Entrepreneurship : CUET Mock Test - 2 - CUET Commerce MCQ

A capital market is an organised market which provides long-term finance for business. It is distinct from money market which provides short-term finance for business.

Economic feasibility considers the costs/benefits of the proposed system and the details of the costs that will be incurred by the organisation adopting the new system, considering the development costs and the running costs.

Operational Risk is associated with the failure of internal processes of a bank or business organisation. Operational risk is the risk that is not inherent in financial, systematic or market-wide risk.

Customer Relationship Management (CRM) is a strategy for managing all your company's relationships and interactions with your present and potential customers. It helps you improve your profitability. More commonly, when people talk about CRM, they are usually referring to a CRM system, a tool which helps with contact management, sales management, workflow processes, productivity, and more. Marketers can use CRM to better understand the pipeline of sales or prospective work coming in, making forecasting simpler and more accurate.

Vertical integration is a procedure in which many levels in the production, and/or administering a product or service starting with the raw materials, are controlled by one business, company or institution so the said entity can gain strength in the marketplace.
Activities not involved in vertical integration are:
(i) Segregation of value-chain activities
(ii) Outsourcing

One-level distribution channel is when the product is not sent directly from the producer to the consumer but the producer sells the product to the retailer who, in turn, sells to the consumer. This channel is also known as distribution through retailers.

• Aspects of economic environment are balance of payment, balance of trade, money supply in the economy and international debt etc.
• EXIM Policy is related to economic environment.
• Social environment consists of the customs and traditions of the society in which a business exists. It includes the standard of living, taste, preferences and education level of the people living in the society where the business exists.
• Political environment consists of all the factors related to government affairs such as type of government power, attitude of government towards different groups of societies, policy changes implemented by different governments etc.
• Legal environment constitutes the laws and various legislations passed in the Parliament.

The type of pricing method involved is variable pricing method. It is a marketing approach that permits different rates to be extended to different customers for the same goods or services. The approach is often employed in cultures where dickering over the price of goods is considered the norm, or potential buyers are allowed to participate in a bidding situation, such as in an auction. The buyer and seller make offers back and forth until they can settle on a price that both believe is fair.

Rate of return on investment:
ROI (i) = 
i = 

The correct answer is 'Talk trend'. Talking to individuals is another effective way to spot trends. Entrepreneurs join a trade association for a certain industry and attend events, both online and offline. They also make use of social networking platforms such as social networking websites and discussion boards. They even form or join groups on social media to check what is trending and what are people talking about.

The stage in 'the creative process' described in the lines is idea germination. Idea germination is the seeding stage of a new idea. It is the stage where the entrepreneur recognises that an opportunity exists. The idea germination takes place according to interest and curiosity of the entrepreneur according to which opportunity is explored and exploited to its best potential.

Profit per unit of product P = 20% of SP per unit of product Q = Rs. 3000
SP per unit of product Q = 3000/0.2 = Rs. 15,000
CP per unit of product Q = Rs. 12,000
CP per unit of product P = 12,000 x 5/6 = Rs. 10,000
SP per unit of product P = Rs. 10,000 + 3000 = Rs. 13,000

Intellectual Property Rights (IPRs) protect the use of information and ideas that are of commercial value. The four types of intellectual property rights include trade secrets, trademarks, copyrights and patents.

Capital budgeting is the process in which a business determines and evaluates potential expenses or investments that are large in nature. Capital budgeting is an administrative decision because it helps in making key decisions to decide on investments to be made. It is an operative decision because it considers short term decisions in lieu of long term strategies at the time of acquisition of fixed assets. It is a strategic decision because it is based on a long term decision taken by the senior management.

Conglomerate is a merger of companies engaged in completely unrelated business operations. Pure conglomerate mergers and mixed conglomerate mergers are the two forms of conglomerate mergers. Pure conglomerate mergers bring together companies that have nothing in common, whereas mixed conglomerate mergers bring together companies that are searching for product or market expansion.

The most important factor in selecting advertising media is media preference of target audience.
Targeting potential customers using the media they prefer is important. Finding out which media they prefer can help improve the ROI on any campaign a business runs. It serves as a key targeting tactic.

Value-based price is a pricing strategy which sets the prices primarily, but not exclusively, according to the perceived or estimated value of the product or service to the customer rather than according to the cost of the product or historical prices.

Geeta Ram should contact National Bank for Agriculture and Rural Development (NABARD) for starting his factory. NABARD will serve as a financing institution for institutional credit such as long-term, short-term, and for the promotion of activities in rural areas.

Joint sector industries are jointly run by the state and individual or a group of individuals. Oil India Ltd (OIL) is jointly owned by public and private sectors.
Cooperative sector industries are owned and operated by the producers or suppliers of raw materials, workers or both.
BHEL and SAIL are public sector enterprises while TISCO is a private sector enterprise.

Market penetration pricing is a pricing strategy that sets a low initial price for a product. The goal is to quickly attract new customers based on the low cost. A market penetration pricing strategy is suitable when the production and distribution costs fall with increasing production.

Financial management may be defined as the area or function in an organisation which is concerned with profitability, expenses, cash and credit so that the "organisation may have the means to carry out its objective as satisfactorily as possible", the latter often defined as maximising the value of the firm for stockholders.

An executive summary is the overview of the entire business plan and should succinctly highlight the most important parts of the plan. The executive summary is more than just a general outline of your business plan, though; the business plan's audience is often busy executives and investors, so the executive summary might be the only part they read.

Statement 4 is incorrect. The liability of the members of a cooperative society is limited to the extent of the amount contributed by them as capital. This defines the maximum risk that a member can be asked to bear.

In HUF form of business, all the members of a Hindu Undivided Family own the business jointly. The membership is limited up to three successive generations. There is no limit to the number of members.

Average inventory = (Opening inventory + Closing inventory)/2
Let closing inventory = X
Opening inventory = X + 5,000
24,000 = (X + 5,000 + X)/2
24,000 × 2 = 2X + 5,000
48,000 - 5,000 = 2X
43,000/2 = X
21,500 = X
Value of closing stock = Rs. 21,500
Value of opening stock = Rs. 21,500 + 5,000 = Rs. 26,500

It is the source of short-term financing of working capital, or for financing day to day business activities. The trade credit is given by one business enterprise to another on the purchase and sale of goods. The credit is usually given for three or four months, i.e. less than a year. Hence, it is for short-term.

Goal setting involves the development of an action plan designed to motivate and guide a person or group towards a goal. Goal setting can be guided by goal-setting criteria (or rules) such as SMART criteria. Goal setting theory involves the following stages:
Goal definition → Goal acceptance → Efforts → Performance → Rewards → Satisfaction

Creativity is the phenomenon whereby imaginative and original ideas are turned into reality. Graham Wallas (1926) outlined the creative thinking process into four stages:

• Preparation
• Incubation
• Illumination
• Verification

Hence, it could be concluded that motivation is not related to the creative process.

• Techniques to be used as important control techniques to assess the performance of inventory management:
• EOQ: A decision about how much to order has great significance in inventory management. This is the quantity of materials which can be purchased at minimum costs.
• ABC analysis: Under A-B-C analysis, the materials are divided into three categories viz. A, B and C. A-B-C analysis helps to concentrate more efforts on category A since greatest monetary advantage will come by controlling these items. An attention should be paid in estimating requirements, purchasing, maintaining safety stocks and properly storing of 'A' category materials. According to the performance of inventories, these are categorised.
• Inventory turnover ratio: Inventory turnover ratios are calculated to indicate whether inventories have been used efficiently or not.

Average stock level = Minimum stock level + (1/2) Reorder quantity
9000 units = 4000 units + (1/2) Reorder quantity
(1/2) Reorder quantity = 9000 units – 4000 units
Reorder level = 5000/0.5 units = 10,000 units