APSET Paper 2 Mock Test - 4 (Management) - AP TET MCQ

Bank rate is the interest rate at which a nation’s central bank lends money to domestic banks, often in the form of very short-term loans.
Managing the bank rate is method by which central banks affect economic activity.
Lower bank rates can help to expand the economy by lowering the cost of funds for borrowers.
Higher bank rates help to reign in the economy when inflation is higher than desired.
It is the rate at which RBI lends money to other banks or financial institutes.

The NPV and IRR methods actually lead to the same acceptance or rejection decision rule where there is a single project because fordiscount rates greater than the IRR, the NPV is negative.

The inconsistency in ranking of competing projects as per the NPV and IRRmethods is because the NPV method assumes that cash flows from the project are reinvested at thediscount rate.

The IRR method assumes that cash flows are reinvested at the internal rate of return of the project

In case of single project, NPV and IRR will provide the same result regarding decision of accepting and rejecting the project. NPV derives the required rate of return and IRR derives the rate of return where NPV will be zero.

However, when comparing two projects, the NPV and IRR may give different results because NPV and IRR have different cash flow patterns.

In order to capture market for a new product two broad strategies namely market skimming pricing and market penetration pricing are used where as in product line pricing involves the process used by retailers of price the goods in such a way that they create different cost category with different quality levels in the minds of the customer.

Example:

Surf excel is offered in two variants one is simple surf excel price lower and the other is surf excel with super chargers for better cleaning of clothes which is priced higher, which creates an illusion in the mind of the customer that since it is priced higher and has super chargers in it, it is of better quality than the cheaper one.

Market skimming pricing and market penetration pricing are two broad strategies for new products.

Statement I: PERT (Program Evaluation and Review Technique) is indeed an event-oriented technique. PERT focuses on the sequencing of events or activities and the relationships among them. It emphasizes the critical path method and uses probabilistic time estimates to determine project timelines.

Statement II: CPM (Critical Path Method) is a task-oriented technique. CPM focuses on identifying the critical path, which is the sequence of tasks that determines the shortest possible project duration. It emphasizes the time required for each task and the interdependencies between them.

Both PERT and CPM are widely used project management techniques, and they have their own unique approaches and methodologies.

Concept:-

Chi-square test:

• It is an important test among the several tests of significance developed by statisticians.
• Developed by Karl Pearson in 1900.
• It is a non-parametric test not based on any assumption or distribution of any variable.
• This statistical test follows a specific distribution known as the chi-square distribution.

Explanation:

Nonparametric tests:-

• Also known as distribution- free tests because they are based on fewer assumptions.
• Parametric tests involve specific probability distributions and the tests involve estimation of the key parameters of that distribution from the sample data.
• There are some situations when it is clear that the outcome does not follow a normal distribution. These include:

1. When the outcome is an ordinal variable or a rank.
2. When there are definite outliers.
3. When the outcome has clear of detection.

Advantages of nonparametric tests:

• Used with all scales
• Easier to compute
• Make fewer assumptions
• Need not involve population parameters
• Results may be as exact as parametric procedures. 

Entrepreneurship Development Institute of India (EDII), Ahmedabad .

• It is the Technical support partner for Start-up Village Entrepreneurship Programme (SVEP).
• It is an autonomous and non-for-profit institute.
• It is sponsored by apex financial institutions like the IDBI Bank Ltd., IFCI Ltd., ICICI Bank Ltd. and the State Bank of India (SBI).

Net Income Approach for capital structure was presented by David Durand. The theory suggests increasing value of the firm by decreasing the overall cost of capital which is measured in terms of Weighted Average Cost of Capital. This can be done by having a higher proportion of debt, which is a cheaper source of finance compared to equity finance.

Net operating income approach for capital structure was given by Ezta Soloman. This approach for capital structure believes that the value of a firm is not affected by the change of debt component in the capital structure. It assumes that the benefit that a firm derives by infusion of debt is negated by the simultaneous increase in the required rate of return by the equity shareholders.

The irrelevance proposition theorem is a theory of corporate capital structure that posits financial leverage does not affect the value of a company, if income tax and distress costs are not present in the business environment. The irrelevance proposition theorem was developed by Merton Miller and Franco Modigliani.

FRICTO is an acronym for flexibility (F), risk (R), income (I), control (C), timing (T), and other (O). These represent important factors that affect the debt-equity mix decision in a company. FRICTO analysis for capital structure was developed by Robert Bruner.

V. A. Graicuna's, a French management consultant, analysed subordinate-supervisor relations and classified these relationships into three types:
(a) Direct Single Relationships between the senior and each of his subordinates individually
(b) Direct Group Relationships between the manager and each of the possible combinations of subordinates
(c) Cross Relationships between each of the groups of subordinates
According to Graicuna's formula n (n - l), if a superior has three subordinates, the number of cross-relationships would be six.

Product-oriented layouts are organised around products or families of similar high-volume, low-variety products. A product layout is where the equipment, tools, and machines are located according to how a product is made. An automated car wash is a product-oriented approach that seeks the best personnel and machine utilisations in repetitive or continuous production.

• Management Structure and nature is included in internal environment.
• It composition of Board of Directors, Professionalization of management.
• Remaining factors are related to external environment.
• Hence, Management Structure and nature is not external environment.

“A person’s action is ethical only if that person is willing for that same action to be taken by everyone who is in a similar situation” a Immanuel Kant’s principle, known as categorical imperatives, in a guide to managerial action.

According to Kant a manager action is ethical only if that person is willing for that same action to be taken by everyone who is in a similar situation.

Simple and universal principles given by Fayol’s 14- principles of management that explains the management.

Critical Path Method (CPM):

• The critical Path Method (CPM) is a network analysis approach.
• It finds out which sequence of activities has the least measure of scheduling resilience by which it predicts the duration of the project.
• It is based on the estimation of the standard time needed for the execution of an activity.
• CPM manages the both time and cost of the project.
• In this method, the critical path of the project is established by identifying the critical activities of the project.

Key Points

Total Float:

• Total Float refers to the amount of time that a task can be delayed without affecting the completion date of the project.
• It is the difference between the estimated duration of the task and the latest possible start date.
• Total float can be calculated for each task in the project and helps project managers identify tasks that can be delayed without causing any delays to the overall project completion.
• It is the maximum available time over the activity completion time.

Important Points

To calculate total float, you can use the following formula:

• Total float = Late finish - Early finish
• Where "Late finish" is the latest possible finish date for an activity and "Early finish" is the earliest possible finish date for an activity.
• These values can be obtained through critical path analysis or network diagramming.

Hence, Total float of an activity is the Maximum available time over activity.

Corporate governance refers to the way a corporation is governed. It is the technique by which companies are directed and managed. It means carrying the business as per the stakeholders' desires. It is actually conducted by the board of directors and the concerned committees for the benefit of company's stakeholders.

Equity Theory defines motivation is a function of fairness in social exchanges. It focuses on determining whether the distribution of resources is fair to both relational partners. Equity is measured by comparing the ratio of contributions and benefits for each person.

Expectancy theory, initially put forward by Victor Vroom at the Yale School of Management, suggests that behavior is motivated by anticipated results or consequences. Vroom proposed that a person decides to behave in a certain way based on the expected result of the chosen behavior.

Goal-setting involves the development of an action plan designed to motivate and guide a person or group toward a goal. It helps in determining specific levels of performance for workers to attain and then striving to attain them.

ERG Theory is a theory in psychology proposed by Clayton Alderfer. Alderfer's regression hypothesis suggests that when people are frustrated by their inability to meet needs at the next higher level in the hierarchy, they regress to the next lower category of needs and intensify their desire to gratify these needs.

Preventive Control emphasizes on control through speculation of deviations rather than exercising control after the deviations have occurred.

Operations Management oversees the transformation process that converts resources such as labor and raw materials into finished goods and services.

Hence, option (c) is true regarding Operations Management.

Options (a), (b), (d) are all false regarding Operations Management.

The author of Equity Theory of Motivation is Stancy Adams. Equity theory focuses on determining whether the distribution of resources is fair to both relational partners. Equity is measured by comparing the ratio of contributions and benefits for each person.

Human resource planning ensures the best fit between employees and jobs while avoiding manpower shortages or surpluses. There are four key steps of the HRP process. They include analysing present labour supply, forecasting labour demand, balancing projected labour demand with supply, and supporting organisational goals.

The dividend yield is the ratio of a company's annual dividend compared to its share price. The dividend yield is represented as a percentage and is calculated as follows:
Dividend Yield = 

Capitalism is an economic system based on principle of free enterprises.
Production are privately owned and operated for profit usually in competitive markets.
Under this system country’s trade and industry are controlled by private owners for profit rather than by state.
This system is based on private ownership.
In this economy decision-making and investment are determined by the owners and distributions of goods are mostly determined by competition in the market.

• It is a function of management. It is not related Maslow theory. Maslow proposes that needs have certain priority.
• Maslow’s theory of human motivation in psychological review. Maslow consequently extended the idea to include his observations of humans’ innate curiosity.
• Maslow’s need hierarchy.

Inflation accounting actually helps facilitate the comparison of financial numbers over time. By adjusting financial statements for inflation, it allows for a more meaningful comparison of figures across different periods. Without inflation adjustments, the effects of inflation can distort the numbers, making it challenging to assess the true changes in financial performance or value over time. Therefore, statement d is incorrect.

BCG (Boston Consulting Group matrix)

• The BCG (Boston Consulting Group matrix) is also known as the product portfolio matrix.
• It is a planning tool of the business which is used to estimate the strategic position of the brand portfolio of a firm.
• BCG matrix is a popular portfolio analysis method that classifies the product or service of a firm in a 2 × 2 matrix.
• Each quadrant is categorized as a high or low performance, according to the relative market growth rate and market share.

TQM, which stands for Total Quality Management, is a management approach focused on continuous improvement, customer satisfaction, and involvement of all employees in the quality improvement process.

The Deming triangle, also known as the Deming cycle or the PDCA (Plan-Do-Check-Act) cycle, is a fundamental concept in TQM. It was developed by Dr. W. Edwards Deming, a prominent figure in the field of quality management. The Deming triangle provides a systematic approach for achieving continuous improvement by following four steps:

• Plan: Identify objectives and plan the processes required to achieve them.
• Do: Implement the planned processes.
• Check: Monitor and evaluate the results and compare them to the objectives.
• Act: Take appropriate actions based on the evaluation to improve the processes further.

The Deming triangle is a key tool used to implement TQM principles and drive quality improvement in organizations. It emphasizes the importance of planning, executing, evaluating, and continuously improving processes to achieve quality goals.

Therefore, the correct statement is that TQM is best explained with the help of the Deming triangle (option b). The other options provided in the question are not accurate representations of TQM concepts.

The four systems of Management in terms of Leadership styles are related to Rensis Likert. The four management systems as identified by Likert were: Exploitative Authoritative, Benevolent Authoritative, Consultative and Participative.

According to Dale Yoder, ''Selection is the process in which candidates for employment are divided into two classes - those who are to be offered employment and those who are not''. Selection means a process by which qualified personnel may be chosen from applicants offering their services to the organisation for employment.

A whistle-blower is a person who exposes secretive information or activity that is deemed illegal, unethical, or not correct within a private or public organisation. The Whistle-blower Protection Act, 2014 states that whistle-blowers are to be protected since they intend to bring out truth.

The Capital Asset Pricing Model (CAPM) is a finance theory that establishes a linear relationship between the required return on an investment and risk.
The model is based on the relationship between an asset's beta, the risk-free rate (typically the Treasury bill rate) and the equity risk premium, or the expected return on the market minus the risk-free rate.

• Test means to check that individuality level of ability, knowledge, Personality, interest, and aptitude for the job.
• Aptitude test: A test designed to determine a person’s ability in a particular skill or field of knowledge
• Achievement test: An achievement test is a test of developed skill or knowledge. The most common type of achievement test is a standardized test developed to measure skills and knowledge learned in a given grade level, usually through planned instruction, such as training or classroom instruction.
• Personality test: A personality test is a questionnaire or other standardized instrument designed to reveal aspects of an individual’s character or psychological makeup.
• Therefore, for the recruitment and selection different test were conducted in organisation.