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

The correct answer is 18 per cent

Key Points Sustainable Growth Rate:

• The maximum rate of growth that a business or social enterprise may maintain without needing to raise more capital or take on more debt is known as the sustainable growth rate (SGR).
• It measures how quickly a business can expand using only internal revenue and without borrowing money from other sources.

Important Points

The sustainable growth rate of the company that enjoys return on equity = 30 percent and a dividend payout ratio of 40 percent is 18%

The Correct answer is Option 1.

Key Points

 Coefficient of Range:

• The range is the difference between the highest and the lowest value of frequency for a given frequency distribution.
• The coefficient of range on the other hand is the ratio of the difference between the highest and lowest value of frequency to the sum of the highest and lowest value of frequency.
• The coefficient of Range shows how much of the data is spread. It shows the relative measure of the dispersion of the range. 
• In order to calculate, the formula used is- (Highest Value of frequency - The lowest value of frequency)/ (Highest Value of frequency + Lowest value of frequency)

 Coefficient of Quartile Deviation (QD):

• Quartiles are the values that divide a group of observations into four equal parts. 
• The coefficient of quartile deviation is a measure of dispersion used to describe the spread or distribution of data.
• It is calculated as - Coefficient of quartile deviation = (Q3 – Q1) / (Q3 + Q1)

Coefficient of Mean Deviation (MAD):

• Mean deviation or average deviation is the average difference between the items in a series from the mean, median, or mode.
• The coefficient of mean deviation is calculated by dividing the mean deviation by the average. If deviations are taken from the mean, we divide it by the mean.
• It is calculated as Mean Deviation/ x or Me.

Coefficient of Variation (CV): 

• The coefficient of variation (CV) is the ratio of the standard deviation to the mean and shows the extent of variability in relation to the mean of the population. The higher the Coefficient of Variation, the greater the dispersion.
• It is calculated as - 

Hence, the correct answer is Option 1.

The European Legislative Council is not associated with the EU organization.

The European Union adopts legislation through a variety of legislative procedures. The procedure used for a given legislative proposal depends on the policy area in question.

Most legislation needs to be proposed by the European Commission and approved by the Council of the European Union and European Parliament to become law. Therefore, there is no such body as the European legislative council.

The correct answer is primary, collateral.

Key PointsVoucher

• A voucher denotes a source document, typically created for future reference and maintaining a record of the circumstances surrounding the transaction.
• Because it supports the entries made in the journal, it serves as documentary proof of that transaction.
• It is important to remember that a transaction can only be recorded in the books of accounts if there is documented basis for it.

 Important PointsBased on the source, there are two kinds of vouchers:

1. Primary Vouchers: A primary voucher is considered to be a written document that is in its original form and exists. Purchase invoices, cash receipt counterfoils, and other related documents may be included.
2. Collateral Vouchers: These are Copies of supporting documents that are not available in the original. They are xerox copies. The contracts may be kept in the vaults of banks. The copies are kept in the office for vouching.

Hence, Original vouchers are called primary vouchers and their copies or supporting documents are called collateral vouchers.

Additional InformationTypes of Vouchers on the basis of recording of transactions

1. Transaction Voucher: Simple transactions are those that only include a single debit or credit, and they need the preparation of Transaction Vouchers.
2. Compound Voucher: Transactions are considered compound if they include both a single debit or credit and many debits or credits. Compound vouchers are created for these types of transactions.
3. Complex Voucher: Transactions with multiple debits and multiple credits are referred to as complex transactions, and the journal voucher created for them is a complicated voucher.

The correct answer is Assertion is incorrect, but Reasoning is correct.

Key PointsAs per the passage, "Despite these advantages, there are challenges, particularly the restriction on individual countries' monetary policies as monetary policy is decided by the ECB, not individual countries."

The correct answer is assertion is incorrect, but Reasoning is correct.

Key PointsAs per the passage, "The Euro's stability relies on the performance of all member economies, as witnessed during the Eurozone debt crisis of 2010."

The correct answer is It reduces transaction costs.

Key PointsAs per the passage, "For businesses, it provides pricing transparency and reduces transaction costs, aiding in the increase of cross-border trade within the Eurozone."

The correct answer is the European Central Bank.

Key PointsAs per the passage, "Managed by the European Central Bank (ECB) and the Eurosystem which comprises the central banks of the Eurozone, it currently serves as the official currency for 19 of the 27 EU member states collectively known as the Eurozone."

The correct answer is 2002.

Key Points As per the passage, "Introduced in 1999 as an electronic currency for banking and financial transactions and in tangible form in 2002, the Euro is the second most traded currency worldwide after the US Dollar."

Key-Points

Masala Bonds

• Masala Bonds are rupee-denominated bonds issued outside India by Indian entities. They are debt instruments that help to raise money in local currency from foreign investors.
• Masala bonds are bonds issued outside India but denominated in Indian Rupees, rather than the local currency. Masala is an Indian word and it means spices. The term was used by the International Finance Corporation to evoke the culture and cuisine of India. 
• It is a debt instrument issued by an Indian entity in foreign markets to raise money, in Indian currency, instead of dollars or local denomination. In 2019, Kerala became the first Indian state to issue Masala Bonds worth Rs. 2,150 crore on the London Stock Exchange.
• Masala bonds allow Indian companies to raise overseas debt in the Indian currency. The instrument shields the issuers from currency fluctuations mainly because interest payments and redemption are in rupees. At the same time, investors get interest rates that are higher than in their domestic markets. In the third statement, the most popular market for Masala bonds currently in London.

Therefore Option 3 is not a correct statement with respect to Masala Bonds.

The South Asian Association for Regional Cooperation (SAARC) is the regional intergovernmental organization and geopolitical union of nations in South Asia. Its member states include Afghanistan, Bangladesh, Bhutan, India, Nepal, the Maldives, Pakistan, and Sri Lanka. SAARC comprises 3% of the world's area, 21% of the world's population, and 3.8% of the global economy, as of 2015. SAARC was founded in Dhaka on 8th December 1985. Its secretariat is based in Kathmandu, Nepal. The organization promotes the development of economic and regional integration. It launched the South Asian Free Trade Area in 2006. SAARC maintains permanent diplomatic relations at the United Nations as an observer and has developed links with multilateral entities, including the European Union.

The correct answer is MRTP.

Important Points

• The Competition Act, 2002 was enacted by the Parliament of India and governs Indian competition law.
• It replaced the archaic The Monopolies and Restrictive Trade Practices Act, 1969.
• Under this legislation, the Competition Commission of India was established to prevent the activities that have an adverse effect on competition in India.
• This act extends to whole of India.

Theory X - Autocratic style: Theory X beliefs that people do not like work and some kind of direct pressure and control must be exerted to get them to work effectively.

Theory Y - Participative style: This theory assumes that people are creative and eager to work.

Theory Z - Democratic style: This theory includes the notion that workers tend to want to build co-operative and intimate working relationships with those that they work for and with.

The Correct Answer is Employee Loyalty.

Key PointsPerception is the process of interpreting and making sense of sensory information. In an organizational context, perception plays a role in a wide range of activities, including performance evaluation, performance expectations, and job evaluation.

Important Points

Managerial Implications of Perceptions

People in organisations are always judging each other. Managers must appraise their subordinate’s performance. Let us look at the more obvious applications of perceptions in organisations.

• Employment Interview: A major input into who is hired and who is rejected in any organisation is the employment interview. Evidence indicates that interviewers often make inaccurate perceptual judgements. Interviewers generally draw early impressions that become very quickly entrenched.
• Performance Evaluation: An employee’s performance appraisal very much depends on the perceptual process. The performance appraisal represents an assessment of an employee’s work. While this can be objective, many jobs are evaluated in subjective terms. Subjective measures are, by definition, judgemental.
• Performance Expectations: A manager’s expectations of an individual affect both the manager’s behaviour towards the individual and the individual’s response.
• Productivity: What individuals perceive from their work situation will influence their productivity.
• Job Satisfaction: Job satisfaction is a highly subjective, and feeling of the benefits that derive from the job. Clearly his variable is critically linked to perception.
• Job evaluation: It is a systematic process for assessing the relative worth of different jobs within an organization. It involves the use of various methods and criteria to evaluate the tasks, duties, and responsibilities associated with each job, and to determine the relative value of each job in comparison to others.

Additional Information

• Employee loyalty is a concept related to an employee's commitment to their organization, colleagues, and job.
• While perception can play a role in shaping an employee's perceptions of their organization and colleagues, loyalty is not typically considered an application of perception in organizations.
• Loyalty can certainly be increased by perception but cannot be measured by application of Perception.

Therefore, customer portfolio analysis helps the business to identify the Most Valuable Customer.

The correct answer is A is true but R is false.

Key Points

Assertion ‘A’: When holding company holds more than 50% (but not whole) shares of a company, then the holders of the rest of shares will be known as "Minority". 

The term "minority" refers to shareholders who hold less than 50% of the shares of a company. This means that if a holding company holds more than 50% of the shares of a subsidiary company, the remaining shareholders are considered the minority shareholders.

Reason ‘R’: Minority interest is calculated by considering proportionate shares and reserves of Holding Company. However, the reason provided in Reason 'R' is incorrect. Minority interest refers to the proportionate share of a subsidiary's net assets that are not owned by the parent company. It is calculated based on the ownership percentage of the minority shareholders in the subsidiary company, not by considering the shares and reserves of the holding company.

Therefore, Assertion 'A' is true as it correctly defines minority shareholders, but Reason 'R' is false as it provides an incorrect explanation of minority interest calculation.

The correct answer is option 3.

Concept:

​Copyright Infringement:

The unauthorized use of someone else's copyrighted work is called copyright infringement. As a result, it is the unauthorized use of another person's copyrighted work, infringing on the copyright holder's rights to reproduce, distribute, exhibit, or perform the protected work.

Explanation:

Consider the following real-life example.

PersonX is free to record a TV program to view it later, but if he transfers or distributes it PersonY. So the given example is copyright Infringement.

• Copyright infringement occurs when a third party infringes on the copyright holder's rights, such as the exclusive use of a work for a specified period of time.
• Music and movies are two of the most well-known kinds of entertainment that are subjected to substantial copyright violations. Infringement lawsuits may result in contingent liabilities, or funds set aside in the event of a lawsuit.

Hence the correct answer is Copyright Infringement.

Additional Information

• Hacking is the act of unauthorized access to a computer, computer network, or any digital system. Hackers usually have the technical expertise in hardware and software.
• Identity thieves increasingly use personal information stolen from computers or computer networks, to commit fraud by using the data gained unlawfully.
• Cyberbullying is bullying with the use of digital technologies. It can take place on social media, messaging platforms, gaming platforms, and mobile phones.

The correct answer is ​Socio-Economic condition.

• In India, the creamy layer is defined as an economically and socially backward class.

Key Points

• The term creamy layer was used by the Santhanam Commission in the year 1971.
• At present, a family with a minimum annual income of ` 8 lakhs has been placed under the creamy layer.
• Backward class people coming to the creamy layer are out of the purview of reservation.

Key Points

Simple Regression Analysis:

A simple regression analysis is essentially a statistical technique used to quantify the relationship between a single independent variable and a single dependent variable based on historical observations.

Important Points

Least Squares method used in Simple Regression Analysis:

Finding a regression line or best-fitted line for any collection of data that is specified by an equation is done using the least square method. With this technique, the trend of the results is discovered quantitatively by reducing the sum of the squares of the residual sections of the points from the curve or line. When performing regression analysis, the least square method is used to fit equations to the data in order to derive the curve.

• The primary goal of this methodology is to minimize the sum of squared errors. This explains why this approach is known as the least-squares approach.
• A statistical technique called the least-squares method is used to determine which equation, such as y = mx + b, best fits the data. According to the regression equation, it minimizes the sum of the squared differences between the dependent variable's estimated values and actual values.
• This approach is frequently used in data fitting, where the goal is to minimize the sum of squared errors, which is thought to represent the discrepancy between the observed values and the corresponding fitted values.
• The behaviour of the dependent variable with respect to the independent variable is predicted using the least-squares method.
• Variance is the product of the square of the errors.
• The least-squares method's primary goal is to reduce the total squared errors.

Hence, it is true that least squares method used in simple regression analysis minimises the sum of the squared differences between the actual values of dependent variable and the estimated values of the dependent variable as per regression equation

The concept of the law of diminishing returns states that if one factor of production is increased while other factors are held constant, then the output per unit of the variable factor will eventually diminish. Laws of increasing and constant returns are temporary phases of the law of diminishing returns because returns increase and remain the same temporarily, as the business expands.

The correct match is (1) - (c), (2) - (a), (3) - (b), (4) - (d).

Important Points Imperial Bank of India:

• On January 27, 1921, the Imperial Bank of India was founded. After the country attained independence, it changed its name to State Bank of India.
• The Bank of Calcutta's founding in 1806 marks the beginning of modern banking in India.
• It was renamed as the Bank of Bengal in 1809.
• The Bank of Bombay and the Bank of Madras then emerged in the 1840s.

RBI (Reserve Bank of India):

• The central bank of the country is the Reserve Bank of India (RBI), commonly referred to as the banker's bank.
• RBI established under the provisions of the Reserve Bank of India Act; it started operating on April 1st, 1935.
• RBI was founded to promote financial stability in India by implementing monetary policies to ensure monetary stability.
• In addition to managing the country's monetary system, government debt, foreign exchange reserves, and financial regulation and supervision, it also serves as a banker to the country's banks and government.

State Bank of India (SBI): 

• On July 1st, the State Bank of India was constituted under the State Bank of India Act 1955 in order to take over the operations and business of the Imperial Bank of India.
• In accordance with the Imperial Bank of India Act of 1920, the Imperial Bank of India was established in 1921. The Bank engages in all types of general banking activity, including merchant banking, mutual funds, and foreign exchange.

Industrial Development Bank of India: 

• The primary financial institution for providing credit and other facilities for growing companies and supporting development institutions is the Industrial Development Bank of India (IDBI), which was founded under the Industrial Development Bank of India Act, 1964.
• Up until 1976, IDBI was a bank that belonged to the RBI. It was split off from the RBI in 1976, and the Indian government now owns it. In terms of development, IDBI is the tenth-largest bank in the world.

The correct answer is 283.

Important Points

• ITNS Challan Number 283 is used for payment of Fringe Benefits Tax.
• Fringe benefit tax (FBT) was a form of tax that companies paid in lieu of benefits they offered their employees in addition to the compensation paid to them. It was included by the Finance Act 2005 with effect from April 1, 2006.
• The Income Tax Department's Challan ITNS 284 is used to pay Income Tax on Corporations (Corporation Tax) and Income Tax on Other than Corporations.
• The Income Tax Department's Challan ITNS 283 is used to pay the Banking Cash Transaction Tax and Fringe Benefits Tax.
• To deposit gift tax, estate duty, spending tax, and other miscellaneous taxes use the ITNS 282 form. 

The correct answer is a - 1, b - 3, c - 2, d - 4.

Key PointsHere is an explanation of the four CSR models:

• Ethical model: This model is based on the idea that businesses have a moral responsibility to act in a responsible way towards their stakeholders. The ethical model argues that businesses should consider the interests of their stakeholders when making decisions, even if those decisions do not maximize profits.
• Statist model: This model is based on the idea that the state has a responsibility to regulate businesses and ensure that they act in a responsible way. The statist model argues that the state should set standards for businesses to meet, and that businesses should be held accountable for their actions.
• Liberal model: This model is based on the idea that businesses should be free to operate without government interference. The liberal model argues that businesses should be allowed to make their own decisions about how to operate, as long as they do not violate the law.
• Stakeholder model: This model is based on the idea that businesses have a responsibility to be accountable to their stakeholders and to work to meet their needs. The stakeholder model argues that businesses should consider the interests of all of their stakeholders when making decisions, and that they should be transparent about their activities.

The ethical model is the oldest of the four models, and it is still widely used today. The statist model is more common in countries with a strong government presence, such as China. The liberal model is more common in countries with a strong tradition of free enterprise, such as the United States. The stakeholder model is a more recent model, and it is becoming increasingly popular as businesses become more aware of the importance of sustainability and social responsibility.

The correct answer is Competitive advantage.

Key Points

Trade secrets:

• Trade secrets refer to valuable, confidential, and non-public information that is kept secret within an organization.
• They can include formulas, processes, methods, customer lists, marketing strategies, and other proprietary information.
• Trade secrets are important for maintaining a competitive advantage in the market.

Important Points

Competitive Advantage:

• Trade secrets provide a unique competitive advantage to companies.
• By keeping certain information secret, companies can differentiate themselves from competitors and have an edge in the market.
• Trade secrets allow companies to maintain their unique processes, techniques, or information that gives them an advantage over others.

Confidentiality and Exclusivity:

• Trade secrets allow companies to protect valuable information from being disclosed to competitors or the public.
• This confidentiality and exclusivity give them an upper hand in the market, as competitors cannot replicate or imitate their secret methods or strategies.

Cost-effectiveness:

• Unlike other forms of intellectual property protection, such as patents or trademarks, trade secrets do not require formal registration or filing fees.
• They can be maintained and protected internally, making them a cost-effective way of safeguarding valuable information.

Longevity:

• Trade secrets can provide long-term protection, as long as the information remains confidential.
• Unlike patents or trademarks that have expiration dates, trade secrets can be kept indefinitely as long as they are not publicly disclosed.
• This allows companies to have a sustained competitive advantage over an extended period.

Overall, trade secrets are valuable assets for companies as they provide a competitive edge, maintain confidentiality and exclusivity, are cost-effective, and offer long-term protection.

Protecting trade secrets can help companies maintain their market position, enhance innovation, and preserve their unique know-how and techniques.

The correct answer is option 3

Key Points The correct match is given below:

Important PointsR. A. Fisher - Anova

• Developed by Ronald Fisher, ANOVA stands for Analysis of Variance. 
• The statistical approach of analysis of variance, or ANOVA, divides observed variance data into multiple components for use in additional tests.
• For three or more groups of data, a one-way ANOVA is used to learn more about the relationship between the dependent and independent variables.
• If there is no real variance between the groups, the F-ratio of the ANOVA should be near to 1.

Karl Pearson - Correlation

• The Pearson's product-moment correlation coefficient (abbreviated as r or rxy) is a measure of the strength of a linear link between two variables (x and y being the two variables involved).

Formula for Karl Pearson - Correlation is 

Spearman - Rank Correlation

• Spearman’s correlation coefficient is a statistical measure of the strength of a monotonic relationship between paired data
• Spearman's Rank correlation coefficient is a technique which can be used to summarise the strength and direction (negative or positive) of a relationship between two variables.​
• The result will always be between 1 and minus 1.

Formula for Spearman - Rank Correlation is

Gosset - Student’s t distribution

• The t test tells you how significant the differences between groups are; In other words, it lets you know if those differences (measured in means) could have happened by chance.
• The t score is a proportion of the difference between two groups divided by the difference between groups.
• The greater the t score, the greater the difference between groups. The smaller the t score, the closer the groups are related.

The correct answer is C, E, F only.

Key Points A. Financial leverage increases the company's fixed costs.
This statement is incorrect. Financial leverage does not directly impact fixed costs. Fixed costs are expenses that do not vary with the level of sales or production.

B. Financial leverage decreases the company's risk.
This statement is incorrect. Financial leverage actually increases the company's risk. While it can potentially enhance returns, it also increases the company's financial obligations and vulnerability to economic downturns or changes in interest rates.

C. Financial leverage involves using debt to finance a portion of the company's assets.
This statement is correct. Financial leverage refers to the use of borrowed funds or debt to finance a portion of a company's assets. By utilizing debt, a company can amplify its returns on investment, as the cost of debt is typically lower than the expected return on investment.

D. Financial leverage has no impact on the company's profitability.
This statement is incorrect. Financial leverage can impact the company's profitability. By using debt, a company incurs interest expenses, which can reduce its net income and profitability.

E. Investors use leverage to multiply their buying power in the market.
This statement is correct. Investors can use leverage to increase their buying power and potentially amplify their returns. By using borrowed funds, investors can control larger positions in the market than they would be able to with their own capital alone.

F. Misuse of leverage may have serious consequences, as there are some that believe it played a factor in the 2008 Global Financial Crisis.
This statement is correct. The misuse of leverage, particularly in the form of excessive risk-taking and improper financial practices, was believed to be a contributing factor to the 2008 Global Financial Crisis. Improper use of leverage can lead to significant financial instability and systemic risks.

Based on the evaluation, the correct statements are:

C. Financial leverage involves using debt to finance a portion of the company's assets.
E. Investors use leverage to multiply their buying power in the market.
F. Misuse of leverage may have serious consequences, as there are some that believe it played a factor in the 2008 Global Financial Crisis.

Therefore, the correct answer is: C, E, and F.