MH SET Paper 2 Mock Test - 3 (Management) - MAHA TET MCQ

Marketing management is the organisational discipline which focuses on the practical application of marketing orientation, techniques and methods inside enterprises and organisations and on the management of a firm's marketing resources and activities. Marketing management has the responsibility to perform many functions in the field of marketing such as planning, collecting marketing information, directing, motivating, coordinating and controlling. All these functions aim to achieve the marketing goals.

• Sensitivity Analysis is the technique used in examining the effect of change in one variable at a time. A sensitivity analysis determines how different values of an independent variable affect a particular dependent variable under a given set of assumptions.
• Simulation is the process of developing the frequency distribution of Net Present Value. Monte Carlo simulation performs risk analysis by building models of possible results by substituting a range of values, a probability distribution, for any factor that has inherent uncertainty.
• Hillier Model is the technique used in examining the chances of Net Present Value being greater than zero. According to the Hillier model, the risk associated with the project can be assessed through the standard deviation of expected cash flows.
• Decision tree is the technique used when investment at a future date is to be decided based on the probable outcome of previous investment. A decision tree is a decision support tool that uses a tree-like model of decisions and their possible consequences, including chance event outcomes, resource costs, and utility.

The debt-to-equity ratio is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. A D/E ratio of 2 indicates that the company derives two-thirds of its capital financing from debt and one-third from shareholder equity, so it borrows twice as much funding as it owns (2 debt units for every 1 equity unit).
Flotation cost is the total cost incurred by a company in offering its securities to the public. They arise from expenses such as underwriting fees, legal fees and registration fees. Flotation costs make new equity cost more than cost of floating a debt.

According to the CAPM model, the cost of equity is represented by:
R_f + (R_m - R_f) β_j
(Where R_m indicates market rate of return, R_f indicates risk free rate of return and β_j indicates beta of stock j.)
The CAPM model indicates security with a positive alpha is one that is expected to yield an abnormal positive rate of return, based on the perceived risk of the security, and thus is under-p riced.

An impulse purchase or impulse buying is an unplanned decision to buy a product or service, made just before a purchase. One who tends to make such purchases is referred to as an impulse purchaser or impulse buyer.

An entrepreneur is an independent person. He makes his own decision and he has risk taking ability. He never blames others for his decisions. Everybody dream but entrepreneurs realize their dreams and work hard to make them true.
They convert their dream in to business idea and business idea in to business opportunity. Whatever they do, they do with full dedication and possess technical knowledge.

Under the modified accelerated cost recovery system (MACRS) an asset in the ‘5 years property class’ would typically be depreciated over 6 years.

The exchange concept of marketing deals with the Exchange of products between sellers and buyers covering distribution and price aspects. 

• The central idea of marketing is the exchange of products between the seller and the buyer. Exchange covers the distribution aspect and the price mechanism of the product. 
• Marketing theorists consider the exchange to be the central concept without which there would be no such thing as marketing.
• For an exchange to happen, both parties have to have something of value for each other.
• For instance, a man visiting a coffee shop might have enough money to buy a cup of coffee while the cafe has coffee. Both parties must be able to communicate with each other, and both must want to exchange something and be able to do so. If the customer in the coffee shop can't make himself understood, or if he decides he doesn't want a cup of coffee, or if he turns out not to have quite enough money, then there will be no exchange. If all of the needed conditions are met, there will be an exchange of money for coffee.

Thus, option 1 is the correct answer.

The correct answer is Ordinal approach. 

Key Points

• Ordinal Utility states that the satisfaction a consumer gets after consuming a good or service cannot be scaled in numbers, whereas, these things can be arranged in the order of preference.
• Edgeworth first developed a more scientific approach to the study of consumer behavior, known as the “Indifference Curve Approach” in1881.
• In 1906, Vilfredo Pareto modified the “Edgeworth Approach”.
• Again J.R.Hicks and R.G.D.Allen refined the Indifference Curve Approach in 1934.
• Later, in 1939 J.R.Hicks in his book “ Value and Capital” gave a final shape to this “Indifference Curve Analysis” or ordinal approach. 
• According to the ordinal approach, utility is a psychological phenomenon like happiness, satisfaction, and welfare.
• The ordinal theory is highly subjective and differs across individuals.
• Therefore, it cannot be measured in quantifiable terms.
• The function that represents the utility of a product according to its preference, but does not provide any numerical figure, is known as an Ordinal Utility.
• In simpler words, this theory affirms that it is relevant to ask which item is better as compared to others instead of how good is that product.

Statement I: An activity cannot be represented by more than one arrow, but an arrow can represent one or more activities.

This statement is incorrect. In project network diagrams, an activity can indeed be represented by more than one arrow. In fact, it is common to have multiple arrows representing the same activity to indicate different dependencies or relationships with other activities. For example, an activity might have multiple predecessor activities or multiple successor activities, resulting in multiple arrows representing that single activity.

Statement II: The activities in a critical path can be preponed or postponed.

This statement is also incorrect. The critical path in a project network represents the longest path from the project's start to its completion, and it determines the minimum time required to complete the project. Activities on the critical path have zero float or slack, meaning they cannot be delayed without delaying the entire project. Similarly, they cannot be preponed or completed earlier without affecting the project's duration. The critical path activities must be executed as planned to ensure the project is completed within the shortest possible time.

Therefore, since both statements are incorrect, the correct answer is option (b): Both the statements I and II are incorrect.

Price Consumption Curve is a graphic representation which shows the ability of consumer to purchase quantity of goods/ products when the price of that commodity changes.

Hence, the correct answer is a- iv, b-ii, c-iii, d-i.

• Cost function is related to engineering method,
• Supply function is related to factor prices.
• Production function is related to Isoquants
• Oligopoly is related to kinky demand curve.

Income and expenditure account:

• The income and expenditure account is prepared by non-trading concerns at the end of the accounting period matching revenue receipts with revenue expenses to determine surplus or deficit.
• It is a nominal account that states that all the expenses are debited, and all the incomes are credited.
• It follows the accrual basis of accounting, meaning all the revenue transactions of this year are recorded regardless of whether they are received or not.

Key Points

Features of Income and expenditure account:

• Non-trading concerns prepare income and expenditure accounts, and it is similar to the profit and loss account made by the trading concerns.
• It is usually prepared at the end of the period.
• It is prepared on the accrual basis of accounting.
• It records non-cash items as well.
• Only items of only revenue nature are included, and capital items are excluded.
• The surplus or deficit balance at the end of it is then transferred to the capital fund account.
• It is based on the double-entry system of accounting

A holistic marketing approach states that business is considered as a whole wherein all the departments viz. R&D, Marketing, Finance, HR, etc. are integrated and work collectively towards the marketing and sale of a product. There are four components that can very well characterise the holistic marketing approach:
Internal marketing means hiring, training, motivating and inculcating business values in able employees who can serve customers well. Internal marketing deals with the market department to know the understanding level of the product among the employees and thereby imparting the necessary training to meet the expected results.
Performance marketing focuses on the returns to the business from the marketing activities undertaken as well as the effects of the same on the society as a whole. The marketer has to give answers to the top authority for the amount spent on marketing activities along with its effects on business. Brand and customer equity is the major focus area of this marketing.
Integrated marketing means how well the 4 P's of the marketing mix (product, price, place, promotion) are synced to deliver the efficient message to the prospective customers.Integrated marketing, an important character of holistic marketing must ensure that each communication tool must give a real and authentic information to the customer.
Relationship marketing focuses on building a strong and long-lasting relationship with all who can directly or indirectly add to the success of an organization.This is the most essential character of holistic marketing that results in a marketing network that shows how well all the stakeholders have created mutually profitable business relationships.

The operating cycle refers to the time it takes for a company to convert its inventory into cash through the sale of goods or services. It includes the time it takes to purchase raw materials, manufacture or produce the goods, sell them, and collect cash from customers.

The operating cycle consists of two main components: the inventory conversion period and the accounts receivable collection period. The inventory conversion period is the time it takes for a company to convert its raw materials into finished goods and then sell them. The accounts receivable collection period is the time it takes for the company to collect cash from its customers after the sale.

Therefore, the operating cycle represents the time that elapses between the purchase of raw materials and the collection of cash for sales.

Statement (I) : In the applied sciences, normative science is a type of information that is developed, presented, or interpreted based on an assumed, usually unstated, preference for a particular policy or class of policies.

Statement (II) : Normative generally means relating to an evaluative standard. Normativity is the phenomenon in human societies of designating some actions or outcomes as good or desirable or permissible and others as bad or undesirable or impermissible. A norm in this normative sense means a standard for evaluating or making judgments about behavior or outcomes. Normative is sometimes also used, somewhat confusingly, to mean relating to a descriptive standard: doing what is normally done or what most others are expected to do in practice. In this sense a norm is not evaluative, a basis for judging behavior or outcomes; it is simply a fact or observation about behavior or outcomes, without judgment. Many researchers in this[clarification needed] field try to restrict the use of the term normative to the evaluative sense and refer to the description of behavior and outcomes as positive, descriptive, predictive, or empirical.

ISO 9000:

• ISO 9000 is defined as a set of international standards on quality management and quality assurance developed to help companies effectively document the quality system elements needed to maintain an efficient quality system.
• They are not specific to any one industry and can be applied to organizations of any size.
• Thus Both (A) and (R) are correct.
• ISO 9000 can help a company satisfy its customers, meet regulatory requirements, and achieve continual improvement.
• It should be considered to be the first step or the base level of a quality system.
• Published by the International Organization for Standardization, it aims to encourage the production of goods and services that meet a globally-acceptable level of quality.
• ISO 9000 lays out best practices, guidelines, and a standard vocabulary for quality management systems.
• There isn't any relationship between the two statements. So (R) is not the correct explanation of (A).

Therefore, the method used to compare the means of more than two populations simultaneously is called Analysis of Variance.

Importance of financial statement analysis:

• Measuring the profitability
• Indicating the Trend of Achievements
• Assessing the Growth Potential of the Business
• Comparative Position in Relation to Other Firms
• Assess overall financial strength
• Assess solvency of the firm

The consumer surplus is the difference between the highest price a consumer is willing to pay and the actual market price of the good or service. Consumer surplus is an economic measurement of consumer benefits.

Porter and Lawler model is related to motivation. The Porter and Lawler theory of motivation is based on the assumption that rewards cause satisfaction and that sometimes performance produces reward.

Benefits provided for temporary and permanent disability disfigurement, medical expenses and medical rehabilitation are referred to as workers' compensation. It is a state-mandated insurance programme that provides benefits to employees who suffer job-related injuries and illnesses.

• In case of high competition or new launch of product or new entry in the existing market, companies do not consider their own pricing but they follow the pricing of their competitors. This is also a strategy to survive in the market.
• In such case there may be the possibility of high margin, Low margin or companies may sell on breakeven point if they are new entrant. Going rate pricing is often done in perfect competition.

• Branding is a process of creating unique name and image for a product in a consumers mind. It aims to establish a significant and differentiated presence in the market that attracts new customers and retains loyal customers.
• From above we can say that Branding not seeks to charge differential price or to sell the product in different countries. It is also not just to give attractive name to a product. It is about giving unique and differentiated name and creating image for a product in consumers mind.

The correct answer is Statement I is correct., Statement II is incorrect.

Corporate level strategy:

• The corporate-level strategy addresses the entire strategic scope of the firm.
• It is a “big picture” view of the organization and includes deciding in which, product or service markets to compete and in which, geographic regions to operate.
• Corporate-level strategy is an action taken to gain a competitive advantage through the selection and management of a combination of businesses competing in several industries or product markets.
• Types of Corporate Level Strategy – 4 Major Types: Stability Strategy, Expansion Strategy, Retrenchment Strategy, and Combination Strategy. 

Key Points

Stability Strategy: 

• When a company finds that it should continue in the existing business and is doing reasonably well in that business but has no scope for significant growth, stability is the strategy to be adopted.
• The stability strategy is not a “do nothing” strategy. It may involve incremental improvements.
• A long-term stability strategy also requires reinvestment, R& D, and innovation. 
• Thus Statement I is correct.

Expansion strategy:

• An expansion strategy is synonymous with a growth strategy.
• A firm seeks to achieve faster growth, compete, achieve higher profits, grow a brand, capitalize on economies of scale, have a greater impact, or occupy a larger market share.
• This may entail acquiring more market share through traditional competitive strategies, entering new markets, targeting new market segments, offering new products or services, and expanding or improving current operations. 

Redemption strategy:

• A redemption strategy seeks to restructure, sell or otherwise divest a business unit.
• The purpose is to reduce costs, streamline operations, or stabilize cash flow.
• The three primary types of retrenchment strategy are Turnaround Strategy, Divestment Strategy, and Liquidation Strategy. 
• Thus Statement II is incorrect. 

Combination Strategy: 

• A combination/mixed strategy is the last corporate strategy.
• The organization following a mixed strategy simultaneously uses stability, expansion, and retrenchment strategies in its different business units.
• It fits to deal with the diverse environmental situation.

Hence, the correct answer is Statement I is correct., Statement II is incorrect.

Calculation:
The formula 3 median = mode + 2 mean is an empirical relationship that may hold true for approximately symmetric distributions.
Substituting the value in the formula we get,
3 ∗ (39) = Mode + 2 ∗ (37)
Mode = 13
Mode is the value that occurs most frequently.
Median is the middle value when the dataset is arranged in order.
Mean is the sum of all values divided by the number of values.

Money market instruments are securities that provide businesses, banks, and the government with large amounts of low-cost capital for a short time. The period is overnight, a few days, weeks, or even months, but always less than a year.
Commercial Paper is an important money market instrument. Commercial Paper is a money-market security issued (sold) by large corporations to obtain funds to meet short-term debt obligations (for example, payroll) and is backed only by an issuing bank or company promise to pay the face amount on the maturity date specified on the note.

Encoding is a process by which a sender translates his thoughts into a series of symbols that he feels, will communicate the message to the intended receiver. (c) A channel is anything that links the sender with the receiver. (d) Decoding is the interpretation and translation of a message into meaningful information. (e) A feedback is a message that is generated by the receiver in response to the sender’s original message. (a) Modeling is not relevant in this context.

Preventive control is based on the idea that most of the negative deviations from standards can be overcome by applying the fundamentals of management.

The correct answer is (a) and (b).

Note: The incorrect option statements have been asked.

• Human Resource Development is an essence of management of any organization is to utilize effectively all the available human and physical resources, financial and technological resources.
• HRD is concerned with the development of human capac­ity.
  • Human capacity or human potential includes-aptitude, knowledge, values, skills of HR, responsiveness, loyalty and commitment, transparency, leadership development.
• Human Resource Development is the part of human resource management that specifically deals with the training and development of the employees in the organization.
  • It is the framework for helping employees develop their personal and organizational skills, knowledge, and abilities.
• The goals of the HRD systems are to develop:
  • The capabilities of each employee as an individual.
  • The capabilities of each individual about his or her present role.
  • The capabilities of each employee about his or her expected future role(s).
  • The dyadic relationship between each employee and his or her supervisor.
  • The team spirit and functioning in every organizational unit (department, group, etc.).
  • Collaboration among different units of the organization.
  • The organization’s overall health and self-renewing capabilities, in turn, increase the enabling capabilities of individuals, dyads, teams, and the entire organization.