address the procedures or legal framework for amalgamation, absorption, or reconstruction of companies.

Section 391:

• This section was part of the earlier Companies Act, 1956, and it dealt with the procedures for arrangements and compromises between a company and its creditors or shareholders.
• Under the Companies Act, 2013, the relevant provisions for such arrangements are primarily found in Sections 230-232. Therefore, Section 391 is not applicable under the Companies Act, 2013, for the purposes of amalgamation, absorption, and reconstruction.

Q47: The distribution of data which has a long left tail is known as:

(a) Positively skewed distribution

(b) Negatively skewed distribution

(c) Symmetrical distribution

(d) Mesokurtic distribution

Ans: B

Sol: The correct answer is Negatively skewed distribution.

Negatively skewed distribution:

• A negatively skewed distribution, also known as a left-skewed distribution, has a long tail on the left side. This means that there are a few extremely low values that pull the mean to the left.
• In the context of a financial enterprise, this type of distribution might represent scenarios where most of the data points (e.g., returns on investment) are higher, but there are a few significant losses that cause the left tail.
• This can be important for risk management, as it indicates potential for significant downside risk.

Other Related Points

Positively skewed distribution:

• A positively skewed distribution has a long tail on the right side, indicating a few extremely high values. This is the opposite of a negatively skewed distribution.
• It is not the correct answer as it refers to data with a long right tail, not a long left tail.

Symmetrical distribution:

• A symmetrical distribution is one where the left and right sides are mirror images of each other. There is no long tail on either side.
• This type of distribution is not skewed and is not the correct answer.

Mesokurtic distribution:

• A mesokurtic distribution refers to a distribution with kurtosis similar to that of a normal distribution. It describes the "peakedness" of the distribution.
• This is not related to the skewness (left or right tail) and therefore is not the correct answer.

Q48: Arrange the following steps involved in the process of IPO issue in correct order. 

A. Verification by SEBI

B. Hiring an Underwriter

C. Registration for IPO

D. Pricing of IPO

E. Allotment of shares

Choose the correct answer from the options given below:

(a) A, C, D, B, E

(b) A, D, C, B, E

(c) B, C, D, A, E

(d) B, C, A, D, E

Ans: D

Sol: The correct answer is B, C, A, D, E.

Hiring an underwriter (B):

• The first step in the IPO process involves hiring an underwriter, typically an investment bank. The underwriter helps the company prepare for the IPO by determining the financial health and readiness of the company for the public market.
• This step is crucial as the underwriter plays a key role in advising on the IPO process, preparing necessary documentation, and ensuring regulatory compliance.

Registration for IPO (C):

• After hiring an underwriter, the company must register for the IPO with the appropriate regulatory authorities, such as the Securities and Exchange Board of India (SEBI).
• This step involves submitting a detailed prospectus outlining the company's financials, business model, risk factors, and other pertinent information.

Verification by SEBI (A):

• Following registration, the regulatory authority (SEBI) conducts a thorough verification of the submitted documents to ensure compliance with all legal and financial requirements.
• This verification process is critical to protect investors by ensuring that all information provided by the company is accurate and complete.

Pricing of IPO (D):

• Once the regulatory authority approves the IPO, the next step is to determine the IPO price. This involves setting the price at which the shares will be offered to the public.
• The pricing is typically decided through a book-building process where the demand for shares is gauged to arrive at an optimal price.

Allotment of shares (E):

• The final step in the IPO process is the allotment of shares to investors. This step involves distributing the shares to institutional and retail investors based on the demand and subscription levels.
• Successful allotment marks the company’s transition to a publicly traded entity, and its shares begin trading on the stock exchange.

Q49: Which of the following is the apex decision-making body of WTO?

(a) General Council

(b) Executive Council

(c) Ministerial Conference

(d) TRIMS

Ans: C

Sol: The correct answer is Ministerial Conference.

Ministerial Conference:

• This is the highest decision-making body of the World Trade Organization (WTO).
• It meets at least once every two years and is composed of representatives (usually trade ministers) from all WTO member countries.
• The Ministerial Conference can take decisions on all matters under any of the multilateral trade agreements.

Other Related Points

General Council:

• This is a key decision-making body but not the apex. It operates when the Ministerial Conference is not in session.
• The General Council conducts the day-to-day work of the WTO and also meets as the Dispute Settlement Body and the Trade Policy Review Body.

Executive Council:

• This body does not exist within the WTO structure. The WTO functions through the Ministerial Conference and the General Council, along with specialized councils and committees.

TRIMS:

• Trade-Related Investment Measures (TRIMS) is an agreement under the WTO but not a decision-making body.
• TRIMS focuses on regulations applied to foreign investors and investments that may affect trade.

Q50: The price of one kg of tea is ₹ 30. At this price ₹ 5 kg of tea is demanded. If the price of coffee rises from ₹25 to ₹35 per kg, the quantity demanded of tea rises from 5 kg to 8 kg. Find the cross price elasticity of tea.

(a) (+) 0.5

(b) (+) 1.0

(c) (+) 1.5

(d) (-) 1.8

Ans: C

Sol: The correct answer is 1.5.

Cross Price Elasticity of Demand (XED):

• Cross price elasticity of demand measures the responsiveness of the quantity demanded of one good when the price of another good changes.
• The formula to calculate Cross Price Elasticity of Demand is:
  XED = (% Change in Quantity Demanded of Tea) / (% Change in Price of Coffee)

Step 1: Calculate the % Change in Quantity Demanded of Tea:

• Initial Quantity Demanded of Tea = 5 kg
• New Quantity Demanded of Tea = 8 kg
• Change in Quantity Demanded of Tea = 8 kg - 5 kg = 3 kg
• % Change in Quantity Demanded of Tea = (3 / 5) * 100 = 60%

Step 2: Calculate the % Change in Price of Coffee:

• Initial Price of Coffee = ₹25 per kg
• New Price of Coffee = ₹35 per kg
• Change in Price of Coffee = ₹35 - ₹25 = ₹10
• % Change in Price of Coffee = (10 / 25) * 100 = 40%

Step 3: Calculate Cross Price Elasticity of Demand:

• XED = (60% Change in Quantity Demanded of Tea) / (40% Change in Price of Coffee)
• XED = 60% / 40%
• XED = 1.5
• The positive cross price elasticity indicates that tea and coffee are substitute goods.

Other Related Points

Interpreting Cross Price Elasticity Values:

• A positive XED value indicates that the two goods are substitutes. The demand for one increases when the price of the other increases.
• A negative XED value indicates that the goods are complements. The demand for one decreases when the price of the other increases.
• A zero XED value indicates that the goods are independent, meaning the change in the price of one good does not affect the demand for the other.

Q51: Match the List-I with List-II

Choose the correct answer from the options given below:

(a) A-II, B-III, C-IV, D-I

(b) A-I, B-II, C-III, D-IV

(c) A-II, B-III, C-I, D-IV

(d) A-I, B-III, C-II, D-IV

Ans: A

Sol: The correct answer is 'A-II, B-III, C-IV, D-I'.

Transfer of ownership (A) matches with Contract of Sale of Goods (II).

• A contract of sale of goods involves the transfer of ownership of goods from the seller to the buyer in exchange for a price. This is a fundamental aspect of commercial transactions where ownership rights are transferred.
• For example, when you buy a car from a dealership, the ownership of the car is transferred to you once the payment is made and the necessary legal documents are signed.
• Key Point: Understanding the legal implications of ownership transfer is crucial in ensuring that both parties' rights and obligations are clearly defined and protected.

Sale of goodwill after dissolution (B) matches with Dissolution of Partnership Firm (III).

• When a partnership firm is dissolved, its assets, including goodwill, are sold off to settle any remaining debts and distribute the remaining assets among the partners. Goodwill represents the reputation and customer relationships that a firm has built over time.
• For instance, if a law firm dissolves, the goodwill associated with its name and client base can be sold to another law firm.
• Key Point: The sale of goodwill is an important consideration during the dissolution process as it can significantly impact the financial outcomes for the partners.

Buy back of shares (C) matches with Share Capital of Company (IV).

• A company may decide to buy back its own shares from the market, which can affect the share capital of the company. This is typically done to reduce the number of outstanding shares, increase the value of remaining shares, or prevent other shareholders from taking a controlling stake.
• For example, if a company believes its shares are undervalued, it might repurchase them to boost the share price.
• Key Point: Share buybacks can be a strategic financial decision to enhance shareholder value and improve financial ratios.

Promissory Note (D) matches with Negotiable Instrument (I).

• A promissory note is a type of negotiable instrument that contains a written promise by one party to pay a specified sum of money to another party either on demand or at a future date. It is widely used in financial transactions as a means of credit.
• For example, when a borrower takes a loan from a lender, a promissory note may be issued to outline the terms of repayment.
• Key Point: Promissory notes are crucial tools in finance for securing loans and ensuring that the terms of repayment are clearly documented and legally enforceable.

Q52: Arrange the steps of Capital Budgeting Process in correct sequence. 

A. Preparation of Capital Budget and Appropriation

B. Performance Review

C. Assembling of Investment proposals

D. Identification of Investment opportunities

E. Decision Making

Choose the correct answer from the options given below:

(a) D, C, E, A, B

(b) A, C, D, B, E

(c) A, D, C, B, E

(d) B, D, C, E, A

Ans: A

Sol: The correct answer is D, C, E, A, B.

Identification of Investment opportunities (D):

• This is the initial step in the capital budgeting process, where the organization identifies potential investment opportunities.
• It involves scanning the environment for viable projects or investments that can generate value for the organization.
• These opportunities could range from new product development, expansion, cost-saving initiatives, to acquiring new assets.

Assembling of Investment proposals (C):

• Once potential opportunities are identified, the next step is to gather detailed information about each investment proposal.
• This involves preparing comprehensive proposals that include cost estimates, potential returns, risk assessments, and strategic alignment with organizational goals.
• It helps in creating a structured repository of possible investments for further evaluation.

Decision Making (E):

• After assembling the investment proposals, the decision-making phase begins where these proposals are evaluated and prioritized.
• This involves using capital budgeting techniques like Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period, etc., to select the most beneficial projects.
• The management or a designated committee typically makes the final investment decisions based on these evaluations.

Preparation of Capital Budget and Appropriation (A):

• Following the decision-making phase, the next step is to prepare the capital budget, which outlines the selected projects and their respective funding requirements.
• This budget serves as a detailed plan for allocating financial resources to approved investment projects over a specified period.
• It ensures that the necessary funds are appropriated and allocated efficiently to support the execution of these projects.

Performance Review (B):

• The final step in the capital budgeting process is to review the performance of the implemented projects.
• This involves monitoring and evaluating the actual performance against the planned objectives and financial projections.
• It helps in assessing the success of the investments and provides insights for future capital budgeting decisions.

Q53: The effect of exchange rate fluctuations on a firm's future cost and revenues is termed as:-

(a) Transaction Exposure

(b) Translation Exposure

(c) Accounting Exposure

(d) Operating Exposure

Ans: D

Sol: The correct answer is Operating Exposure.

Operating Exposure:

• Operating exposure, also known as economic exposure, measures the impact of exchange rate fluctuations on a firm's future cash flows and market value.
• It considers long-term effects of changes in exchange rates on a company’s competitive position, which can affect its future revenues and costs.
• This type of exposure can influence strategic decisions, such as pricing, sourcing, and investment in foreign operations.

Other Related Points

Transaction Exposure:

• This measures the effect of exchange rate movements on the value of a company’s outstanding foreign currency-denominated transactions.
• It focuses on short-term cash flows and impacts the settlement of contracts involving foreign currencies.

Translation Exposure:

• Also known as accounting exposure, it deals with the impact of exchange rate changes on the financial statements of a company.
• It affects the consolidation of financial reports of foreign subsidiaries into the parent company's financial statements.

Accounting Exposure:

• This is another term for translation exposure and focuses on the balance sheet and income statement translations for multinational companies.

Q54: Which of the following are different types of dumping? 

A. Persistent dumping

B. Predatory dumping

C. Sporadic dumping

D. Nomadic dumping

Choose the correct answer from the options given below:

(a) A & B Only

(b) A, B & C Only

(c) B & C Only

(d) C & D Only

Ans: B

Sol: The correct answer is A, B & C Only.

Let's analyze each type of dumping:

Persistent dumping

• Persistent dumping refers to the continuous sale of products in a foreign market at a price lower than in the domestic market. This practice is often used to maintain a stable market presence in the foreign market.
• Reason for inclusion: This is a recognized type of dumping that involves long-term market strategies.

Predatory dumping

• Predatory dumping occurs when a company sells a product in a foreign market at a very low price to drive competitors out of the market. Once the competition is eliminated, the company can raise prices.
• Reason for inclusion: This type of dumping is intended to eliminate competition and gain market control.

Sporadic dumping

• Sporadic dumping happens when a company occasionally sells products in a foreign market at a lower price to unload excess inventory or during periods of low demand in the domestic market.
• Reason for inclusion: This is a short-term strategy to manage excess supply or respond to temporary market conditions.

Nomadic dumping

• Nomadic dumping is not a recognized type of dumping in economic literature. It appears to be a fictitious term in this context.
• Reason for exclusion: Since this term is not officially recognized as a type of dumping, it cannot be included in the correct answer.

Q55: Which of the following are true about chi-square test and chi-square distribution? 

A. Chi-square test is a non-parametric test.

B. Chi-square test was developed by spearman.

C. Chi-square distribution can never be negative.

D. Chi-square distribution is a discrete distribution.

E. Chi-square distribution is a function of its degree of freedom.

Choose the correct answer from the options given below:

(a) B, C & D Only

(b) A, C & E Only

(c) A, B & D Only

(d) B, D & E Only

Ans: B

Sol: The correct answer is A, C & E Only.

Let's analyze each statement:

A. Chi-square test is a non-parametric test.

• Non-parametric tests are those that do not assume a specific distribution for the data.
• The chi-square test does not assume a normal distribution and is used for categorical data.
• Reason for inclusion: This statement is correct as chi-square is indeed a non-parametric test.

B. Chi-square test was developed by Spearman.

• In reality, the chi-square test was developed by Karl Pearson, not Spearman.
• Reason for exclusion: This statement is incorrect.

C. Chi-square distribution can never be negative.

• The chi-square distribution is always non-negative because it is derived from the sum of squared standard normal variables.
• Reason for inclusion: This statement is correct as the chi-square distribution values are always non-negative.

D. Chi-square distribution is a discrete distribution.

• The chi-square distribution is actually a continuous distribution, not discrete.
• Reason for exclusion: This statement is incorrect.

E. Chi-square distribution is a function of its degree of freedom.

• The shape of the chi-square distribution depends on the degrees of freedom (df).
• Reason for inclusion: This statement is correct as the chi-square distribution changes with different degrees of freedom.

Q56: Calculate Debt Service coverage ratio from the following data 

Net profit before interest and Tax Rs. 50,000

10% Debenture (payable in 10 years in equal instalments) Rs. 1,00,000

Tax rate is 50%

(a) 1.27

(b) 1.67

(c) 2.27

(d) 2.67

Ans: C

Sol: The correct answer is 1.67.

Calculation of DSCR:

• The formula for DSCR is: DSCR = Net Operating Income (NOI) / Total Debt Service.
• In this case, Net Profit Before Interest and Tax (NPBIT) is used as a proxy for NOI, which is Rs. 50,000.
• Total Debt Service is the sum of Interest Expense (Rs. 10,000) and Principal Repayment (Rs. 10,000), totaling Rs. 20,000.
• The resulting DSCR is: DSCR = 50,000 / 20,000 = 2.5.

Interpretation of DSCR:

• A DSCR of 1.67 indicates that the business generates 1.67 times the cash flow needed to cover its debt obligations, reflecting a healthy financial position.
• This level is generally considered satisfactory for lenders, as it demonstrates a buffer for meeting debt payments.

Key Components of the Calculation:

• Net Profit Before Interest and Tax (NPBIT): Reflects the operating performance before financing and tax effects.
• Total Debt Service: Includes both interest expense and principal repayments, which are mandatory obligations.
• The adjustment of cash flows ensures that effective liquidity available for debt servicing is considered.

Other Related Points

Net Operating Income (NOI):

• While NPBIT is used here as a proxy for NOI, actual NOI calculations in some cases may adjust for non-cash expenses (like depreciation) or tax benefits.

Importance of DSCR in Lending Decisions:

• Lenders rely on DSCR to assess a borrower’s capacity to meet debt obligations, typically preferring a DSCR above 1.5 for comfort.
• A DSCR below 1.0 indicates insufficient cash flow to cover debt servicing, raising risks of default.

Q57: Match the List-I with List-II 

Choose the correct answer from the options given below:

(a) A-I, B-II, C-III, D-IV

(b) A-IV, B-II, C-I, D-III

(c) A-IV, B-III, C-II, D-I

(d) A-III, B-IV, C-I, D-II

Ans: B

Sol: The correct answer is A-IV, B-II, C-I, D-III.

Section 80-C (A) matches with the ceiling limit of 1,50,000 (IV).

• Under Section 80C of the Income Tax Act, individuals and HUFs can claim a deduction of up to Rs. 1,50,000 on their total income for various investments and expenditures.

Section 80-CCD (1) (B) matches with the ceiling limit of 10% of salary or 20% of gross total income as per case (II).

• Section 80CCD (1) allows a deduction for contributions to the National Pension System (NPS) up to 10% of the salary (for employees) or 20% of gross total income (for self-employed individuals).

Section 80-CCD (1B) (C) matches with the ceiling limit of 50,000 (I).

• Section 80CCD (1B) provides an additional deduction of Rs. 50,000 for contributions to the NPS, which is over and above the limit of Rs. 1,50,000 under Section 80C.

Section 80-CCD (2) (D) matches with the ceiling limit of 14% of salary (III).

• Section 80CCD (2) allows for a deduction for employer contributions to the NPS. For central government employees, this limit is set at 14% of salary (basic + DA).

Q58: What are the planning strategies used by multinational enterprises to exploit gaps and anomalies in tax rules to avoid paying taxes?

(a) AEPS

(b) BEPS

(c) EBPS

(d) CEPS

Ans: B

Sol: The correct answer is BEPS.

Base Erosion and Profit Shifting (BEPS):

• BEPS refers to the strategies used by multinational enterprises (MNEs) to exploit gaps, mismatches, and loopholes in tax rules to artificially shift profits to low or no-tax jurisdictions, where there is little or no economic activity.
• The Organisation for Economic Co-operation and Development (OECD) has developed an Action Plan on BEPS to combat this practice, emphasizing tax fairness and preventing revenue loss for governments.
• Examples of BEPS strategies include manipulating transfer pricing, treaty shopping, and the use of hybrid mismatch arrangements to minimize taxable income.
• This practice impacts government revenue significantly, reducing funds for public services and leading to an uneven economic playing field between businesses.

Other Related Points

AEPS:

• Stands for Aadhaar Enabled Payment System and is unrelated to tax avoidance. It facilitates banking transactions using Aadhaar authentication.

EBPS:

• There is no significant financial or tax-related terminology abbreviated as EBPS, making this option irrelevant in this context.

CEPS:

• While CEPS might refer to certain payment systems or organizations, it is not associated with the manipulation of tax systems by MNEs.

Q59: The management of Vibgyor Fabrics subscribes to the NOI approach and believes that its cost of debt and overall cost of capital will remain at 9% and 12% respectively. If the debt-equity ratio is 0.8, what is the cost of equity?

(a) 16.4%

(b) 12.4%

(c) 14.4%

(d) 8.12%

Ans: C

Sol: The correct answer is 14.4%

The cost of equity (Ke) can be calculated using the formula derived from the NOI approach:

The NOI (Net Operating Income) approach suggests that the total market value and the overall cost of capital of a firm are independent of its capital structure.

According to the NOI approach, the firm's cost of equity can be calculated using the formula: Ke = Ko + (Ko - Kd) * (D/E)

Where:

• Ko = Overall cost of capital = 12%
• Kd = Cost of debt = 9%
• D/E = Debt-Equity ratio = 0.8

By substituting the values into the formula:

Ke = 12% + (12% - 9%) * 0.8

Ke = 12% + 3% * 0.8

Ke = 12% + 2.4%

Ke = 14.4%

Other Related Points

The NOI approach:

• Suggests that a company's value and its overall cost of capital remain constant regardless of changes in its debt-equity ratio.
• This approach challenges the traditional view that increased debt levels (leverage) would always lower a firm's overall cost of capital and thereby increase its value.
• It assumes that increased financial risk from higher leverage is precisely offset by increased equity costs, keeping the overall cost of capital unchanged.

Q60: Determine the correct sequence of the steps involved in the process of hypothesis testing 

A. Setting the null and alternative hypothesis

B. Setting the level of significance

C. Determining the appropriate statistical test

D. Setting the decision rule

E. Analysing the collected data

Choose the correct answer from the options given below:

(a) B, A, C, D, E

(b) B, C, A, D, E

(c) A, C, B, D, E

(d) A, B, C, D, E

Ans: D

Sol: The correct answer is A, B, C, D, E.

Standard Steps in Hypothesis Testing:

• A. Setting the null and alternative hypothesis
  Formulate what you're testing (H₀ and H₁).
• B. Setting the level of significance
  Choose the probability of making a Type I error (usually α = 0.05).
• C. Determining the appropriate statistical test
  Choose the correct test (t-test, z-test, chi-square, etc.) based on data type and sample size.
• D. Setting the decision rule
  Define the critical value or rejection region based on α and the test used.
• E. Analyzing the collected data
  Compute the test statistic, compare with the critical value, and draw a conclusion.

Correct Sequence: A → B → C → D → E
Final Answer is (d) A, B, C, D, E

Q61: A firm wants to launch a new brand of television and refrigerator. The firm conducted a survey and found that 60% of the households have television, 65% have a refrigerator and 35%, both a television and a refrigerator. If a household is randomly selected, what is the probability that the household has either a television or refrigerator?

(a) 0.70

(b) 0.90

(c) 0.80

(d) 0.60

Ans: B

Sol: The correct answer is 0.90.

Formula for Probability of Union of Two Events:

• The probability of either event occurring is given by the formula:
  P(A ∪ B) = P(A) + P(B) − P(A ∩ B).
• Here:
  • P(A): Probability that a household has a television = 60% = 0.60.
  • P(B): Probability that a household has a refrigerator = 65% = 0.65.
  • P(A ∩ B): Probability that a household has both = 35% = 0.35.

Substitute Values:

• P(A ∪ B) = 0.60 + 0.65 − 0.35.
• P(A ∪ B) = 0.90.

Interpretation:

• The probability that a randomly selected household has either a television or a refrigerator is 90%.
• This means 90% of households have at least one of the two appliances.

Other Related Points

Use in Business Decisions:

• Understanding overlap in consumer ownership helps firms identify cross-selling opportunities. For example, a company may target households with televisions to promote refrigerators.
• The data can guide marketing efforts for launching complementary products.

Set Theory Application:

• This principle of union probability is directly derived from set theory, where overlapping probabilities (intersection) must be subtracted to avoid double counting.

Q62: Providing a total package of related goods and services to solve a customer's needs is called:

(a) Complete Selling

(b) Conglomerate Selling

(c) Wholesale Selling

(d) Systems Selling

Ans: D

Sol:  The correct answer is Systems Selling.

Systems Selling:

• Systems selling involves providing a comprehensive solution to the customer's needs by offering a bundle of related goods and services.
• It is commonly used in industries where customers require a complete package rather than individual products, such as IT solutions, industrial equipment, and financial services.
• This approach ensures that all components work seamlessly together, providing greater value and efficiency to the customer.
• In a financial enterprise context, systems selling might involve offering a combination of financial products like loans, investment services, and insurance to meet a customer's overall financial needs.

Other Related Points

Complete Selling: 

• This term does not have a widely recognized definition in the context of sales and marketing.
• It might suggest selling all available products to a customer, but it lacks the strategic integration found in systems selling.
•  

Conglomerate Selling: 

• This term typically refers to a large corporation that owns companies in diverse industries, not a sales strategy.
• It is not related to providing a comprehensive solution to a customer's needs.

 Wholesale Selling: 

• This involves selling goods in large quantities at lower prices, usually to retailers rather than end consumers.
• It does not focus on offering a comprehensive package of related goods and services. 

Q63: Which of the following is correct to compute Labour Mix Variance (LMV)?

(a) LMV = Actual rate (Revised Std. time-Actual time)

(b) LMV Actual time (Actual rate-Actual rate)

(c) LMV Actual rate (Revised Std. time - Actual time)

(d) LMV Std. time (Actual rate - Actual rate)

Ans: C

Sol: The correct answer is LMV Actual rate (Revised Std. time - Actual time).

LMV = Actual rate (Revised Std. time - Actual time):

• This formula correctly computes the Labour Mix Variance by taking the difference between the revised standard time and the actual time and multiplying it by the standard rate.
• The rationale behind this is to measure the efficiency or inefficiency caused by the variance in the mix of labor used, by considering the standard rates set for labor costs.
• This helps in analyzing how changes in the mix of labor types impact the overall labor cost variance.

Other Related Points

LMV = Actual rate (Revised Std. time - Actual time):

• This formula is incorrect because it uses the actual rate instead of the standard rate. Labour Mix Variance should be calculated using standard rates to compare the expected and actual labor mix.

LMV = Actual time (Std. Rate - Actual rate):

• This formula is incorrect as it focuses on rate variance rather than mix variance. It calculates the difference between standard and actual rates for the actual time worked, which pertains more to rate variance analysis.

LMV = Std. time (Actual rate - Std. Rate):

• This formula is also incorrect as it calculates the difference between actual and standard rates for the standard time, which again focuses on rate variance, not mix variance.

Q64: Match the List-I with List-II
 Match the offences and their corresponding penalties as per I.T. Act-2000.

​

Choose the correct answer from the options given below:

(a) A-I, B-II, C-III, D-IV

(b) A-II, B-I, C-IV, D-III

(c) A-II, B-III, C-I, D-IV

(d) A-III, B-IV, C-I, D-II

Ans: C

Sol: The correct answer is 'A-II, B-III, C-I, D-IV'.

Tampering with computer source documents (Sec.65) (A) matches with Imprisonment upto 3 years, or fine of ₹ 2 lakh or both (II).

• Section 65 of the IT Act, 2000, deals with tampering with computer source documents. The penalty for this offence is imprisonment up to 3 years, or a fine of ₹ 2 lakh, or both. This is because tampering with source documents can lead to significant security risks and data breaches.
• It is crucial to protect computer source documents to maintain the integrity and security of digital information.
• Key Point: Tampering with computer source documents is considered a serious offence due to its potential impact on data integrity and security.

Penalty for Misrepresentation (Sec.71) (B) matches with Imprisonment upto 2 years or fine which may extend to one lakh rupees or with both (III).

• Section 71 of the IT Act, 2000, addresses the penalty for Misrepresentation. The punishment for this offence is imprisonment up to 2 years or a fine which may extend to ₹ 1 lakh, or both. This section aims to penalize individuals who provide false information or misrepresent facts in digital communication.
• Accurate representation is essential for trust and reliability in digital transactions and communications.
• Key Point: Misrepresentation can undermine trust in digital systems, hence the penalty aims to discourage such behavior.

Penalty for Breach of confidentiality and privacy (Sec.72) (C) matches with Imprisonment upto 2 years and/or fine upto ₹ 1 lakh (I).

• Section 72 of the IT Act, 2000, deals with the penalty for breach of confidentiality and privacy. The punishment for this offence is imprisonment up to 2 years and/or a fine up to ₹ 1 lakh. This section ensures that individuals or entities handling sensitive personal information maintain confidentiality and privacy.
• Protecting confidentiality and privacy is essential for maintaining user trust and complying with data protection regulations.
• Key Point: Breach of confidentiality and privacy can have severe consequences for individuals, hence the strict penalties.

Punishment for cyber terrorism (Sec.66F) (D) matches with Imprisonment extends to imprisonment for life (IV).

• Section 66F of the IT Act, 2000, outlines the punishment for cyber terrorism. The penalty for this offence is imprisonment that may extend to imprisonment for life. Cyber terrorism poses a significant threat to national security, infrastructure, and public safety.
• Cyber terrorism involves using computers or digital networks to carry out acts of terrorism, making it a grave offence.
• Key Point: The severe penalty reflects the critical nature of protecting against cyber terrorism and ensuring national security.

Q65: According to Proposition II of Modigliani-Miller theory of capital structure, which of the following statement is true?

(a) Financial Leverage has no effect on the wealth of shareholders.

(b) Financial Leverage increases with wealth of shareholders.

(c) Rate of return expected by shareholders increases with the increase in equity financing.

(d) Rate of return expected by shareholders increases with financial leverage.

Ans: D

Sol: The correct answer is Rate of return expected by shareholders increases with financial leverage.

Rate of return expected by shareholders increases with financial leverage:

• According to Proposition II of the Modigliani-Miller theory of capital structure, the expected rate of return on equity increases in proportion to the debt-equity ratio. This is because financial leverage amplifies the potential returns to shareholders, as well as the associated risks.
• When a company uses debt financing, it incurs fixed interest expenses. If the company generates returns higher than the cost of debt, the excess returns boost the profitability for equity shareholders, thus increasing their expected rate of return.
• This proposition demonstrates the trade-off between risk and return: as leverage increases, so does the risk borne by shareholders, which in turn demands a higher rate of return to compensate for this increased risk.

Other Related Points

Financial Leverage has no effect on the wealth of shareholders:

• This statement is incorrect. Financial leverage does affect the wealth of shareholders, as it influences the risk and return profile of their investments. Higher leverage can lead to higher returns but also increases the financial risk.

Financial Leverage increases with wealth of shareholders:

• This is not accurate. Financial leverage refers to the use of debt in the capital structure of a company and is not directly related to the wealth of shareholders. It is a strategic decision made by the company to enhance returns on equity.

Rate of return expected by shareholders increases with the increase in equity financing:

• This statement is incorrect. Increasing equity financing typically reduces financial leverage and consequently, the rate of return expected by shareholders, because the risk (and therefore potential return) decreases without the use of debt.

Q66: Assessment made not only from inside the company but from groups outside the organisation is known as:

(a) 360 Degree Feedback

(b) 720 Degree Feedback

(c) Performance Appraisal

(d) MBO

Ans: B

Sol: The correct answer is 720 Degree Feedback.

720 Degree Feedback:

• 720 Degree Feedback is an advanced form of performance appraisal that involves feedback from internal sources (like managers, peers, subordinates) as well as external sources (like customers, suppliers, and other external stakeholders).
• This comprehensive approach ensures that the employee receives a holistic view of their performance and areas of improvement from all relevant perspectives.
• In the context of a financial enterprise, this type of feedback can be particularly valuable as it includes insights from clients and partners, which are critical for maintaining and improving business relationships and service quality.

Other Related Points

360 Degree Feedback:

• 360 Degree Feedback involves feedback from internal sources within the organization, such as supervisors, peers, and subordinates, but does not typically include external sources.
• While comprehensive within the organization, it lacks the external perspective provided by customers and other stakeholders outside the company.

Performance Appraisal:

• Performance Appraisal is a traditional method where an employee's performance is evaluated by their direct supervisor or manager.
• This method usually lacks the multi-source feedback component and does not include external feedback.

MBO (Management by Objectives):

• MBO is a performance management approach where employees and managers set and agree upon specific, measurable objectives.
• It focuses on setting goals and measuring performance based on the achievement of those goals rather than collecting feedback from various sources.

Q67: Arrange the following steps of sampling design process in correct order. 

A. Sampling frame must be determined

B. Target population should be defined according to objective

C. Sampling process must be effectively executed

D. Selecting a sampling technique

E. Number of elements to be included in the study must be carefully determined.

Choose the correct answer from the options given below:

(a) B, D, E, C, A

(b) A, B, D, E, C

(c) A, C, B, D, E

(d) B, A, D, E, C

Ans: D

Sol: The correct answer is B, A, D, E, C.

Target population should be defined according to objective (B):

• This initial step involves clearly identifying the group of individuals or elements that the researcher aims to study. It sets the foundation for the sampling design by ensuring that the population aligns with the research objectives.
• Defining the target population helps in understanding the scope of the study and ensures that the sample drawn will be representative of the population under investigation.

Sampling frame must be determined (A):

• Once the target population is defined, the next step is to establish a sampling frame, which is essentially a list or database from which the sample will be drawn.
• The sampling frame should be as comprehensive and accurate as possible to ensure that every member of the target population has an equal chance of being selected.

Selecting a sampling technique (D):

• After determining the sampling frame, the researcher must choose an appropriate sampling technique. This could be probability sampling (such as simple random sampling, stratified sampling) or non-probability sampling (such as convenience sampling, judgment sampling).
• The choice of sampling technique will depend on the research objectives, the nature of the population, and the resources available.

Number of elements to be included in the study must be carefully determined (E):

• The researcher needs to decide on the sample size, which is the number of elements or individuals to be included in the study. The sample size should be large enough to provide reliable and valid results but also feasible in terms of resources and time.
• Determining the sample size involves statistical considerations and is crucial for the accuracy and generalizability of the study findings.

Sampling process must be effectively executed (C):

• The final step is the actual execution of the sampling process, where the sample is drawn from the sampling frame using the selected technique.
• This step involves ensuring that the sampling process is carried out systematically and rigorously to maintain the integrity and reliability of the study.

Q68: What will be the dividend per share of Rohtas Industries for the year 2024 given the following information about the company? 

EPS for 2024 = ₹ 3

DPS for 2023 = ₹ 1.2

Target Payout Ratio = ₹0.6

Adjustment Rate = ₹ 0.7

(a) ₹ 1.8

(b) ₹ 1.62

(c) ₹ 1.52

(d) ₹ 1.72

Ans: B

Sol: The correct answer is Rs. 1.62.

Lintner Model Formula:

• The Lintner model for dividend calculation is:
  DPS = DPS_{last year} + Adjustment Rate × (Target Payout × EPS − DPS_{last year})

Substitute Given Values:

• DPS_{last year} = Rs. 1.2.
• Target Payout × EPS = 0.6 × Rs. 3 = Rs. 1.8.
• Adjustment Rate = 0.7.

Compute DPS:

• DPS = 1.2 + 0.7 × (1.8 − 1.2).
• DPS = 1.2 + 0.7 × 0.6.
• DPS = 1.2 + 0.42 = Rs. 1.62.

Interpretation:

• The dividend for 2024 reflects a partial adjustment towards the target payout, ensuring stability in dividends distributed to shareholders.
• Companies use the adjustment rate to smoothen dividend changes, aligning them gradually with their long-term goals.

Other Related Points

Application of Lintner Model in Financial Strategy:

• The Lintner model reflects a firm’s cautious approach to dividend policy, prioritizing investor confidence through consistent payouts.
• Firms avoid drastic changes in dividends, mitigating potential negative market reactions caused by unexpected fluctuations.

Importance of Target Payout Ratio:

• The target payout ratio guides a firm's long-term dividend policy, balancing reinvestment in growth opportunities with rewarding shareholders.

Q69: An appeal that elaborates on a non-product related benefit or image and attempts to induce emotional responses from consumers is called:

(a) Physiological Appeals

(b) Informational Appeal

(c) Sociological Appeal

(d) Transformational Appeal

Ans: D

Sol: The correct answer is Transformational Appeal

Transformational Appeal:

• This type of appeal aims to create an emotional connection between the consumer and the brand. It focuses on non-product related benefits or the image of the brand, often portraying how the product can transform the consumer's life.
• In a financial enterprise context, a transformational appeal might highlight how using a particular financial service can lead to a more prosperous and secure future, thereby evoking feelings of hope and security.
• For example, a bank might use transformational appeal in its advertising to show how its savings plans can help consumers achieve their dreams of buying a home or sending their children to college.

Other Related Points

• Physiological Appeals:
  • These appeals focus on basic human needs such as hunger, thirst, and comfort. They are not typically used in financial marketing as they do not align with the nature of financial products and services.
• Informational Appeal:
  • This type of appeal provides factual information and rational arguments to persuade consumers. While this is useful in financial marketing to explain the benefits of a product or service, it does not focus on emotional responses.
• Sociological Appeal:
  • These appeals relate to societal norms and values, often targeting social status or community belonging. While they can be effective, they are different from transformational appeals which focus more on personal transformation and emotional connection.

Q70: Match the List-I with List-II

​

Choose the correct answer from the options given below:

(a) A-I, B-III, C-II, D-IV

(b) A-II, B-IV, C-I, D-III

(c) A-IV, B-II, C-III, D-I

(d) A-III, B-II, C-IV, D-I

Ans: D

Sol: The correct answer is 'A-III, B-II, C-IV, D-I'.

Forwards (A) matches with Derivative Market (III).

• Forwards are financial contracts that obligate the buyer to purchase, and the seller to sell, an asset at a predetermined future date and price. These are traded over-the-counter (OTC) and are part of the Derivative Market.
• Derivatives are financial instruments whose value is derived from the value of an underlying asset, which can include stocks, bonds, commodities, currencies, interest rates, and market indexes.
• Key Point: Forwards are used for hedging or speculation purposes in the financial markets.

Certificate of Deposits (B) matches with Money Market (II).

• Certificates of Deposits (CDs) are short to medium-term, interest-bearing, debt instruments offered by banks. They are considered low-risk and are traded in the Money Market.
• The Money Market deals with short-term borrowing and lending, typically involving financial instruments that are considered safe and liquid.
• Key Point: CDs provide a fixed interest rate to investors until the maturity date.

FPO (C) matches with Stock Market (IV).

• Follow-on Public Offer (FPO) is a process by which a company already listed on a stock exchange issues new shares to investors. This occurs in the Stock Market.
• FPOs are used by companies to raise additional capital after an initial public offering (IPO).
• Key Point: FPOs can be dilutive or non-dilutive, depending on whether new shares are issued or existing shareholders sell their shares.

IPO (D) matches with Primary Market (I).

• An Initial Public Offering (IPO) is the first time a company offers its shares to the public. This process occurs in the Primary Market.
• The Primary Market is where new securities are created and sold for the first time, allowing companies to raise capital directly from investors.
• Key Point: After the IPO, the shares are traded in the Secondary Market, where existing shares are bought and sold among investors.

Q71: Revenue from sale of products, ordinarily is reported as part of the earning in the period when :

(a) The sale is made

(b) The cash is collected

(c) The products are manufactured

(d) The profit is computed

Ans: A

Sol: The correct answer is sale is made.

Revenue from sale of products is reported when the sale is made:

• This aligns with the accrual basis of accounting, where revenue is recognized when it is earned, regardless of when the cash is received. This means that once the product is delivered or the service is performed, the revenue is recorded in the financial statements.
• Recognizing revenue at the point of sale provides a more accurate reflection of a company’s financial performance during a specific period.

Other Related Points

Revenue is reported when the cash is collected:

• This statement is incorrect under the accrual basis of accounting. Revenue recognition is not dependent on the timing of cash collection, but rather on when the revenue is earned.

Revenue is reported when the products are manufactured:

• This is not accurate. Manufacturing the product does not alone fulfill the revenue recognition criteria. Revenue is recognized when the product is sold and delivered to the customer.

Revenue is reported when the profit is computed:

• This is incorrect. Revenue recognition is based on the completion of the sale transaction and delivery of the product or service, not when the profit is calculated.

Q72: Which of the following is a precondition for applying the chi-square test?

(a) Data should not be presented in percentage or ratio format

(b) The sample must have at least 100 observations

(c) The sample should not be taken at random

(d) In any observation, all the individual observations need not be independent

Ans: A

Sol: The correct answer is Data should not be presented in percentage or ratio format.

Data should not be presented in percentage or ratio format:

• When applying the chi-square test, it is essential that data is in the form of raw frequencies or counts. Percentages or ratios can distort the results of the test because the chi-square test evaluates the observed frequencies against the expected frequencies based on the hypothesis.
• In a financial enterprise context, suppose you're analyzing customer purchasing behaviors across different product categories. The chi-square test needs the actual number of purchases in each category rather than the percentage of total purchases.

Other Related Points

The sample must have at least 100 observations:

• This is incorrect. While having a larger sample size improves the reliability of the chi-square test, there is no strict requirement that you must have at least 100 observations. The chi-square test can be used on smaller samples, although small sample sizes can affect the test's power and accuracy.

The sample should not be taken at random:

• This statement is incorrect. Random sampling is crucial for most statistical tests, including the chi-square test, to ensure that the sample accurately represents the population and to avoid biases.

In any observation, all the individual observations need not be independent:

• This is also incorrect. One of the key assumptions of the chi-square test is the independence of observations. This means that the occurrence of one observation should not influence the occurrence of another for the chi-square test to be valid.

Q73: Match the List-I with List-II
​
 Choose the correct answer from the options given below:

(a) A-I, B-II, C-III, D-IV

(b) A-II, B-I, C-III, D-IV

(c) A-II, B-III, C-IV, D-I

(d) A-III, B-IV, C-II, D-I

Ans: C

Sol: The correct answer is A-II, B-III, C-IV, D-I.

Hedger (A) matches with Reducing investment Risk (II).

• A hedger is an investor who seeks to minimize risk by making investments that offset potential losses. For example, a farmer selling crops might use futures contracts to lock in prices and protect against price fluctuations.
• Key Point: Hedging is a risk management strategy used to protect against market volatility.

Speculator (B) matches with Taking increased Risk willingly (III).

• Speculators are investors who engage in risky financial transactions in an attempt to profit from short-term market movements. They do not seek to minimize risk but rather to capitalize on it.
• Key Point: Speculators often use leverage and other high-risk strategies to maximize potential returns.

Arbitrageur (C) matches with Taking advantage of the mismatch of the prices in two markets (IV).

• An arbitrageur profits by exploiting price differences of the same asset in different markets. For example, buying a stock at a lower price in one market and selling it at a higher price in another.
• Key Point: Arbitrage helps in market efficiency by aligning prices across different markets.

Scalper (D) matches with Buying and selling shares quickly (I).

• A scalper buys and sells financial instruments within a very short time frame, often within minutes, to take advantage of small price movements. This requires quick decision-making and execution.
• Key Point: Scalping is a high-frequency trading strategy that relies on the ability to execute trades rapidly and efficiently.

Q74: The authentication to be affected by use of asymmetric crypto system and hash function is known as:

(a) E-commerce

(b) Virtual signature

(c) Digital signature

(d) E-verification

Ans: C

Sol: The correct answer is Digital signature.

Digital signature:

• A digital signature is a cryptographic technique that ensures the authenticity and integrity of a message, document, or transaction.
• It uses asymmetric cryptography, involving a public key and a private key, along with hash functions to create a unique signature for the data.
• In the context of a financial enterprise, digital signatures are crucial for securing financial transactions, contracts, and communications, ensuring they are not tampered with and are verifiable.
• This form of authentication is widely adopted in financial institutions to maintain the confidentiality and integrity of sensitive data.

Other Related Points

E-commerce:

• This refers to commercial transactions conducted electronically on the internet. While digital signatures are used in e-commerce for transaction security, the term itself is broader and not specifically related to the cryptographic methods mentioned.

Virtual signature:

• This term is often confused with digital signature but is not a standard term in cryptography. It can be considered a misnomer and does not accurately describe the process involving asymmetric cryptography and hash functions.

E-verification:

• This generally refers to the process of electronically verifying the identity of a person or entity. While digital signatures can be a part of e-verification, the term itself is more general and encompasses various other methods and technologies.

Q75: Arrange the following new product planning process in proper sequence. 

A. Idea screening

B. Idea generation

C. Concept Development and testing

D. Market strategy development

E. Business Analysis

Choose the correct answer from the options given below:

(a) A, B, C, D, E

(b) B, A, C, D, E

(c) A, B, C, E, D

(d) E, D, B, A, C

Ans: B

Sol: The correct answer is B, A, C, D, E.

Idea Generation (B):

• This is the initial step in the new product planning process where ideas for new products are generated.
• It involves brainstorming sessions, market research, and soliciting suggestions from employees, customers, and other stakeholders to come up with innovative product ideas.

Idea Screening (A):

• After generating a pool of ideas, the next step is to screen these ideas to identify those with the most potential.
• This involves evaluating each idea against certain criteria, such as feasibility, market potential, and alignment with company goals, to narrow down the list of ideas.

Concept Development and Testing (C):

• In this stage, the selected ideas are developed into detailed product concepts and tested with target consumers.
• Concept testing helps to gather consumer feedback and refine the product concept before moving forward with development.

Market Strategy Development (D):

• Once the concept is validated, the next step is to develop a comprehensive marketing strategy.
• This includes defining the target market, positioning the product, and outlining the marketing mix (product, price, place, promotion) to achieve the desired market penetration and growth.

Business Analysis (E):

• The final step involves conducting a detailed business analysis to assess the financial viability of the new product.
• This includes estimating sales, costs, and profitability to ensure the product aligns with the company’s financial goals and provides a good return on investment.

Other Related Points

Importance of a Structured Process:

• A structured new product planning process helps ensure that all critical aspects of product development are addressed systematically.
• It reduces the risk of product failure by thoroughly evaluating ideas and concepts before significant resources are invested.

Role of Cross-Functional Teams:

• Involving cross-functional teams in the planning process ensures diverse perspectives and expertise, leading to more innovative and well-rounded product concepts.
• Collaboration among departments like R&D, marketing, and finance is crucial for the successful development and launch of new products.

Q76: What is the valuation formula based on the Walter's model if
 P: Price per equity share
 D: Dividend per share
 E: Earnings per share
 r: Rate of return on investment
 k: Cost of equity

(a) 

(b) 

(c) 

(d) 

Ans: C

Sol: The correct answer is P = [D + (E - D)r/k]k

Walter’s Model of Dividend Policy:

• The Walter’s model provides a theoretical framework to show the relationship between dividend policies and the valuation of the firm.
• According to this model, the market price of a share is the sum of the present value of all dividends and the present value of all retained earnings.
• The formula for Walter’s model is given by:
  • P = [D + (E - D)r/k]k
• Where:
  • P is the price per equity share.
  • D is the dividend per share.
  • E is the earnings per share.
  • r is the rate of return on investment.
  • k is the cost of equity.
• In this formula:
  • (D) = Dividend income.
  • ((E - D)) = Retained earnings.
  • (r/k) = Ratio of the return on retained earnings to the cost of equity.
• Hence, the value of a share (P) according to Walter’s Model is:
  • P = [D + (E - D)r/k]k

Other Related Points

Importance of Walter's Model:

• Walter's model suggests that the dividend policy can influence the market price of a share based on the return on investments and the cost of equity.
• It implies that if the firm’s return on investment (r) is greater than the cost of equity (k), retaining earnings to reinvest in the firm will create value, thereby increasing the market price of the shares.
• Conversely, if (r) is less than (k), paying out dividends instead of retaining earnings will be beneficial for shareholders and increase the firm's value.

Q77: Which of the following are included under EPRG framework of internationalisation? 

A. Ecocentrism

B. Ethnocentrism

C. Polycentrism

D. Regiocentrism

E. Regiocentrism

Choose the correct answer from the options given below:

(a) B, C, D & E Only

(b) A, B, C & E Only

(c) A, C, D & E Only

(d) A, B, D & E Only

Ans: A

Sol: The correct answer is B, C, D & E Only.

Let's analyze each component of the EPRG framework:

Ethno centrism (B)

• Ethno centrism refers to the orientation where the company considers the home country to be superior and applies the home country's values and practices to their international operations.
• Reason for inclusion: This is a key aspect of the EPRG framework as it highlights the home country orientation in international business strategy.

Poly centrism (C)

• Poly centrism involves the recognition and adaptation to the host country's culture and practices, allowing for a more localized approach in each country of operation.
• Reason for inclusion: This is part of the EPRG framework as it emphasizes the importance of adapting to the host country's environment in international business.

Regio centrism (D)

• Regio centrism focuses on grouping countries into regions and developing strategies that are tailored to the region as a whole rather than individual countries.
• Reason for inclusion: This is included in the EPRG framework as it highlights the regional approach to international business strategy.

Geo centrism (E)

• Geo centrism takes a global approach, viewing the world as a single market and seeking to develop integrated strategies that are effective worldwide.
• Reason for inclusion: This is a crucial part of the EPRG framework as it represents a global orientation in international business strategy.

Eco centrism (A)

• Eco centrism is not a part of the traditional EPRG framework. It refers to an environmental-centric approach, emphasizing the importance of ecological sustainability.
• Reason for exclusion: Although eco centrism is important in modern business practices, it is not one of the original components of the EPRG framework.

Therefore, the components that are included under the EPRG framework of internationalisation are B: Ethno centrism, C: Poly centrism, D: Regio centrism, and E: Geo centrism. This makes option 1: "B, C, D & E Only" the correct choice.

Q78: In the context of an organisation, the process of making subordinates to act in a desired manner to achieve certain organisational goals is known as:

(a) Employee participation

(b) Co-partnership

(c) Affiliation

(d) Motivation

Ans: D

Sol: The correct answer is Motivation.

Motivation:

• In an organizational context, motivation is the process of stimulating people to act in a desired manner to achieve specific organizational goals.
• Motivation involves understanding and addressing the individual needs and drives of employees to encourage productive behavior.
• Effective motivation can lead to increased employee engagement, higher productivity, and the achievement of organizational objectives.
• Methods to motivate employees include rewards, recognition, opportunities for growth, and creating a positive work environment.

Other Related Points

Employee participation:

• This refers to the involvement of employees in decision-making processes within the organization.
• While it can enhance motivation, it is not the same as the process of motivating employees.

Co-partnership:

• Co-partnership involves employees owning shares in the company they work for, leading to shared ownership and profit-sharing.
• Although it can motivate employees by aligning their interests with the company’s success, it is not the direct process of motivating.

Affiliation:

• Affiliation refers to the need for belonging and being part of a group.
• It is one of the intrinsic motivators but not the overall process of motivating employees.

Q79: Which of the following are the assumption underlying MM Theory of capital structure? 

A. Perfect capital Market

B. Heterogeneous Expectations

C. Absence of Taxes

D. 100% Dividend Payout

E. Equivalent Risk Class

Choose the correct answer from the options given below:

(a) A, C, & E Only

(b) B, C & E Only

(c) A, B, C & D Only

(d) B, C, D & E Only

Ans: A

Sol: The correct answer is  A, C, & E Only.

Perfect Capital Market

• This assumption implies that there are no transaction costs, no bankruptcy costs, and all participants have equal access to information.
• Reason for inclusion: A perfect capital market is a fundamental assumption in the MM Theory as it eliminates market imperfections that could affect capital structure decisions.

Heterogeneous Expectations

• This assumption means that investors have different expectations about future returns and risks.
• Reason for exclusion: The MM Theory assumes homogeneous expectations, meaning all investors have the same expectations about future earnings and risks.

Absence of Taxes

• This assumption means that there are no corporate or personal taxes affecting the firm's cash flows.
• Reason for inclusion: The MM Theory originally assumes no taxes to simplify the analysis and focus on the impact of capital structure on firm value.

100% Dividend Payout

• This assumption means that the firm pays out all its earnings as dividends to shareholders.
• Reason for exclusion: The MM Theory does not specifically assume a 100% dividend payout ratio; it focuses on the impact of capital structure irrespective of the firm's dividend policy.

Equivalent Risk Class

• This assumption means that firms can be grouped into classes that have the same risk characteristics.
• Reason for inclusion: The MM Theory assumes that firms within the same risk class are comparable, making it easier to analyze the impact of different capital structures.

Therefore, the assumptions that strictly align with the MM Theory of capital structure are A: Perfect Capital Market, C: Absence of Taxes, and E: Equivalent Risk Class. This makes option 1: "A, C, & E Only" the correct choice.

Q80: The supply function is given as q = -100 + 10p. Find the elasticity of supply (Es) using point method, when price is Rs. 15.

(a) Es = 2

(b) Es = 3

(c) Es = 3.5

(d) Es = 4

Ans: B

Sol: The correct answer is Es = 3.

Elasticity of supply using the point method is given by:

• Es = (dq/dp) * (p/q), where dq/dp is the derivative of the supply function with respect to price.
• The supply function is given as q = -100 + 10p:
• Differentiate q with respect to p:
  • dq/dp = 10
• When price (p) is Rs. 15:
  • q = -100 + 10 * 15
  • q = -100 + 150
  • q = 50
• Substitute values into the elasticity formula:
  • Es = (10) * (15/50)
  • Es = 150/50
  • Es = 3

Supply elasticity of 3 indicates a relatively elastic supply:

• For a 1% increase in price, the quantity supplied increases by 3%.

Other Related Points

Understanding Elasticity:

Price Elasticity of Supply (Es) measures the responsiveness of the quantity supplied to a change in price:

• High elasticity (Es > 1) indicates that suppliers can ramp up production easily when prices rise.
• Low elasticity (Es < 1) suggests that production capacity is limited or adjustments take longer.

Importance for financial enterprises:

• Companies need to understand supply elasticity to manage inventory, production planning, and pricing strategies effectively.
• Elasticity insights help in forecasting revenue impacts due to price changes, critical for financial planning and stability.

Interplay with Market Dynamics:

• Elasticity affects decision-making in resource allocation, investment, and competitive positioning within a market.

Q81: Arrange the following stages of securitisation in the correct sequence. 

A. Creating an SPV

B. Transfer to SPV

C. abstract growth

D. Seasoning

E. Issue of securities

Choose the correct answer from the options given below:

(a) A, B, C, D, E

(b) B, C, A, D, E

(c) D, C, A, B, E

(d) D, C, B, A, E

Ans: C

Sol: The correct answer is D, C, A, B, E.

Seasoning (D):

• This initial step involves allowing the loans or assets to demonstrate a history of consistent performance. This period helps in assessing the credit quality and stability of the assets.
• Seasoning provides potential investors with the assurance that the asset pool has undergone a period of performance observation, reducing the perceived risk.

Abstract Growth (C):

• In this stage, the performance and growth potential of the underlying assets are abstracted and analyzed. This step helps in establishing the asset pool's viability for securitization.
• It involves assessing the expected future performance and determining the value proposition for investors.

Creating an SPV (A):

• An SPV (Special Purpose Vehicle) is created to isolate the financial risk. The SPV is a separate legal entity established to purchase and manage the asset pool.
• Creating an SPV helps in segregating the securitized assets from the originator’s balance sheet, ensuring that investors have recourse only to the SPV's assets.

Transfer to SPV (B):

• Following the creation of the SPV, the originator transfers the asset pool to the SPV. This transfer is crucial for legal and financial restructuring.
• This step involves the sale or assignment of the assets to the SPV, which then holds the assets and issues securities backed by them.

Issue of securities (E):

• The final stage involves the issuance of securities by the SPV to investors. These securities are backed by the asset pool and provide returns based on the pool's performance.
• Investors receive these securities, which can be structured into different tranches with varying risk and return profiles to meet diverse investment preferences.

Other Related Points

Securitization in Financial Enterprises:

• Securitization allows financial enterprises to convert illiquid assets into liquid securities, providing them with immediate capital while transferring risk to investors.
• This process can increase a financial institution's liquidity and improve its balance sheet by removing potentially risky assets.

Q82: Which of the following is not a feature of capitalist economy?

(a) Right of private property

(b) Freedom of choice to consumers

(c) Government Interference

(d) High level of competition

Ans: C

Sol: The correct answer is Government Interference

Government Interference:

• In a capitalist economy, the role of the government is minimal, with the market forces of supply and demand predominantly guiding economic decisions.
• The lack of government interference is a fundamental characteristic of capitalism, promoting free enterprise and minimal regulatory constraints.
• Government intervention is more characteristic of mixed or planned economies where the state plays a significant role in resource allocation and economic planning.

Other Related Points

Right of private property:

• This is a core feature of a capitalist economy, allowing individuals and businesses to own and control assets and property.
• Private property rights encourage investment, innovation, and efficient resource utilization.

Freedom of choice to consumers:

• In capitalism, consumers have the freedom to choose from a variety of goods and services, driving competition and improving quality and efficiency.
• Consumer sovereignty is essential, as it determines the allocation of resources based on demand.

High level of competition:

• Capitalist economies are characterized by high levels of competition among businesses, leading to better products, services, and innovation.
• Competition ensures that resources are used efficiently and that prices remain competitive.

Q83: Which of the following is NOT a part of micro environment?

(a) Suppliers

(b) Customers

(c) Competitors

(d) Technology

Ans: D

Sol: The correct answer is Technology.

Technology:

• Technology is considered part of the macro environment, not the micro environment.
• It influences industries and markets broadly, impacting various aspects of society, business operations, and economic activities on a large scale.
• In the context of a financial enterprise, technology includes advancements like online banking, fintech innovations, cybersecurity measures, and blockchain technology, which affect the broader financial ecosystem.

Other Related Points

Suppliers:

• Suppliers are part of the micro environment as they provide the necessary resources for businesses to operate.
• In a financial enterprise, suppliers could include software providers, office equipment suppliers, and other vendors who support daily operations.

Customers:

• Customers are a critical component of the micro environment, directly affecting business success.
• For financial enterprises, customers include individual clients, businesses, and other entities utilizing financial products and services.

Competitors:

• Competitors are also part of the micro environment, as they directly influence a company’s market share and strategic planning.
• In the financial sector, competitors could be other banks, investment firms, or fintech companies offering similar financial products and services.

Q84: Nicosia Model of consumer behavior is divided into four major fields, which of the following is the third field under this model?

(a) Feedback

(b) Act of purchase

(c) Firm's and consumer's attributes

(d) Search and evaluation

Ans: B

Sol: The correct answer is Act of purchase.

Act of purchase:

• The Nicosia Model of consumer behavior is a comprehensive framework that seeks to explain consumer decision-making processes.
• It is divided into four major fields: (1) Consumer attitudes based on firm's messages, (2) Search and evaluation, (3) Act of purchase, and (4) Feedback.
• The third field, "Act of purchase," focuses on the actual purchase decision process, including the selection of the product and the transaction itself.
• This field is crucial as it represents the culmination of the consumer's search and evaluation phase, leading to the final decision to buy.

Additional Information

Feedback:

• This is the fourth field in the Nicosia Model, not the third. It involves the post-purchase stage where the consumer evaluates their satisfaction with the product, which can influence future purchasing behavior.

Firm's and consumer's attributes:

• This is not a distinct field within the Nicosia Model but rather elements that influence the first field. It encompasses the characteristics and attributes of both the firm and the consumer that impact the consumer's attitudes and initial exposure to the firm's messages.

Search and evaluation:

• This is the second field in the Nicosia Model. It involves the consumer's process of gathering information and evaluating different products or brands before making a purchase decision.

Q85: Which of the following can file a petition for winding up of a company? 

A. Shareholders

B. The creditor or prospective creditors

C. The legal heirs

D. The person authorized by the central government

Choose the correct answer from the options given below:

(a) A, B & C Only

(b) B, C & D Only

(c) A, C & D Only

(d) A, B & D Only

Ans: D

Sol: The correct answer is A, B & D Only.

Let's analyze each factor:

Shareholders

• Shareholders are the owners of the company and have a vested interest in its operations and financial health.
• They have the right to file a petition for winding up if they believe it is in the best interest of the company or if the company is unable to continue its operations effectively.
• Reason for inclusion: Shareholders are directly affected by the company's performance and are legally empowered to initiate winding up proceedings.

The creditor or prospective creditors

• Creditors are individuals or entities to whom the company owes money. Prospective creditors are those who may have claims against the company in the future.
• Creditors have the right to file a petition for winding up if the company is unable to pay its debts, thereby protecting their financial interests.
• Reason for inclusion: Creditors have a direct financial stake in the company's ability to pay its debts and are legally entitled to seek winding up to recover their dues.

The legal heirs

• Legal heirs are individuals who inherit the rights and obligations of a deceased person.
• While they may have an interest in the company's affairs, they are not typically empowered to file a petition for winding up unless they are also shareholders or creditors.
• Reason for exclusion: Legal heirs do not have an automatic right to file for winding up unless they fall into another qualifying category such as shareholders or creditors.

The person authorised by the central government

• The central government may authorize a person to file a petition for winding up in cases where it is necessary to protect public interest or ensure compliance with regulatory requirements.
• This includes situations where the company is involved in fraudulent or illegal activities.
• Reason for inclusion: The central government has the authority to intervene in cases of public interest or regulatory non-compliance, making this a valid reason for inclusion.

Therefore, the correct factors that can file a petition for winding up of a company are A: Shareholders, B: The creditor or prospective creditors, and D: The person authorised by the central government. This makes option 4: "A, B & D Only" the correct choice.

Q86: Which of the following means management should promote a team-spirit of unity and harmony among employees?

(a) Unity of Command

(b) Unity of Direction

(c) Scalar chain

(d) Esprit De Corps

Ans: D

Sol: The correct answer is Esprit De Corps

Esprit De Corps:

• Esprit De Corps is a management principle that emphasizes the importance of promoting team spirit, unity, and harmony among employees. It encourages a sense of belonging and solidarity within the team, which can lead to improved collaboration, morale, and productivity in a financial enterprise.
• In a financial enterprise, fostering a strong Esprit De Corps can enhance communication and cooperation among employees, leading to better problem-solving and innovation.
• This principle can also help in retaining talent and reducing employee turnover, as a positive work environment is often associated with higher job satisfaction and loyalty.

Other Related Points

Unity of Command:

• This principle states that each employee should receive orders from one superior only, ensuring clear lines of authority and reducing confusion. However, it does not specifically address the promotion of team spirit and harmony among employees.

Unity of Direction:

• This principle ensures that activities with the same objective are directed by one manager using one plan. While it helps in aligning efforts towards organizational goals, it does not focus on fostering unity and harmony among employees.

Scalar Chain:

• The Scalar Chain principle refers to the clear line of authority from the top management to the lowest ranks. It ensures proper communication channels within the organization but does not specifically promote team spirit or unity among employees.

Q87: Arrange the steps of research process in the correct logical order. 

A. Formulate a research question

B. Literature review

C. Collect data

D. Develop a research plan

E. Interpret the result

Choose the correct answer from the options given below:

(a) B, A, D, C, E

(b) A, B, D, C, E

(c) A, C, D, B, E

(d) B, A, C, D, E

Ans: B

Sol: The correct answer is A, B, D, C, E.

Formulate a research question (A):

• This is the initial step in the research process where the researcher identifies and defines the specific problem or question that they aim to address through their study.
• It serves as the foundation for the entire research project, guiding the direction and scope of the investigation.

Literature review (B):

• After formulating the research question, the next step is to review existing literature related to the topic.
• This involves gathering and analyzing previous research, theories, and findings to understand the current state of knowledge and to identify gaps that the new research can fill.

Develop a research plan (D):

• Based on the research question and literature review, the researcher then develops a detailed plan outlining the methodology, tools, and procedures to be used for data collection and analysis.
• This step ensures that the research process is systematic and organized, providing a clear roadmap for conducting the study.

Collect data (C):

• With the research plan in place, the next step is to collect the necessary data.
• Data collection can involve various methods such as surveys, experiments, observations, or archival research, depending on the nature of the study.

Interpret the result (E):

• The final step involves analyzing the collected data to draw meaningful conclusions and interpretations.
• This step helps in answering the research question, validating or refuting hypotheses, and providing insights and recommendations based on the findings.

Other Related Points

Importance of the Research Process:

• The research process is a systematic approach that ensures the study is conducted in a structured and coherent manner.
• Each step builds upon the previous one, contributing to the overall rigor and validity of the research.

Iterative Nature:

• The research process is often iterative, meaning that researchers may need to revisit and refine earlier steps based on new insights and findings.
• This iterative approach helps in continuously improving the quality and relevance of the research.

Q88: The profit volume ratio of a company is 50% and the margin of safety is 40%. Calculate net-profit if the sales volume is Rs. 1,00,000.

(a) 10,000

(b) 18,000

(c) 20,000

(d) 25,000

Ans: C

Sol: The correct answer is 20,000.

Profit Volume Ratio (P/V Ratio) is given as 50%:

• P/V Ratio = (Contribution/Sales) * 100
• It indicates that 50% of the sales contribute to covering fixed costs and profit.

Margin of Safety (MOS) is given as 40%:

• MOS = (Actual Sales - Break-Even Sales) / Actual Sales * 100
• It indicates the percentage by which sales can drop before the company reaches its break-even point.

Calculate the Break-Even Sales:

• MOS = 40% implies that break-even sales are 60% of the actual sales (100% - 40% = 60%).
• Break-Even Sales = 60% of Actual Sales
• Break-Even Sales = 0.60 * Rs. 1,00,000
• Break-Even Sales = Rs. 60,000

Calculate the Contribution Margin:

• Contribution = Sales * P/V Ratio
• Contribution = Rs. 1,00,000 * 50%
• Contribution = Rs. 1,00,000 * 0.50
• Contribution = Rs. 50,000

Calculate the Fixed Costs:

• At break-even, the total contribution equals the fixed costs.
• Fixed Costs = Break-Even Sales * P/V Ratio
• Fixed Costs = Rs. 60,000 * 50%
• Fixed Costs = Rs. 60,000 * 0.50
• Fixed Costs = Rs. 30,000

Calculate the Net Profit:

• Profit = Total Contribution - Fixed Costs
• Profit = Rs. 50,000 - Rs. 30,000
• Profit = Rs. 20,000

Other Related Points

Financial implications of P/V Ratio and Margin of Safety:

P/V Ratio:

• A high P/V Ratio indicates efficient cost management and high profitability per unit of sales, crucial for financial planning and decision making.

Margin of Safety:

• A high Margin of Safety indicates financial stability and lower risk of incurring losses, providing a buffer against sales volatility.

Strategic uses:

• Understanding these metrics helps in setting sales targets, pricing strategies, and optimizing cost structures for better financial health and profitability.

Q89: "Fiduciary relationship" is a relationship based on:

(a) Legal obligations

(b) Absolute trust and reliance

(c) Trade relation

(d) Monetary benefits

Ans: B

Sol: The correct answer is Absolute trust and reliance.

Fiduciary relationship is a relationship based on absolute trust and reliance:

• A fiduciary relationship involves a person (the fiduciary) who is entrusted with the duty to act in the best interests of another party (the principal).
• This relationship is characterized by a high degree of trust and reliance placed by the principal on the fiduciary, often in matters involving financial management, legal advice, or healthcare.
• In financial enterprises, fiduciaries include financial advisors, trustees, and corporate officers who must act with loyalty and care towards their clients or stakeholders.
• Fiduciaries are legally and ethically required to avoid conflicts of interest and to act in the best interests of the principals they serve.

Other Related Points

Legal obligations:

• While fiduciary relationships do involve legal obligations, they are primarily based on trust and reliance. Legal obligations are a broader concept and can apply to many types of relationships that do not necessarily involve fiduciary duties.

Trade relation:

• This is incorrect. A trade relation typically refers to the commercial interactions between two entities, such as buyers and sellers, and does not inherently involve the level of trust and reliance seen in fiduciary relationships.

Monetary benefits:

• Fiduciary relationships are not based on monetary benefits. While fiduciaries may be compensated for their services, the essence of the relationship is the duty to act in the best interests of the principal, not personal financial gain.

Q90: Which of the following is the most frequently held meeting of a company?

(a) Statutory Meeting

(b) Annual General Meeting

(c) Class Meeting

(d) Directors’ Meeting

Ans: D

Sol: The correct answer is Directors’ Meeting.

Directors’ Meeting:

• Directors’ Meetings are typically held more frequently than other types of meetings within a company.
• These meetings are crucial for making important decisions regarding the company's operations, strategies, and governance.
• They can occur monthly, quarterly, or as needed, depending on the company's requirements and the nature of its business.

Other Related Points

Statutory Meeting:

• This is a one-time meeting required by law to be held by a newly incorporated company, usually within a certain period after its incorporation.
• It is not a recurring event, hence not the most frequently held meeting.

Annual General Meeting (AGM):

• An AGM is held once a year and is a mandatory meeting where shareholders gather to discuss the company's annual performance, elect directors, and address other major decisions.
• Its annual occurrence makes it less frequent compared to Directors’ Meetings.

Class Meeting:

• Class meetings are held to discuss matters that affect a particular class of shareholders, such as preference or ordinary shareholders.
• These meetings are infrequent and occur only when specific issues concerning that class arise.

Q91: Solar Tech Ltd., a global solar panel manufacturer, sought to expand into emerging markets to counteract stagnation in its domestic market. After analyzing global opportunities, the company targeted India due to its favourable renewable energy policies and growing demand for sustainable energy solutions. 

Solar Tech Ltd. established a joint venture with a local firm to leverage their market knowledge and distribution network. They also customized their products to meet local regulatory standards and climatic conditions. Despite initial challenges, such as navigating regulatory complexities and cultural differences, Solar Tech achieved a 25% market share within two years.

The success of the company was attributed to strategic partnerships, product customization, and effective market entry tactics. However, it faced ongoing issues with supply chain disruption and the need for continuous innovation to stay competitive.

How did Solar Tech Ltd. initially approach the market entry into India?

(a) By setting up a wholly owned subsidiary

(b) Through a joint venture with a local firm

(c) By acquiring a local competition

(d) By exporting products directly

Ans: B

Sol: The correct answer is Through a joint venture with a local firm.

• Through a joint venture with a local firm:
  • Solar Tech Ltd. entered the Indian market through a joint venture with a local firm. This allowed the company to leverage the local firm's market knowledge and distribution network, which is essential for navigating the complex regulatory and cultural landscape of a foreign market.
  • A joint venture in international markets is often a strategic move to share risks and combine resources, making it particularly valuable for financial enterprises looking to mitigate initial challenges such as market unfamiliarity and high entry costs.
  • For Solar Tech, this approach provided the necessary support for quick adaptation and ensured a successful market entry strategy, as evidenced by their significant market share within two years.

Other Related Points

By setting up a wholly owned subsidiary:

• This option is incorrect. The passage clearly states that Solar Tech chose a joint venture, not a wholly owned subsidiary. A wholly owned subsidiary would have required more direct control and higher initial investment, which was not the approach taken by Solar Tech in this case.

By acquiring a local competition:

• This is also incorrect. The passage does not mention any acquisitions. Instead, Solar Tech entered the Indian market through a joint venture, which suggests a more collaborative approach rather than an aggressive acquisition strategy.

By exporting products directly:

• This option is incorrect. While exporting could be a simpler method of market entry, the passage indicates that Solar Tech did more than just export products. The company worked on customizing products and forming strategic partnerships, which would be more difficult to achieve through direct exports alone.

Q92: Solar Tech Ltd., a global solar panel manufacturer, sought to expand into emerging markets to counteract stagnation in its domestic market. After analyzing global opportunities, the company targeted India due to its favourable renewable energy policies and growing demand for sustainable energy solutions. 

Solar Tech Ltd. established a joint venture with a local firm to leverage their market knowledge and distribution network. They also customized their products to meet local regulatory standards and climatic conditions. Despite initial challenges, such as navigating regulatory complexities and cultural differences, Solar Tech achieved a 25% market share within two years.

The success of the company was attributed to strategic partnerships, product customization, and effective market entry tactics. However, it faced ongoing issues with supply chain disruption and the need for continuous innovation to stay competitive.

What was a key factor in Solar Tech's ability to achieve a 25% market share in India?

(a) Price reduction

(b) Aggressive advertising campaigns

(c) Strategic partnership and product customization

(d) Government subsidies

Ans: C

Sol: The correct answer is Strategic partnership and product customization.

Strategic partnership and product customization:

• Solar Tech Ltd. partnered with a local firm in India, allowing it to tap into local market knowledge, distribution networks, and consumer preferences. This collaboration proved essential in successfully navigating India's market complexities.
• Product customization was another key factor, as Solar Tech tailored its offerings to meet local regulatory standards and climatic conditions, making its products more suitable for the Indian market.
• For financial enterprises, forming strategic partnerships and customizing products to meet the needs of local markets are critical components of entering and expanding in new regions, as they minimize risk and maximize market relevance.

Other Related Points

Price reduction:

• This option is incorrect. The passage does not indicate that Solar Tech achieved its market share through price reduction. The company focused more on strategic partnerships and product adaptation rather than reducing prices.

Aggressive advertising campaigns:

• This is not mentioned in the passage as a key factor for the company’s success. While marketing could play a role, the passage highlights the importance of partnerships and product customization over advertising.

Government subsidies:

• While government support for renewable energy may have been a factor, the passage focuses on the company's efforts to establish joint ventures and tailor products for the local market as the key drivers of success, not specifically government subsidies.

Q93: Solar Tech Ltd., a global solar panel manufacturer, sought to expand into emerging markets to counteract stagnation in its domestic market. After analyzing global opportunities, the company targeted India due to its favourable renewable energy policies and growing demand for sustainable energy solutions. 

Solar Tech Ltd. established a joint venture with a local firm to leverage their market knowledge and distribution network. They also customized their products to meet local regulatory standards and climatic conditions. Despite initial challenges, such as navigating regulatory complexities and cultural differences, Solar Tech achieved a 25% market share within two years.

The success of the company was attributed to strategic partnerships, product customization, and effective market entry tactics. However, it faced ongoing issues with supply chain disruption and the need for continuous innovation to stay competitive.

What was the primary reason for Solar Tech to expand its business to the Indian market?

(a) Declining domestic demand

(b) Favourable policies and growing demand in India

(c) Lower production cost in India

(d) Saturated international market

Ans: B

Sol: The correct answer is Favourable policies and growing demand in India.

Favourable policies and growing demand in India:

• India's renewable energy policies provided incentives and regulatory support, making it an attractive market for Solar Tech Ltd. to expand.
• The country’s growing demand for sustainable energy solutions created significant opportunities for solar panel manufacturers to capture market share.
• Focusing on emerging markets with such favourable conditions aligns with strategic financial decisions to maximize revenue and counteract stagnation in domestic markets.

Other Related Points

Declining domestic demand:

• This is incorrect. While domestic stagnation motivated the search for new markets, the primary reason for targeting India was its favourable conditions, not merely a reaction to declining demand at home.

Lower production cost in India:

• While cost advantages might be a consideration, the passage highlights favourable policies and market demand as the main drivers for the expansion, not production cost.

Saturated international market:

• This is incorrect. The international market is not described as saturated; instead, the focus is on the attractive opportunity presented by India’s policies and demand.

Q94: Solar Tech Ltd., a global solar panel manufacturer, sought to expand into emerging markets to counteract stagnation in its domestic market. After analyzing global opportunities, the company targeted India due to its favourable renewable energy policies and growing demand for sustainable energy solutions. 

Solar Tech Ltd. established a joint venture with a local firm to leverage their market knowledge and distribution network. They also customized their products to meet local regulatory standards and climatic conditions. Despite initial challenges, such as navigating regulatory complexities and cultural differences, Solar Tech achieved a 25% market share within two years.

The success of the company was attributed to strategic partnerships, product customization, and effective market entry tactics. However, it faced ongoing issues with supply chain disruption and the need for continuous innovation to stay competitive.

Despite its success, what ongoing issue did Solar Tech Ltd. encounter?

(a) Decreasing customer base

(b) Increased competition from local brands

(c) Supply chain disruption

(d) Difficulties in securing financing

Ans: C

Sol: The correct answer is Supply chain disruption.

Supply chain disruption:

• Supply chain disruption refers to interruptions in the production, procurement, or delivery processes that can hinder business operations.
• For Solar Tech Ltd., issues such as logistical delays, shortage of raw materials, or geopolitical challenges could significantly impact production and delivery.
• In financial enterprises, supply chain disruptions lead to increased costs, delayed revenue generation, and potential loss of market share, making it critical to address these challenges proactively.
• This ongoing issue requires efficient supply chain management, diversification of suppliers, and leveraging technology to mitigate risks and maintain operational efficiency.

Other Related Points

Decreasing customer base:

• This option is incorrect as the passage indicates Solar Tech Ltd. achieved a significant market share of 25% within two years, showcasing growth in its customer base.

Increased competition from local brands:

• While competition from local brands is a common challenge in emerging markets, the passage does not mention it as an ongoing issue faced by Solar Tech Ltd.

Difficulties in securing financing:

• This option is incorrect because the passage does not indicate financial constraints or issues in securing funds as a challenge for Solar Tech Ltd.

Q95: Read the following paragraph and answer the questions. 

Solar Tech Ltd, a global solar panel manufacturer, plans to expand in emerging markets to counter the slowdown in its domestic market. After analysing global opportunities, the company targeted India due to favourable renewable energy policies and growing demand for sustainable energy solutions.

Solar Tech Ltd. formed a joint venture with a local firm to leverage market knowledge and distribution network. They also modified their products to suit regulatory standards and climatic conditions. Despite initial challenges such as regulatory complexities and cultural barriers, Solar Tech achieved 25% market share within two years. The company's success was attributed to strategic partnerships, product customization and effective market entry strategies. However, it faces issues such as current supply chain disruptions and the need to constantly innovate to stay competitive.

What were some of the challenges faced by Solar Limited in the Indian market?

(a) Labor shortages and high tariffs

(b) High inflation rate

(c) Political instability and poor infrastructure

(d) Regulatory complexities and cultural differences

Ans: D

Sol: Regulatory complexities and cultural differences:

• Solar Tech Ltd. faced significant challenges in navigating India's regulatory framework which could include different state and central government policies regarding renewable energy.
• Cultural differences also posed a challenge, as understanding the local market preferences, business practices, and consumer behavior required adaptation and local expertise.
• The company had to modify its products to comply with local regulatory standards and optimize them for India's climatic conditions, which likely involved additional research and development costs and time.
• These complexities necessitated forming a joint venture with a local firm to leverage their market knowledge and distribution network, aiding in overcoming these challenges.

Other Related Points

Labor shortages and high tariffs:

• This was not mentioned as a challenge in the provided passage. While labor shortages and high tariffs can be significant barriers in many markets, they were not highlighted by Solar Tech Ltd. as issues in their expansion to India.

High inflation rate:

• The passage did not mention high inflation rates as a challenge for Solar Tech Ltd. in the Indian market. Financial metrics such as inflation can affect business operations, but it was not specified here as one of the primary obstacles.

Political instability and poor infrastructure:

• No evidence or mention in the passage indicates that political instability or poor infrastructure were direct challenges faced by Solar Tech Ltd. in India. The company's focus seemed more on regulatory and cultural aspects.

Q96: The finance manager of ABC Ltd., a company based in Bangalore has gone on vacation to an island with his family. The island has very poor connectivity and hence he is unable to make or receive calls. The CEO of the company sent him a SMS to provide certain information related to the financial statement as he was unable to connect due to network problems and CEO has a meeting with the chairman next day. 

The finance manager has no documents with him and he was also not able to take the help of internet to send the desired information due to lack of internet facility on the island. On the basis of his memory, he was able to send the following information to the CEO through SMS, which was delivered after 2 hours.

a) Current Debt to Total Debt Ratio : 0.40
b) Total Debt to owner’s equity : 0.60
c) Fixed Assets to owner’s equity : 0.60
d) Total Assets turnover : 2 Times
e) Inventory turnover : 8 Times
f) Owner’s equity : ₹1,00,000

The CEO is puzzled to get the SMS, as he was unable to find the required information. You are required to help the CEO in finding relevant information from the SMS as indicated in the following questions:

What would be the value of fixed assets as per the ratio given in the case?

(a) ₹ 50,000

(b) ₹ 60,000

(c) ₹ 70,000

(d) ₹ 75,000

Ans: B

Sol: The correct answer is ₹ 60,000.

Fixed Assets to Owner’s Equity Ratio: 0.60

• The fixed assets to owner's equity ratio provided in the SMS is 0.60.
• This ratio means that fixed assets are 60% of the total owner's equity.
• Given that the owner's equity is ₹1,00,000, we can calculate the fixed assets as follows:
• Fixed Assets = Owner's Equity × Fixed Assets to Owner’s Equity Ratio
• Fixed Assets = ₹1,00,000 × 0.60 = ₹60,000

Other Related Points

Other Ratios Provided in the SMS:

• Current Debt to Total Debt Ratio: 0.40 - Indicates the proportion of current debt to total debt.
• Total Debt to Owner’s Equity: 0.60 - Indicates the leverage or extent of debt financing compared to owner’s equity.
• Total Assets Turnover: 2 Times - Measures the efficiency in using assets to generate sales.
• Inventory Turnover: 8 Times - Indicates how often inventory is sold and replaced over a period.

Q97: The finance manager of ABC Ltd., a company based in Bangalore has gone on vacation to an island with his family. The island has very poor connectivity and hence he is unable to make or receive calls. The CEO of the company sent him a SMS to provide certain information related to the financial statement as he was unable to connect due to network problems and CEO has a meeting with the chairman next day. 

The finance manager has no documents with him and he was also not able to take the help of internet to send the desired information due to lack of internet facility on the island. On the basis of his memory, he was able to send the following information to the CEO through SMS, which was delivered after 2 hours.

a) Current Debt to Total Debt Ratio : 0.40
b) Total Debt to owner’s equity : 0.60
c) Fixed Assets to owner’s equity : 0.60
d) Total Assets turnover : 2 Times
e) Inventory turnover : 8 Times
f) Owner’s equity : ₹1,00,000

The CEO is puzzled to get the SMS, as he was unable to find the required information. You are required to help the CEO in finding relevant information from the SMS as indicated in the following questions:

Compute the value of inventory from the data given in case.

(a) ₹40,000

(b) ₹45,000

(c) ₹50,000

(d) ₹60,000

Ans: A

Sol: The correct answer is Rs. 40,000.

• Calculation of Inventory:
  • Given: Owner’s equity = ₹1,00,000, Total Debt to Owner’s equity = 0.60
    Total Debt = 0.60 × ₹1,00,000 = ₹60,000.
  • Total Assets = Owner’s equity + Total Debt
    Total Assets = ₹1,00,000 + ₹60,000 = ₹1,60,000.
  • Total Assets Turnover = 2 Times, so Total Sales = Total Assets × Total Assets Turnover
    Total Sales = ₹1,60,000 × 2 = ₹3,20,000.
  • Inventory Turnover = 8 Times, so Inventory = Total Sales / Inventory Turnover
    Inventory = ₹3,20,000 / 8 = ₹40,000.

Other Related Points

Significance of Inventory Turnover in Financial Analysis:

• Inventory turnover measures the efficiency of a company in managing its stock and converting inventory into sales.
• A high turnover rate, as seen in this case (8 times), indicates strong sales performance and effective inventory management, reducing the risk of obsolescence.
• This metric is critical for financial decision-making, helping companies optimize inventory levels and improve working capital management.

Q98: The finance manager of ABC Ltd., a company based in Bangalore has gone on vacation to an island with his family. The island has very poor connectivity and hence he is unable to make or receive calls. The CEO of the company sent him a SMS to provide certain information related to the financial statement as he was unable to connect due to network problems and CEO has a meeting with the chairman next day. 

The finance manager has no documents with him and he was also not able to take the help of internet to send the desired information due to lack of internet facility on the island. On the basis of his memory, he was able to send the following information to the CEO through SMS, which was delivered after 2 hours.

a) Current Debt to Total Debt Ratio : 0.40
b) Total Debt to owner’s equity : 0.60
c) Fixed Assets to owner’s equity : 0.60
d) Total Assets turnover : 2 Times
e) Inventory turnover : 8 Times
f) Owner’s equity : ₹1,00,000

The CEO is puzzled to get the SMS, as he was unable to find the required information. You are required to help the CEO in finding relevant information from the SMS as indicated in the following questions:

Identify the value of long-term debt from the given data

(a) ₹32,000

(b) ₹35,000

(c) ₹36,000

(d) ₹39,500

Ans: C

Sol: The correct answer is Rs. 36,000.

Calculation of Long-term Debt:

• Given: Total Debt to Owner’s Equity = 0.60 and Owner’s Equity = ₹1,00,000.
  Total Debt = 0.60 × ₹1,00,000 = ₹60,000.
• Current Debt to Total Debt Ratio = 0.40, so Current Debt = 0.40 × ₹60,000 = ₹24,000.
• Long-term Debt = Total Debt - Current Debt.
  Long-term Debt = ₹60,000 - ₹24,000 = ₹36,000.

Other Related Points

Relevance of Long-term Debt in Financial Analysis:

• Long-term debt is a critical part of a company’s capital structure, indicating the amount of financing obtained for long-term investments such as property, plant, and equipment.
• It is essential for assessing a company’s financial stability and ability to meet obligations over an extended period.
• A balanced ratio between long-term and short-term debt reflects sound financial management, ensuring liquidity for operational needs while maintaining strategic investments.

Q99: The finance manager of ABC Ltd., a company based in Bangalore has gone on vacation to an island with his family. The island has very poor connectivity and hence he is unable to make or receive calls. The CEO of the company sent him a SMS to provide certain information related to the financial statement as he was unable to connect due to network problems and CEO has a meeting with the chairman next day. 

The finance manager has no documents with him and he was also not able to take the help of internet to send the desired information due to lack of internet facility on the island. On the basis of his memory, he was able to send the following information to the CEO through SMS, which was delivered after 2 hours.

a) Current Debt to Total Debt Ratio : 0.40
b) Total Debt to owner’s equity : 0.60
c) Fixed Assets to owner’s equity : 0.60
d) Total Assets turnover : 2 Times
e) Inventory turnover : 8 Times
f) Owner’s equity : ₹1,00,000

The CEO is puzzled to get the SMS, as he was unable to find the required information. You are required to help the CEO in finding relevant information from the SMS as indicated in the following questions:

Find out the value of total assets from the given information

(a) ₹80,000

(b) ₹1,20,000

(c) ₹1,45,000

(d) ₹1,60,000

Ans: D

Sol: The correct answer is Rs. 1,60,000.

Calculation of Total Assets:

• Total Assets Turnover = 2 times, which implies that:
  Total Assets = Sales ÷ Total Assets Turnover.
• Given that Owner’s Equity = ₹1,00,000 and Total Debt to Owner’s Equity = 0.60:
  Total Debt = ₹1,00,000 × 0.60 = ₹60,000.
• Total Assets = Total Debt + Owner’s Equity.
  Total Assets = ₹60,000 + ₹1,00,000 = ₹1,60,000.

Other Related Points

Importance of Total Assets in Financial Analysis:

• Total assets represent the sum of all resources owned by a company and are a crucial component of the balance sheet.
• The calculation of total assets provides insights into the financial strength of a company and its ability to meet liabilities.
• A proper balance between total assets and liabilities ensures financial stability and sustainable growth.

Q100: The finance manager of ABC Ltd., a company based in Bangalore has gone on vacation to an island with his family. The island has very poor connectivity and hence he is unable to make or receive calls. The CEO of the company sent him a SMS to provide certain information related to the financial statement as he was unable to connect due to network problems and CEO has a meeting with the chairman next day. 

The finance manager has no documents with him and he was also not able to take the help of internet to send the desired information due to lack of internet facility on the island. On the basis of his memory, he was able to send the following information to the CEO through SMS, which was delivered after 2 hours.

a) Current Debt to Total Debt Ratio : 0.40
b) Total Debt to owner’s equity : 0.60
c) Fixed Assets to owner’s equity : 0.60
d) Total Assets turnover : 2 Times
e) Inventory turnover : 8 Times
f) Owner’s equity : ₹1,00,000

The CEO is puzzled to get the SMS, as he was unable to find the required information. You are required to help the CEO in finding relevant information from the SMS as indicated in the following questions:

What would be the value of sales as per the data given in case.

(a) ₹1,60,000

(b) ₹2,20,000

(c) ₹3,00,000

(d) ₹3,20,000

Ans: D

Sol: The correct answer is ₹3,20,000.

Calculation of Sales: 

• Total Assets Turnover = 2 times, which implies that:
  Sales = Total Assets × Total Assets Turnover.
• From the given data, Total Assets = ₹1,60,000 (calculated earlier).
• Therefore, Sales = ₹1,60,000 × 2 = ₹3,20,000.

Other Related Points

Understanding Total Assets Turnover:

• Total Assets Turnover is a financial metric that shows how efficiently a company uses its total assets to generate sales revenue.
• The higher the ratio, the more efficiently the company is utilizing its assets. A ratio of 2 means that for every ₹1 of total assets, the company generates ₹2 in sales.

Relevance of Sales Data:

• Sales data is critical for evaluating a company’s operational performance and revenue-generating capacity.
• It is a key input for analyzing profit margins, break-even points, and growth projections.