UGC NET Commerce October 2020 Question PaperPaper 2 with Answer Key

100 questions with the answer key and explanations.

1. Question 1

   As per Section 80G of the Income Tax Act, the maximum deduction allowed for any cash donation is up to:

   1. ARs. 1,000
   2. BRs. 2,000
   3. CRs. 5,000
   4. DRs. 10,000

   Answer: (B) Rs. 2,000

   Explanation

   Under Section 80G of the Income Tax Act, the ceiling for cash donations eligible for deduction is Rs. 2,000.

   Finance Act 2017 lowered the cash donation threshold from Rs. 10,000 to Rs. 2,000 with effect from assessment year 2018-19 to curb cash transactions and foster transparency. Any donation over Rs. 2,000 must be made through banking channels to qualify for tax deduction.

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2. Question 2

   A surcharge of 10% is payable by an individual assessee where total income exceeds:

   1. ARs. 7,50,000
   2. BRs. 8,50,000
   3. CRs. 50,00,000
   4. DRs. 20,00,000

   Answer: (C) Rs. 50,00,000

   Explanation

   A 10% surcharge applies to an individual assessee when total income exceeds Rs. 50,00,000 but does not exceed Rs. 1 crore.

   • Rs. 50 lakh to Rs. 1 crore — 10% surcharge applies.
   • Rs. 1 crore to Rs. 2 crore — 15% surcharge applies.
   • Rs. 2 crore to Rs. 5 crore — 25% surcharge applies.
   • Exceeding Rs. 5 crore — 37% surcharge applies under the regular regime.

   No surcharge applies to income below Rs. 50 lakh.

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3. Question 3

   In continuous compounding, the time it takes to double a sum grossly follows the 'Rule of 69'. If it is changed to discrete compounding, the relevant rule of thumb is:

   1. ARule of 69.3
   2. BRule of 72
   3. CRule of 84
   4. DRule of 64

   Answer: (B) Rule of 72

   Explanation

   The Rule of 72 is the traditional financial rule of thumb used to estimate the doubling time of an investment under discrete compounding.

   • Discrete compounding — doubling years ≈ 72 / r, which provides a convenient integer approximation for typical annual interest rates.
   • Continuous compounding — doubling years ≈ ln(2) / r ≈ 0.693 / r, commonly referred to as the Rule of 69 or Rule of 69.3.

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4. Question 4

   In marketing, DSA stands for:

   1. ADelivery Staff Agent
   2. BDirect Supplier Agent
   3. CDirect Selling Agent
   4. DDistribution and Supply Agent

   Answer: (C) Direct Selling Agent

   Explanation

   DSA stands for Direct Selling Agent.

   Direct Selling Agents are independent representatives or intermediaries appointed by financial institutions, banks, or consumer companies to source prospective clients and market products such as loans, mutual funds, and credit cards directly to consumers.

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5. Question 5

   Which of the following are correct statements with regard to NBFC in India?

   I. All NBFCs should be registered with RBI
   II. NBFCs cannot accept demand deposits
   III. NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself
   IV. Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs

   Choose the correct answer from the options given below:

   1. AI, II, III only
   2. BI, II, III, IV only
   3. CI, II, IV only
   4. DI, IV only

   Answer: (B) I, II, III, IV only

   Explanation

   All four statements are standard regulatory attributes of Non-Banking Financial Companies in India.

   • Statement I — Under Section 45-IA of the RBI Act 1934, NBFCs operating in India must be registered with the Reserve Bank of India.
   • Statement II — NBFCs cannot accept demand deposits payable on demand.
   • Statement III — NBFCs do not participate in the clearing and settlement mechanism and cannot issue cheques drawn on themselves.
   • Statement IV — DICGC insurance coverage of up to Rs. 5 lakh is restricted to banking depositors and is unavailable to depositors of NBFCs.

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6. Question 6

   Which of the following explains the declining slope of indifference curves?

   I. Diminishing marginal utility
   II. Diminishing marginal rate of substitutions between the commodities
   III. Diminishing marginal rate of technical substitution
   IV. Ordinal measurement of utilities
   V. Diminishing marginal utility if money

   Choose the correct answer from the options given below:

   1. AI and IV only
   2. BII and IV only
   3. CIII and IV only
   4. DI and V only

   Answer: (B) II and IV only

   Explanation

   Indifference curve theory is built on ordinal utility measurement and the diminishing marginal rate of substitution.

   • II. Diminishing marginal rate of substitution — as a consumer substitutes commodity X for commodity Y, the amount of Y they are willing to give up for an additional unit of X continuously declines, causing the indifference curve to slope downwards and remain convex to the origin.
   • IV. Ordinal measurement of utilities — the indifference framework relies strictly on ranking preference bundles rather than cardinal quantification.
   • I & V — cardinal concepts rooted in Marshallian utility analysis.
   • III — MRTS relates to production isoquants, not consumption indifference curves.

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7. Question 7

   Out of the following statements which of them explains the difference between enculturation and acculturation as a part of Cross-Cultural Training?

   I. Enculturation refers to the process of learning and adopting host cultural norms, and acculturation is the process of learning our own native culture
   II. Enculturation is an anthropological term used for socialisation like acculturation
   III. Both terms refer to the process of learning through social interaction
   IV. Enculturation refers to the process of learning our own culture, and acculturation refers to the process of learning host cultural norms

   Choose the correct answer from the options given below:

   1. AI, II, III only
   2. BII and IV only
   3. CII, III and IV only
   4. DI, II, III and IV only

   Answer: (C) II, III and IV only

   Explanation

   Statements II, III, and IV accurately characterize the sociological and anthropological distinction between enculturation and acculturation.

   • Statement IV — Enculturation is the primary socialization through which one acquires their native culture, whereas acculturation involves adopting the norms and values of an external host culture.
   • Statement I — Incorrect because it reverses the definitions.
   • Statement II — Correct because both describe socialization phenomena across human groups.
   • Statement III — Correct because cultural learning in both forms takes place through sustained social interaction.

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8. Question 8

   Which of the following is not correct with respect to matrix organisation?

   1. AIt is the combination of fundamental and product organisation
   2. BFunctional departments are not permanent fixtures of a matrix organisation
   3. CProduct departments are created as the need for them arises
   4. DTeam members have functional home when they are not needed on a project

   Answer: (B) Functional departments are not permanent fixtures of a matrix organisation

   Explanation

   Functional departments are permanent fixtures of a matrix organisation, which makes statement B incorrect.

   • A — Matrix design combines a permanent functional hierarchy with project or product lines.
   • B — Incorrect assertion. Functional departments provide ongoing professional homes, standards, and career structures, remaining permanent while project teams form and disband.
   • C — Product or project groups are created dynamically to handle specific contracts or tasks.
   • D — Project specialists return to their permanent functional department once their project responsibilities end.

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9. Question 9

   Which of the following are true about delivering customer value?

   I. A company can go alone in creating customer value
   II. Company must work within a broader network of partners to accomplish customer value
   III. Individual companies and brands compete; their entire value delivery networks don't
   IV. Individual companies and brands don't compete; their entire value delivery networks do
   V. Value = Contribution/cost (offer higher contribution through product or service to clients and lowers the cost)

   Choose the correct answer from the options given below:

   1. AI and V only
   2. BI, II and V only
   3. CII, III and V only
   4. DII, IV and V only

   Answer: (D) II, IV and V only

   Explanation

   Modern marketing views value creation as a collaborative network outcome rather than an isolated firm activity.

   • Statement II — A firm must collaborate with suppliers, distributors, and channel partners to construct an effective value delivery network.
   • Statement IV — Modern market competition occurs between complete supply chains and value delivery networks rather than stand-alone enterprises.
   • Statement V — Customer value is maximized by increasing perceived contribution or utility while reducing monetary and non-monetary costs.
   • Statements I & III — False because isolated firms cannot deliver modern value networks independently.

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10. Question 10

    Out of the following statements, which is not correct about RTI Act, 2005?

    I. The RTI Act came into force on October 13, 2005
    II. Any citizen may request information from a Public Authority (Both govt. and private)
    III. Reply for information asked can be given within 30 days
    IV. There is nominal application fees that are needed to pay to get the information under the RTI application
    V. For getting information, applicant has to pay Rs. 10/- per page of information for Central Govt. Departments

    Choose the correct answer from the options given below:

    1. AI, II and V only
    2. BII and V only
    3. CIII and V only
    4. DII, III, IV and V only

    Answer: (A) I, II and V only

    Explanation

    Statements I, II, and V contain factual errors regarding the Right to Information Act, 2005.

    • Statement I is incorrect — The RTI Act came fully into force on October 12, 2005, not October 13.
    • Statement II is incorrect — Purely private bodies do not qualify as public authorities under Section 2(h) unless substantially financed by government funds.
    • Statement V is incorrect — For Central Government departments, the fee for providing copies of documents is Rs. 2 per page for A4 or A3 paper, not Rs. 10 per page.
    • Statements III and IV are correct — The statutory response window is 30 days and the initial application fee is nominal (Rs. 10).

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11. Question 11

    In which of the following stages of product life cycle a company reduces sales promotion to take advantage of heavy consumer demand?

    1. AIntroduction
    2. BGrowth
    3. CMaturity
    4. DDecline

    Answer: (B) Growth

    Explanation

    During the Growth stage of the product life cycle, consumer demand expands rapidly through strong market acceptance and positive word-of-mouth.

    Because demand is buoyant and sales accelerate naturally, firms can curtail aggressive sales promotion expenditures to maximize operating margins while redirecting resources toward production scaling, product refinement, and distribution expansion.

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12. Question 12

    Which of the following is not correct about properties of correlation coefficient?

    I. Depends on the origin
    II. Depends on the scale
    III. Depends on both origin and scale
    IV. Is independent with respect to origin
    V. Is independent with respect to scale

    Choose the correct answer from the options given below:

    1. AI, IV and V only
    2. BI, II and IV only
    3. CI, II and III only
    4. DIV, V and II only

    Answer: (C) I, II and III only

    Explanation

    Karl Pearson's coefficient of correlation is completely independent of both change of origin and change of scale.

    • Statements IV & V — Correct properties. Adding, subtracting, multiplying, or dividing variable values by non-zero constants leaves r unchanged.
    • Statements I, II, & III — Incorrect claims because correlation does not depend on origin or scale.

    Hence, statements I, II, and III represent the incorrect properties.

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13. Question 13

    A manufacturing enterprise monthly consumes 1,350 units of raw material at the cost of Rs. 20 per unit. Determine its economic order quantity given the ordering cost of Rs. 2,400 and carrying cost of inventory being 30 percent of the price paid.

    1. A3,600 units
    2. B2,400 units
    3. C4,800 units
    4. D2,700 units

    Answer: (A) 3,600 units

    Explanation

    Economic Order Quantity is computed using annual demand, ordering cost, and unit carrying cost.

    Annual demand (A):
    1,350 units * 12 months = 16,200 units

    Carrying cost per unit per annum (C):
    30% of Rs. 20 = Rs. 6

    Ordering cost per order (S):
    Rs. 2,400

    Formula:
    EOQ = √((2 * A * S) / C)
    EOQ = √((2 * 16,200 * 2,400) / 6) = √(77,760,000 / 6) = √(12,960,000) = 3,600 units

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14. Question 14

    Some doctors charge patients for missed appointments because the services value existed only at the point and disappeared when the patients did not show up, is an example of which one of the following four service characteristics?

    1. AInseparability
    2. BIntangibility
    3. CVariability
    4. DPerishability

    Answer: (D) Perishability

    Explanation

    Perishability means services cannot be stored, saved, or inventoried for future use.

    When a patient fails to attend a scheduled appointment, that specific consultation time cannot be salvaged or reused later. Charging for missed appointments addresses the unrecoverable revenue loss caused by service perishability.

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15. Question 15

    In Leontief production function, L is considered as:

    1. AStructural constraint in the production process
    2. BDegree of homogeneity
    3. CBinding constraint in the production process
    4. DOptimisation constraint in the production process

    Answer: (C) Binding constraint in the production process

    Explanation

    In a Leontief fixed-proportions production function, inputs act as binding constraints on output.

    The production function takes the form Q = min(K/a, L/b). Because labor and capital must be combined in rigid fixed ratios with zero factor substitution, the input in shorter relative supply acts as the strictly binding constraint that caps total attainable production.

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16. Question 16

    As per Carroll Model, the four level of Corporate Social Responsibility are:

    1. APhysical, economic, legal and social
    2. BPhysical, economic, legal and ethical
    3. CPhilanthropic, economic, legal and ethical
    4. DPhilanthropic, economic, social and ethical

    Answer: (C) Philanthropic, economic, legal and ethical

    Explanation

    Archie Carroll's pyramid of Corporate Social Responsibility outlines four hierarchical layers.

    • Economic — foundation layer requiring the firm to be profitable.
    • Legal — duty to obey statutory laws and government regulations.
    • Ethical — obligation to do what is right, just, and fair beyond legal mandates.
    • Philanthropic — apex tier calling for voluntary corporate citizenship and community welfare contributions.

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17. Question 17

    Which of the following does not come under the definition of 'Information' under RTI Act, 2005?

    1. ALogbooks
    2. BCirculars
    3. CFile notings in the process
    4. DData material held in any electrical form

    Answer: (C) File notings in the process

    Explanation

    Under Section 2(f) of the RTI Act 2005, 'information' covers records, documents, memos, emails, opinions, advices, press releases, circulars, orders, logbooks, contracts, reports, papers, samples, models, and data material in electronic format.

    Internal, incomplete file notings that reflect ongoing deliberations prior to a final administrative decision do not constitute settled public information, making option C the excluded item.

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18. Question 18

    Match List-I with List-II.

    List-I	List-II
    I. Mezzanine capital	1. It is the speedy source of finance less regulated by the regulatory environment of debt and capital markets.
    II. Private equity	2. It is long-term capital embraced by the high net worth and high-risk appetite investors.
    III. Global Depository Receipts	3. It is an equity instrument issued in overseas markets and is listed and traded on bourses on OTC basis.
    IV. Venture capital	4. It refers to subordinated debt or preferred equity that allows firms to borrow additional capital beyond the level's lenders are willing to finance through the bank loans.

    1. AI-2, II-4, III-1, IV-3
    2. BI-1, II-3, III-4, IV-2
    3. CI-4, II-1, III-3, IV-2
    4. DI-3, II-2, III-1, IV-4

    Answer: (C) I-4, II-1, III-3, IV-2

    Explanation

    The matched capital instruments and institutional finance descriptors are:

    I-4, II-1, III-3, IV-2

    • I. Mezzanine capital (4) — hybrid subordinated debt or preferred equity providing bridge financing beyond standard bank borrowing limits.
    • II. Private equity (1) — unlisted direct investment funding with lighter public market regulatory constraints.
    • III. Global Depository Receipts (3) — overseas negotiable dollar instruments traded across foreign bourses or OTC markets.
    • IV. Venture capital (2) — long-term early-stage risk capital provided by high net-worth investors to emerging enterprises.

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19. Question 19

    In which of the following situations, the payback period method is advised for evaluation of investment opportunities?

    I. Overleveraged businesses
    II. Cash rich businesses
    III. Uncertain market conditions
    IV. Stable market conditions

    Choose the correct answer from the options given below:

    1. AI and II only
    2. BI and III only
    3. CII and III only
    4. DIII and IV only

    Answer: (B) I and III only

    Explanation

    The payback period method prioritizes the speed of capital recoupment and liquidity conservation.

    • I. Overleveraged businesses — firms with heavy debt burdens must prioritize swift cash recovery to service debt and avert default.
    • III. Uncertain market conditions — in volatile or rapidly shifting markets, distant cash flows carry high risk, making fast recovery essential.
    • II & IV — cash-rich firms in stable environments prefer discounted cash flow techniques like NPV or IRR that measure total economic profitability.

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20. Question 20

    Match List-I with List-II.

    List-I	List-II
    I. Bayes' theorem	1. P(Ē) = 1 - P(E)
    II. Conditional probability	2. P(E₁ ∪ E₂) = P(E₁) + P(E₂)
    III. Theorem of complimentary events	3. P(E₂/E₁) = P(E₁ ∩ E₂)/P(E₁)
    IV. Theorem of addition	4. P(Hᵢ/E) = P(Hᵢ ∩ E)/P(E)

    1. AI-1, II-4, III-3, IV-2
    2. BI-3, II-4, III-2, IV-1
    3. CI-3, II-4, III-1, IV-2
    4. DI-4, II-3, III-2, IV-1

    Answer: (D) I-4, II-3, III-2, IV-1

    Explanation

    The statistical formulas match the probability concepts as follows:

    • I. Bayes' theorem (4) — updates the prior probability of hypothesis H based on event E via P(Hᵢ/E) = P(Hᵢ ∩ E) / P(E).
    • II. Conditional probability (3) — gives the probability of E₂ given E₁ via P(E₂/E₁) = P(E₁ ∩ E₂) / P(E₁).
    • III. Complementary events (1) — probability of the non-occurrence of E is P(Ē) = 1 - P(E).
    • IV. Theorem of addition (2) — for mutually exclusive events, P(E₁ ∪ E₂) = P(E₁) + P(E₂).

    Option D is the intended key combination because I-4 and II-3 uniquely identify it, despite an exam printing swap of labels for statements 1 and 2.

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21. Question 21

    Charging different prices for the same product in different markets until the MR of last unit sold equals to the MC of the product sold in each market is determined by:

    I. Price discrimination of first degree
    II. Price discrimination of second degree
    III. Price discrimination of third degree
    IV. Equilibrium price
    V. Price discrimination

    Choose the correct answer from the options given below:

    1. AI and II only
    2. BI and III only
    3. CIII and V only
    4. DI and IV only

    Answer: (C) III and V only

    Explanation

    Segmenting independent markets and equating marginal revenue across each sub-market to overall marginal cost defines third-degree price discrimination.

    • III. Third-degree price discrimination — Pigou defined this as charging different prices across separate customer groups or markets based on price elasticity differences.
    • V. Price discrimination — represents the broad economic practice of selling identical products at non-uniform prices.
    • I — first degree extracts entire consumer surplus from every individual.
    • II — second degree uses volume or block discounting.

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22. Question 22

    Which one is False as per the relevant provisions of Indian Contract Act, 1872?

    1. AA void agreement is one that is not enforceable by law
    2. BAssignment is the obvious mode of discharge of contract
    3. CWhere a party waives its rights under the contract, the other party is released of its obligations under the contract
    4. DWhere the subject matter of a contract is destroyed for no fault of the promisor, the contract does not become void by impossibility of performance

    Answer: (D) Where the subject matter of a contract is destroyed for no fault of the promisor, the contract does not become void by impossibility of performance

    Explanation

    Statement D is legally false because destruction of subject matter discharges the contract by impossibility.

    Under Section 56 of the Indian Contract Act, 1872 (doctrine of frustration), if the specific subject matter essential to the contract is destroyed without the fault of the promisor, performance becomes impossible and the contract becomes void.

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23. Question 23

    Mercosur, a South American Trade block is a:

    1. AFree Trade Area
    2. BCommon Market
    3. CCustom Union
    4. DEconomic Cooperation

    Answer: (B) Common Market

    Explanation

    Mercosur is formally constituted as a Common Market.

    Established under the 1991 Treaty of Asuncion, the Southern Common Market (Mercado Comun del Sur) was created to achieve free movement of goods, services, and factors of production with a common external tariff, representing a deeper stage of integration than a free trade area or customs union.

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24. Question 24

    What is the probability that a randomly chosen card from a deck of cards will either be a King or Spade?

    1. A0.3077
    2. B0.3269
    3. C0.0384
    4. D0.3169

    Answer: (A) 0.3077

    Explanation

    Using the addition rule for non-mutually exclusive events:

    P(King or Spade) = P(King) + P(Spade) - P(King and Spade)

    In a 52-card deck:

    • Number of Kings = 4
    • Number of Spades = 13
    • King of Spades (intersection) = 1

    Calculation:
    (4/52) + (13/52) - (1/52) = 16 / 52 = 4 / 13 ≈ 0.307692...

    Rounding to four decimal places yields 0.3077.

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25. Question 25

    Which of the following is not an implied condition in a contract of sale?

    1. ACondition as to quality or fitness
    2. BCondition as to merchantable quality
    3. CCondition as to wholesomeness
    4. DCondition as to free from encumbrances

    Answer: (D) Condition as to free from encumbrances

    Explanation

    Freedom from encumbrances is an implied warranty rather than an implied condition under the Sale of Goods Act, 1930.

    • Section 14(c) — the buyer shall enjoy freedom from any charge or encumbrance in favor of a third party, which the statute categorizes as an implied warranty.
    • Sections 15-17 — conditions as to description, merchantable quality, fitness for purpose, and wholesomeness are classified as implied conditions whose breach allows contract repudiation.

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26. Question 26

    In which of the following price adjustment strategies, a company reduces prices to reward customer responses such as volume purchases, paying early or promoting the product?

    1. ADiscount and allowances pricing
    2. BPsychological pricing
    3. CPromotional pricing
    4. DDynamic pricing

    Answer: (A) Discount and allowances pricing

    Explanation

    Discount and allowance pricing adjusts base prices to reward specific customer behaviors.

    • Discounts — price reductions such as cash discounts for early settlement, quantity discounts for bulk purchases, and seasonal discounts for off-season buying.
    • Allowances — trade-in allowances for turning in an older item or promotional allowances rewarding dealers for active participation in advertising programs.
    • B, C, & D — psychological, promotional, and dynamic pricing alter prices for perception, temporary urgency, or real-time demand rather than customer behavioral rewards.

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27. Question 27

    Arrange the following sequence of decisions in manufacturing enterprises:

    I. Making of forecasts
    II. Determination of key factors
    III. Consideration of alternative combination of forecasts
    IV. Preparation of budgets
    V. Combination of factors

    Choose the correct answer from the options given below:

    1. AI, II, III, IV, V
    2. BIII, I, V, II, IV
    3. CII, I, III, V, IV
    4. DI, III, II, V, IV

    Answer: (C) II, I, III, V, IV

    Explanation

    Managerial planning in manufacturing follows a structured sequence starting with constraint identification.

    II, I, III, V, IV

    • II. Determination of key factors — identifying the limiting factor (principal budget factor) such as raw material shortages or sales capacity.
    • I. Making of forecasts — developing baseline demand and supply projections within the identified constraint.
    • III. Consideration of alternative combinations — evaluating various scenario forecasts.
    • V. Combination of factors — allocating and integrating productive inputs.
    • IV. Preparation of budgets — converting the finalized operational schedule into detailed master and functional budgets.

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28. Question 28

    The headquarters of ASEAN is located in which of the following countries?

    1. AIndonesia
    2. BVietnam
    3. CThailand
    4. DSingapore

    Answer: (A) Indonesia

    Explanation

    The permanent Secretariat and headquarters of the Association of Southeast Asian Nations (ASEAN) is located in Jakarta, Indonesia.

    Established under the ASEAN Declaration (Bangkok Declaration) on 8 August 1967, the regional intergovernmental organization later instituted its permanent secretariat building in Jakarta in 1976.

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29. Question 29

    Assertion (A): Trademark registration gives exclusive proprietary rights to the trademark owner.

    Reason (R): A trademark is a recognizable sign, design or expression which identifies products or services of a particular source from those of others, and it is used to claim exclusive proprietary rights of products or services.

    1. ABoth A and R are true and R is the correct explanation of A
    2. BBoth A and R are true but R is NOT the correct explanation of A
    3. CA is true but R is false
    4. DA is false but R is true

    Answer: (A) Both A and R are true and R is the correct explanation of A

    Explanation

    Both statements are true and Reason (R) provides the legal and functional justification for Assertion (A).

    • Assertion (A) — Under Section 28 of the Trade Marks Act 1999, registration grants the registered proprietor the exclusive legal monopoly to use the mark and initiate infringement actions against unauthorized users.
    • Reason (R) — Because a trademark functions distinctively as a badge of origin to differentiate goods and services from those of rivals, granting statutory registration secures the proprietor's claim of exclusive proprietary rights.

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30. Question 30

    Match List-I with List-II.

    List-I (market forms)	List-II (role of selling costs)
    I. Perfect competition	1. Sustained survival of firm
    II. Monopoly	2. Influencing buying behaviour
    III. Monopolistic competition	3. Increasing market size
    IV. Oligopoly	4. Intimation of product or service

    1. AI-1, II-3, III-4, IV-2
    2. BI-4, II-2, III-1, IV-3
    3. CI-3, II-4, III-2, IV-1
    4. DI-2, II-1, III-3, IV-4

    Answer: (C) I-3, II-4, III-2, IV-1

    Explanation

    The roles of selling costs across market forms match as follows:

    I-3, II-4, III-2, IV-1

    • I. Perfect competition (3) — individual firms face horizontal demand, so selling costs occur collectively at the industry level to expand overall market size.
    • II. Monopoly (4) — having no close rivals, the monopolist incurs selling costs purely for public intimation and informative awareness.
    • III. Monopolistic competition (2) — product differentiation makes advertising essential to persuade consumers and influence buying behaviour.
    • IV. Oligopoly (1) — intense non-price competition makes continuous selling costs critical for the sustained survival of the firm.

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31. Question 31

    'Constraint Optimisation' is closer to which of the following objectives of business firm?

    1. ASales maximisation
    2. BProfit maximisation
    3. CSatisfying behaviour
    4. DRent seeking behaviour

    Answer: (C) Satisfying behaviour

    Explanation

    Constraint optimization mirrors the satisfying (satisficing) behavioral model of the firm formulated by Herbert Simon.

    In managerial and behavioral economics, decision-makers operate under bounded rationality and complex internal trade-offs. Rather than pursuing unconstrained global profit maximization, firms optimize performance subject to institutional, financial, and environmental constraints to attain satisfactory target aspirations.

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32. Question 32

    Which one of the following is not true for Mass Marketing?

    1. AProvides very little scope for customization
    2. BDeals with customers directly
    3. CNormally followed in case of FMCG and SMCG goods
    4. DRelies heavily on advertising

    Answer: (B) Deals with customers directly

    Explanation

    Mass marketing relies on extensive intermediary distribution networks rather than dealing with end consumers directly.

    • B is false — Mass marketing utilizes broad multi-tier distribution channels (wholesalers, distributors, retailers). Direct customer interaction characterizes direct marketing, personal selling, or customized niche marketing.
    • A, C, & D are true — Mass marketing offers standardized products with minimal customization, suits fast-moving consumer goods, and relies heavily on mass advertising campaigns.

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33. Question 33

    EPRG framework in International Business refers to:

    1. AEthno, Poly, Regio, Geo transformations
    2. BEthnocentric, Polycentric, Regio-centric and Geocentric Orientations
    3. CEthics, Policies, Regulations and Guidelines Orientations
    4. DEvery Person Refers Global Framework

    Answer: (B) Ethnocentric, Polycentric, Regio-centric and Geocentric Orientations

    Explanation

    The EPRG framework defines four strategic management orientations in international business.

    Formulated by Howard Perlmutter, the framework categorizes multinational strategic postures as:

    • Ethnocentric — home-country oriented.
    • Polycentric — host-country oriented.
    • Regiocentric — regional-market oriented.
    • Geocentric — world or globally integrated orientation.

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34. Question 34

    Pricing strategy of setting a high price when a product is introduced and gradually lowering its price is known as:

    1. ASkimming
    2. BPenetration Pricing
    3. CPeak load pricing
    4. DDumping

    Answer: (A) Skimming

    Explanation

    Price skimming involves setting an initially premium price for a new product and progressively lowering it over time.

    • A. Skimming — skims surplus from early adopters willing to pay top price before reducing prices to penetrate broader price-sensitive segments.
    • B. Penetration — launches with an intentionally low price to capture quick market share.
    • C. Peak load — charges higher prices during high-demand time windows.
    • D. Dumping — exports goods below domestic cost to capture overseas markets.

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35. Question 35

    Which of the following financial institution(s) got merged with their subsidiary?

    I. UTI
    II. IFCI
    III. ICICI
    IV. IDBI
    V. Global Trust Bank

    Choose the correct answer from the options given below:

    1. AI and II only
    2. BII and III only
    3. CIII and IV only
    4. DIII and V only

    Answer: (C) III and IV only

    Explanation

    ICICI and IDBI both executed reverse mergers with their commercial banking subsidiaries.

    • III. ICICI — parent development financial institution ICICI merged with its commercial banking arm ICICI Bank in 2002.
    • IV. IDBI — parent development finance institution IDBI merged with IDBI Bank Ltd in 2004 to form a unified commercial bank.
    • I, II, & V — UTI underwent restructuring into SUUTI and UTI Mutual Fund, IFCI remained a specialized non-banking financial institution, and Global Trust Bank was amalgamated into Oriental Bank of Commerce.

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36. Question 36

    Match List-I with List-II.

    List-I (Capital structure preposition(s))	List-II (description(s))
    I. Target Capital Structure	1. Expected yield on the equity capital is equal to the pure equity return plus a premium of financial risk.
    II. Optimum Capital Structure	2. It refers to the perceived costs due to increased ratio of debt in the firm.
    III. Cost of financial distress	3. It is the debt ratio the firm strives to achieve.
    IV. MM preposition II	4. It is the debt-equity ratio that maximises the value of the firm.

    1. AI-2, II-3, III-1, IV-4
    2. BI-3, II-4, III-2, IV-1
    3. CI-4, II-2, III-3, IV-1
    4. DI-1, II-3, III-2, IV-4

    Answer: (B) I-3, II-4, III-2, IV-1

    Explanation

    The capital structure concepts match their corporate finance descriptions as follows:

    I-3, II-4, III-2, IV-1

    • I. Target Capital Structure (3) — the planned debt-equity ratio management actively strives to achieve over the operating horizon.
    • II. Optimum Capital Structure (4) — the capital mix that minimizes the overall cost of capital and maximizes firm market value.
    • III. Cost of financial distress (2) — indirect and direct bankruptcy costs arising from excessive leverage ratios.
    • IV. MM proposition II (1) — states that the required return on levered equity equals the unlevered equity cost plus a financial risk premium proportional to the debt-equity ratio.

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37. Question 37

    What is the rate of tax deduction at source from insurance commission in case of 'Person'?

    1. A2 percent
    2. B5 percent
    3. C10 percent
    4. D4 percent

    Answer: (B) 5 percent

    Explanation

    Under Section 194D of the Income Tax Act, 1961, the TDS rate on insurance commission paid to a resident person (non-corporate assessee) is 5%.

    Section 194D mandates that any person paying insurance commission to a resident individual or HUF exceeding Rs. 15,000 in a financial year must deduct tax at source at the rate of 5% (reduced from the earlier 10% rate by the Finance Act 2016). For domestic company payees, the statutory TDS rate is 10%.

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38. Question 38

    What type of defence mechanism is used by a person when he gets angry at his child or spouse because he had a bad day at work?

    I. Denial
    II. Repression
    III. Projection
    IV. Displacement
    V. Regression

    Choose the correct answer from the options given below:

    1. AI and II only
    2. BII only
    3. CIV only
    4. DV only

    Answer: (C) IV only

    Explanation

    Displacement is an unconscious psychological defense mechanism involving the redirection of emotional impulses to a substitute target.

    When an individual experiences anger or frustration from an authoritative source (such as an employer or supervisor) where retaliation would carry severe repercussions, the pent-up hostility is displaced onto a less threatening person, such as a spouse or child.

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39. Question 39

    Which one of the following statements is 'True' in partnership?

    1. AIn the absence of any provision in the partnership deed, only a working partner is entitled to remuneration
    2. BAny firm which earns normal profit has no goodwill
    3. CThe business of the firm must be carried on by all the partners
    4. DInterest on loan given by a partner to the firm shall be paid if there are profits

    Answer: (B) Any firm which earns normal profit has no goodwill

    Explanation

    Goodwill reflects the capitalized value of super profits, meaning a firm earning only normal profit possesses zero goodwill.

    • B is true — Goodwill arises from the capacity of a firm to earn super profits above normal industry yields. If earnings equal normal profits, super profits equal zero, resulting in no commercial goodwill.
    • A is false — Under Section 13(a) of the Indian Partnership Act 1932, no partner is entitled to remuneration without express agreement.
    • C is false — Under Section 4, partnership business may be conducted by all or any of them acting for all.
    • D is false — Partner loan interest (6% p.a. under Section 13(d)) is a charge against profits payable regardless of whether profits exist.

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40. Question 40

    The 'going concern concept' is the underlying basis for:

    1. ADisclosing the market value of securities
    2. BConsolidating the accounts of subsidiary companies with those of parent company
    3. CDepreciating fixed assets over their useful lives
    4. DDisclosing the sales and other operating information in the income statement

    Answer: (C) Depreciating fixed assets over their useful lives

    Explanation

    The going concern postulate provides the fundamental accounting rationale for depreciating fixed assets over useful operating lifespans.

    Under this assumption, an enterprise will continue operational activities indefinitely rather than face forced liquidation. Consequently, fixed assets are recorded at cost and allocated systematically across future revenue-generating accounting periods through depreciation rather than written down to liquidation values.

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41. Question 41

    Which of the following are positional averages?

    I. Arithmetic mean
    II. Median
    III. Mode
    IV. Geometric mean
    V. Harmonic mean

    Choose the correct answer from the options given below:

    1. AII and III only
    2. BII, III and IV only
    3. CII, III and I only
    4. DI, II, III and IV only

    Answer: (A) II and III only

    Explanation

    Median and mode are classified as positional averages in business statistics.

    • Positional averages (II & III) — determine typical values based on position within an ordered series (median at the 50th percentile) or frequency concentration (mode at peak frequency).
    • Mathematical averages (I, IV, & V) — arithmetic mean, geometric mean, and harmonic mean compute central values algebraically from all individual observations.

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42. Question 42

    Match List-I with List-II.

    List-I	List-II
    I. Standard costing	1. Financial forecasting and planning
    II. Margin of safety	2. Sales minus break-even sales
    III. Ratio Analysis	3. Control of inventory
    IV. JIT system	4. Management by exception

    1. AI-4, II-2, III-1, IV-3
    2. BI-3, II-1, III-2, IV-4
    3. CI-2, II-3, III-1, IV-4
    4. DI-1, II-2, III-4, IV-3

    Answer: (A) I-4, II-2, III-1, IV-3

    Explanation

    The accounting and cost management tools match their functional definitions as follows:

    I-4, II-2, III-1, IV-3

    • I. Standard costing (4) — isolates cost variances to enable management by exception on material deviations.
    • II. Margin of safety (2) — represents the excess of actual or budgeted sales volume over break-even sales volume.
    • III. Ratio Analysis (1) — evaluates financial statements to guide financial forecasting and operational planning.
    • IV. JIT system (3) — establishes pull-based inventory replenishment to optimize inventory control and minimize holding waste.

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43. Question 43

    Arrange the following products in the increasing order of price elasticities:

    I. Homogeneous products
    II. Differentiated products
    III. Necessities
    IV. Durable goods

    Choose the correct answer from the options given below:

    1. AIII, II, IV, I
    2. BI, II, III, IV
    3. CI, III, II, IV
    4. DIII, I, II, IV

    Answer: (A) III, II, IV, I

    Explanation

    Price elasticity of demand increases as substitutes become closer and purchase postponement becomes feasible.

    III, II, IV, I

    • III. Necessities — lowest elasticity because consumers cannot forgo essential survival goods.
    • II. Differentiated products — moderate elasticity constrained by brand preference.
    • IV. Durable goods — higher elasticity because buyers readily delay replacement or repair existing units when prices climb.
    • I. Homogeneous products — highest elasticity approaching infinity because perfect substitutes allow consumers to switch suppliers immediately upon any price variation.

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44. Question 44

    Out of the following, which are not the features of GST 2017 in India?

    I. GST is applicable on supply of Goods and Services
    II. GST is based on the principle of origin-based taxation rather than principle of destination based consumption
    III. Import of Goods is treated as Inter-state supplies and would be subject to IGST in addition to applicable Custom duties
    IV. It is a dual taxation with Centre and State simultaneously levying it on a common base
    V. GST is applicable to all Goods and Services without any exemptions

    Choose the correct answer from the options given below:

    1. AI, II and V only
    2. BII, III and V only
    3. CII and V only
    4. DIII, IV and V only

    Answer: (C) II and V only

    Explanation

    Statements II and V misstate the statutory design of India's Goods and Services Tax.

    • Statement II is not a feature — GST is fundamentally a destination-based consumption tax where revenue accrues to the consuming state, replacing earlier origin-based taxes like Central Sales Tax.
    • Statement V is not a feature — GST exempts numerous essential items, healthcare, educational services, and constitutional exclusions like potable alcohol and specified petroleum products.
    • Statements I, III, and IV — accurate features of the dual GST architecture.

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45. Question 45

    Consumer rationality in business economics is collective manifestation of which of the following assumptions?

    I. Non-Satiation
    II. Clarity of preferences
    III. Divisibility of goods and services
    IV. Economic selfish motive
    V. Possession of information

    Choose the correct answer from the options given below:

    1. AI, II and IV only
    2. BI, III and V only
    3. CI, II, III and IV only
    4. DI, II, IV and V only

    Answer: (D) I, II, IV and V only

    Explanation

    Consumer rationality represents purposeful behavior aimed at utility maximization based on behavioral axioms.

    • I. Non-satiation — the consumer prefers more goods to fewer.
    • II. Clarity of preferences — preferences satisfy completeness and transitivity.
    • IV. Economic selfish motive — the individual acts to maximize personal satisfaction.
    • V. Possession of information — the buyer possesses sufficient market knowledge of prices and substitutes.

    Item III (divisibility of goods) is a technical geometric assumption for smooth indifference curves rather than a behavioral postulate of rationality.

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46. Question 46

    Which of the following is not an example of compressed data?

    1. AData array
    2. BFrequency distribution
    3. CHistogram
    4. DOgives

    Answer: (A) Data array

    Explanation

    A data array is raw, ungrouped data arranged simply in ascending or descending sequence without condensation.

    • A. Data array — retains every individual observation without aggregating counts, so it is uncompressed.
    • B, C, & D — frequency distributions, histograms, and cumulative frequency ogives group raw observations into class intervals, compressing the dataset into condensed analytical forms.

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47. Question 47

    Given below are two statements:

    Statement I: Gratuity received by Government employee is exempted from tax under Section 10(10)(i) of the Income Tax Act, 1961.

    Statement II: Gratuity received by local authority employee is exempted from tax.

    Choose the correct answer from the options given below:

    1. ABoth Statement I and Statement II are correct
    2. BBoth Statement I and Statement II are incorrect
    3. CStatement I is correct but Statement II is incorrect
    4. DStatement I is incorrect but Statement II is correct

    Answer: (A) Both Statement I and Statement II are correct

    Explanation

    Both statements are correct under Section 10(10)(i) of the Income Tax Act, 1961.

    • Statement I — Retirement or death gratuity received by employees of the Central Government, State Governments, or defence services is completely exempt from income tax without monetary ceiling.
    • Statement II — Section 10(10)(i) explicitly accords identical full tax exemption to gratuity received by employees of local authorities.

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48. Question 48

    When foreign currency assets and liabilities match in terms of amount of exposure and timing of maturities, it is described as:

    1. AFinancial hedge
    2. BNatural hedge
    3. CPerfect hedge
    4. DNetting

    Answer: (B) Natural hedge

    Explanation

    A natural hedge occurs when operational currency inflows and outflows inherently offset one another.

    By matching foreign currency assets and liabilities in identical currencies with corresponding exposure amounts and maturity timelines, the firm neutralizes currency fluctuation risk naturally through its balance sheet structure without relying on external financial derivatives.

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49. Question 49

    Match List-I with List-II.

    List-I	List-II
    I. Limited liability partnership	1. It can be formed with a minimum of two individuals or body corporate through their nominees
    II. Particular partnership	2. It is formed for a specific venture or for a particular period
    III. Partnership	3. It is an association of two or more individuals
    IV. Mutual agency	4. A partner is both an agent and a principal in a partnership firm

    1. AI-1, II-2, III-3, IV-4
    2. BI-2, II-3, III-1, IV-4
    3. CI-2, II-1, III-3, IV-4
    4. DI-4, II-2, III-1, IV-3

    Answer: (A) I-1, II-2, III-3, IV-4

    Explanation

    The partnership legal concepts match their statutory descriptions as follows:

    I-1, II-2, III-3, IV-4

    • I. Limited liability partnership (1) — under the LLP Act 2008, can be incorporated by two or more individuals or bodies corporate acting through designated nominees.
    • II. Particular partnership (2) — under Section 8 of the Indian Partnership Act 1932, formed exclusively for a single specific adventure or defined fixed duration.
    • III. Partnership (3) — Section 4 defines general partnership as an association of two or more persons sharing business profits.
    • IV. Mutual agency (4) — fundamental doctrine holding that every partner acts simultaneously as an agent and a principal for fellow partners.

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50. Question 50

    The standard deviation of the binomial distribution is:

    1. Anp
    2. B√np
    3. Cnpq
    4. D√npq

    Answer: (D) √npq

    Explanation

    The standard deviation of a binomial distribution with parameters n and p is given by the square root of its variance.

    Mean:
    E(X) = np

    Variance:
    Var(X) = npq, where q = 1 - p

    Standard deviation:
    SD = √Var(X) = √npq

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51. Question 51

    Arrange the following steps of marketing process in proper sequence:

    I. Construct an integrated marketing programme that delivers superior value
    II. Capture value from customers to create profits and customer equity
    III. Understand the marketplace and customer needs and wants
    IV. Engage customers, build profitable relationships, and create customer delight
    V. Design a customer value-driven marketing strategy

    Choose the correct answer from the options given below:

    1. AIII, I, V, IV, II
    2. BII, V, I, III, IV
    3. CIV, I, II, III, V
    4. DIII, V, I, IV, II

    Answer: (D) III, V, I, IV, II

    Explanation

    Philip Kotler's five-step marketing model moves from customer understanding to capturing equity.

    III, V, I, IV, II

    • III. Understand the marketplace — researching consumer needs, wants, and marketplace dynamics.
    • V. Design a strategy — selecting target segments and formulating the value proposition.
    • I. Construct a programme — developing the marketing mix (4Ps) to deliver tangible value.
    • IV. Engage customers — building customer relationships and creating customer delight.
    • II. Capture value — reaping profits, customer equity, and long-term loyalty from satisfied buyers.

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52. Question 52

    Objectives of IMPS (Immediate Payment Service) are:

    I. To enable bank customers to use mobile instruments as a channel for accessing their banks accounts and remit funds 24*7
    II. Making payments simpler just with the mobile number of the beneficiary
    III. To build the foundation for a full range of mobile based banking services
    IV. To create competition with NEFT and RTGS

    Choose the correct answer from the options given below:

    1. AI, II and III only
    2. BII, III and IV only
    3. CI, II and IV only
    4. DII and IV only

    Answer: (A) I, II and III only

    Explanation

    Statements I, II, and III state official core objectives defined by NPCI for IMPS.

    • Statement I — providing a 24x7 instant interbank electronic fund transfer system accessible via mobile channels.
    • Statement II — enabling hassle-free person-to-person remittances using the beneficiary's registered mobile number and MMID.
    • Statement III — building a robust foundational architecture for mobile banking innovation.
    • Statement IV is not an objective — IMPS was launched to complement rather than compete with large-value RTGS and batch-based NEFT settlement systems.

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53. Question 53

    Which of the following is not a major direct selling company in India?

    1. AEureka Forbes
    2. BAmway India Enterprises
    3. CModicare
    4. DHindustan Unilever Ltd.

    Answer: (D) Hindustan Unilever Ltd.

    Explanation

    Hindustan Unilever Ltd operates through multi-tiered conventional wholesale and retail distribution channels rather than direct selling.

    • D. Hindustan Unilever Ltd — relies on traditional retail stocking through distributors and mom-and-pop stores across India.
    • A, B, & C — Eureka Forbes (pioneering vacuum and water purifier door-to-door sales), Amway, and Modicare are prominent multi-level direct marketing companies that sell directly to consumers through independent sales consultants.

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54. Question 54

    Which of the following is correct about deduction available in respect of contribution to various provident funds in case of salaried employees?

    I. Employer's contribution to recognised provident fund is exempted upto 12% of salary
    II. Employer's contribution to unrecognised provident fund is exempted from tax
    III. Employer does not contribute to Public Provident Fund
    IV. Deduction under Section 80 C is available for employer's contribution in unrecognized provident fund

    Choose the correct answer from the options given below:

    1. AI, II and III only
    2. BI, II and IV only
    3. CII, III and IV only
    4. DI, II and IV only

    Answer: (A) I, II and III only

    Explanation

    Statements I, II, and III reflect the tax treatment of provident fund contributions under the Income Tax Act.

    • Statement I — Employer contribution to a Recognised Provident Fund is exempt up to 12% of salary, with any excess taxed as salary income.
    • Statement II — Employer contribution to an Unrecognised Provident Fund is exempt at the time of contribution (it is taxed upon maturity/withdrawal).
    • Statement III — Public Provident Fund is an individual savings scheme where employers make no contribution.
    • Statement IV is incorrect — Section 80C deductions apply to employee contributions to RPF or PPF, never to employer contributions to an unrecognized fund.

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55. Question 55

    Which of the following is a long-term source of finance?

    1. ACommercial paper (CP)
    2. BExternal Commercial Borrowings (ECB)
    3. CFactoring
    4. DLine of Credit (LOC)

    Answer: (B) External Commercial Borrowings (ECB)

    Explanation

    External Commercial Borrowings provide medium to long-term debt financing from non-resident international lenders.

    • B. ECB — instruments like foreign currency loans, bonds, or notes with mandatory minimum average maturity periods ranging from 3 to 5 years.
    • A. Commercial Paper — unsecured short-term money market instrument with maturities up to one year.
    • C. Factoring — short-term receivable discounting facility for working capital.
    • D. Line of Credit — revolving short-term banking credit arrangement.

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56. Question 56

    Arrange the following steps of marketing process in proper sequence:

    I. Report writing
    II. Budgeting
    III. Data collection
    IV. Field work
    V. Research outcomes

    Choose the correct answer from the options given below:

    1. AII, IV, III, V, I
    2. BIV, I, II, III, V
    3. CIV, III, II, V, I
    4. DII, V, IV, III, I

    Answer: (A) II, IV, III, V, I

    Explanation

    The research project workflow follows a structured progression from financial allocation to final dissemination.

    II, IV, III, V, I

    • II. Budgeting — securing research allocations and planning expense envelopes.
    • IV. Field work — deploying field investigators to contact respondents.
    • III. Data collection — gathering completed responses and surveys.
    • V. Research outcomes — analyzing datasets to derive core analytical findings.
    • I. Report writing — synthesizing outcomes into the final research document.

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57. Question 57

    Sugam is also known as:

    1. AITR-1
    2. BITR-2
    3. CITR-4
    4. DITR-6

    Answer: (C) ITR-4

    Explanation

    ITR-4 is officially designated as Sugam under Indian income tax return filing rules.

    • ITR-4 (Sugam) — designed for resident individuals, HUFs, and partnership firms opting for presumptive taxation schemes under Sections 44AD, 44ADA, or 44AE with income up to Rs. 50 lakh.
    • ITR-1 — named Sahaj, for resident individuals with salary/one house property income up to Rs. 50 lakh.
    • ITR-2 — for individuals and HUFs not carrying on business or profession.
    • ITR-6 — for companies other than those claiming exemption under Section 11.

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58. Question 58

    Net Present Value and Internal Rate of Return methods yield conflicting outcomes due to:

    I. Unconventional cash flows
    II. Investment size disparity
    III. Investment life disparity
    IV. Cash flow pattern disparity

    Choose the correct answer from the options given below:

    1. AI and II only
    2. BII and III only
    3. CI, II and III only
    4. DII, III and IV only

    Answer: (D) II, III and IV only

    Explanation

    Ranking conflicts between NPV and IRR in mutually exclusive investments stem from three structural disparities.

    • II. Size disparity — projects with different initial outlays may yield higher percentage IRR for smaller projects but greater total rupee value for larger projects.
    • III. Life disparity — projects with unequal operational horizons create reinvestment rate discrepancies.
    • IV. Cash flow pattern disparity — differing inflow timing (front-loaded versus back-loaded cash flows) produces cross-over discount rates where rankings reverse.

    Unconventional cash flows cause multiple IRRs rather than project ranking conflicts.

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59. Question 59

    Which of the following statements is true for the set off and carry forward of loss under the head 'house property' in India?

    1. ACan be carried forward for 8 years
    2. BCannot be carried forward
    3. CCan be carried forward for 4 years
    4. DCan be carried forward infinitely

    Answer: (A) Can be carried forward for 8 years

    Explanation

    Under Section 71B of the Income Tax Act, 1961, house property loss can be carried forward for up to 8 assessment years.

    Any unabsorbed loss under the head Income from house property that remains after current-year intra-head and inter-head set-off (capped at Rs. 2 lakh under Section 71(3A)) can be carried forward for up to 8 assessment years immediately succeeding the year of loss, to be set off exclusively against house property income.

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60. Question 60

    Market for automobiles needs to be segmented on the basis of:

    I. Buying behaviour
    II. Psychographics
    III. Geographics
    IV. Demographics

    Choose the correct answer from the options given below:

    1. AI and IV only
    2. BIII and IV only
    3. CI, II and IV only
    4. DI, II, III and IV

    Answer: (D) I, II, III and IV

    Explanation

    Automobile market segmentation incorporates all four standard marketing dimensions.

    • IV. Demographics — household income, family size, and occupation dictate purchasing budgets.
    • II. Psychographics — lifestyle, social prestige, and self-image drive preference for luxury, sports, or practical models.
    • III. Geographics — terrain, road infrastructure, and regional climate influence vehicle build (SUVs for rugged terrain, compacts for congested cities).
    • I. Buying behaviour — benefits sought (fuel efficiency, safety, performance) and brand loyalty shape vehicle selection.

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61. Question 61

    Which of the following is/are condition(s) for price discrimination of product?

    I. Firms must have some monopoly power
    II. Price elasticities of demand for the product in different market must differ
    III. Market must be separable or able to be segmented
    IV. Free entry and exit of firms

    Choose the correct answer from the options given below:

    1. AI and IV only
    2. BII, III and IV only
    3. CI, III and IV only
    4. DI, II and III only

    Answer: (D) I, II and III only

    Explanation

    Successful price discrimination requires market power, segment separation, and differential demand elasticities.

    • I. Monopoly power — the firm must be a price maker capable of dictating separate pricing structures.
    • II. Differing elasticities — higher prices are charged where demand is price inelastic and lower prices where demand is elastic.
    • III. Market separation — sub-markets must be strictly insulated to prevent resale arbitrage between buyers.
    • IV is false — free entry and exit characterizes perfect competition where firms are pure price takers and price discrimination is impossible.

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62. Question 62

    The Human Relations Approach rejected the 'rabble hypothesis' by giving which of the following argument?

    1. AThe worker does not work for money only
    2. BA worker operates in a techno-economic system with no room for emotions
    3. CAuthoritarian style of leadership is more productive
    4. DIndividual pays attention to self-achievement irrespective of informal group norms

    Answer: (A) The worker does not work for money only

    Explanation

    The Human Relations school demonstrated that workers are social beings driven by non-monetary human needs.

    Classical management theorists viewed workers through the 'rabble hypothesis' as isolated economic units motivated purely by monetary gain. Elton Mayo's Hawthorne studies disproved this view, demonstrating that peer relationships, informal group norms, recognition, and social belonging heavily influence worker motivation and output.

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63. Question 63

    The portfolio theory articulates diversification to reduce which of the following risks?

    1. AMarket risk
    2. BFinancial risk
    3. CUnsystematic risk
    4. DBusiness risk

    Answer: (C) Unsystematic risk

    Explanation

    Markowitz Modern Portfolio Theory demonstrates that diversification eliminates unsystematic risk.

    • C. Unsystematic risk — firm-specific, diversifiable risk caused by management decisions, strikes, or product failures can be diversified away by combining uncorrelated assets.
    • A. Market risk — non-diversifiable systematic risk stemming from macroeconomic factors (inflation, interest rates) affects the entire market and cannot be eliminated by diversification.

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64. Question 64

    Under which section of Information Technology Act of 2000, updated in 2008, stealing any digital asset or information is considered as cybercrime?

    1. A65
    2. B65-D
    3. C67
    4. D70

    Answer: (A) 65

    Explanation

    Section 65 of the Information Technology Act 2000 establishes criminal liability for tampering with computer source documents.

    Under Section 65, knowingly or intentionally concealing, destroying, altering, or stealing computer source code required to be maintained by law is punishable with imprisonment up to three years, a fine up to two lakh rupees, or both. Section 67 penalizes publishing obscene material, and Section 70 governs protected critical computer systems.

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65. Question 65

    Mohan has rendered his services in India and retired in 2015. He then shifted and settled in Singapore. The pension received by him for such services would be:

    1. ADeemed to accrue or arise outside India
    2. BDeemed to accrue or arise in India only when it is received in India
    3. CDeemed to accrue or arise in India only when it is received outside India
    4. DDeemed to accrue or arise in India

    Answer: (D) Deemed to accrue or arise in India

    Explanation

    Pension paid for past employment services rendered in India is deemed to accrue or arise in India under Section 9(1)(ii) of the Income Tax Act.

    Under Section 9(1)(ii) and its statutory explanation, salary and pension income earned for services rendered within India is deemed to accrue or arise in India, rendering it taxable in India regardless of the pensioner's residential status or where the payment is disbursed.

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66. Question 66

    The term 'collective bargaining' was coined by:

    1. AReed Richardson
    2. BKurt Lewin
    3. CW. E. Deming
    4. DSydney Webb and Beatrice Webb

    Answer: (D) Sydney Webb and Beatrice Webb

    Explanation

    The concept and term 'collective bargaining' was originated by Beatrice Webb in 1891 and formalized with Sydney Webb in 1897.

    In their seminal treatise Industrial Democracy, Sydney and Beatrice Webb introduced the term to describe collective negotiations between trade union representatives and employers over employment terms, hours, and wages.

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67. Question 67

    Which of the following expenses debited to Profit and Loss a/c but disallowed while computing income from business?

    I. General expenses
    II. Personal expenses
    III. Expenses of Income which is taxable under the other heads of income
    IV. Charities and donations

    Choose the correct answer from the options given below:

    1. AI, II and III only
    2. BII, III and IV only
    3. CIII and IV only
    4. DI, II, III and IV

    Answer: (B) II, III and IV only

    Explanation

    Sections 37 and 40 of the Income Tax Act govern disallowed business deductions.

    • II. Personal expenses — expressly disallowed under Section 37(1) because they lack commercial nexus.
    • III. Expenses related to other heads — municipal taxes or investment expenses deductible under House Property or Other Sources cannot be charged against business income.
    • IV. Charities and donations — not incurred wholly and exclusively for business trade (eligible separately under Section 80G).
    • I. General expenses — wholly and exclusively incurred for business operations are fully allowable deductions.

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68. Question 68

    Arrange the following legal enactments in India in chronological sequence from first to last:

    I. The Mines Act
    II. The Minimum Wages Act
    III. The Payment of Gratuity Act
    IV. The Child Labour (Prohibition and Regulation) Act
    V. The Apprentices Act

    Choose the correct answer from the options given below:

    1. AII, IV, III, I, V
    2. BII, I, V, III, IV
    3. CI, V, II, III, IV
    4. DV, II, I, III, IV

    Answer: (B) II, I, V, III, IV

    Explanation

    The Indian labor and industrial statutes were enacted in the following chronological sequence:

    II, I, V, III, IV

    • II. The Minimum Wages Act — 1948
    • I. The Mines Act — 1952
    • V. The Apprentices Act — 1961
    • III. The Payment of Gratuity Act — 1972
    • IV. The Child Labour (Prohibition and Regulation) Act — 1986

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69. Question 69

    Arrange the following initiatives taken by the government of India to tackle Non-performing assets in ascending order of chronology:

    I. Corporate Debt Restructuring
    II. Compromise Settlement
    III. The Debt Recovery Tribunals (DRTs)
    IV. Credit Information Bureau
    V. SARFAESI Act

    Choose the correct answer from the options given below:

    1. AIII, IV, I, II, V
    2. BI, II, V, III, IV
    3. CIII, IV, II, V, I
    4. DIV, III, II, V, I

    Answer: (A) III, IV, I, II, V

    Explanation

    The institutional mechanisms to manage banking non-performing assets were introduced in the following order:

    III, IV, I, II, V

    • III. Debt Recovery Tribunals (DRTs) — established under the RDDBFI Act 1993.
    • IV. Credit Information Bureau (CIBIL) — incorporated in August 2000.
    • I. Corporate Debt Restructuring (CDR) — introduced by RBI in August 2001.
    • II. Revised Compromise Settlement scheme — specialized guidelines notified around 2002.
    • V. SARFAESI Act — enacted in 2002 empowering banks to enforce securities without court intervention.

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70. Question 70

    Arrange the following procedure of Income Tax return e-filing in India in sequence:

    I. Login
    II. Register
    III. Verification
    IV. Downloading utility and preparing return
    V. e-filing Income Tax Return

    Choose the correct answer from the options given below:

    1. AI, II, III, IV, V
    2. BI, III, II, V, IV
    3. CII, I, V, IV, III
    4. DII, I, IV, V, III

    Answer: (D) II, I, IV, V, III

    Explanation

    Filing an income tax return online follows five sequential operational steps.

    II, I, IV, V, III

    • II. Register — first-time users create an account using PAN credentials on the e-filing portal.
    • I. Login — authenticated access into the personal taxpayer dashboard.
    • IV. Downloading utility and preparing return — generating the XML/JSON return using official offline or online tools.
    • V. e-filing return — uploading the completed return file to the portal.
    • III. Verification — e-verifying via Aadhaar OTP, net banking, or mailing physical ITR-V to CPC Bangalore.

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71. Question 71

    Arrange the following financing choices in order of preference suggested by the pecking order theory:

    I. Reinvestment of earnings
    II. New issue of equity
    III. Issue of debt

    Choose the correct answer from the options given below:

    1. AI, II, III
    2. BI, III, II
    3. CII, III, I
    4. DII, I, III

    Answer: (B) I, III, II

    Explanation

    Myers and Majluf's Pecking Order Theory prioritizes capital sources based on information asymmetry costs.

    I, III, II

    • I. Reinvestment of earnings (Internal equity) — cheapest and least sensitive to asymmetric information signaling.
    • III. Issue of debt (External debt) — safer than external equity because debt signals less information risk to market participants.
    • II. New issue of equity (External equity) — lowest preference and last resort due to negative market signaling and dilution.

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72. Question 72

    When sampling is done without replacement, the standard error of the mean is:

    1. ASE x̄ = σ/√n
    2. BSE x̄ = (σ/√n) √((N - n)/(n - 1))
    3. CSE x̄ = (σ/√n) √((N - 1)/(N - n))
    4. DSE x̄ = (σ/√n) √(1 - n/N)

    Answer: (D) SE x̄ = (σ/√n) √(1 - n/N)

    Explanation

    When sampling from a finite population without replacement, the standard error includes the finite population correction factor.

    Baseline standard error:
    SE = σ / √n

    Finite population correction (FPC):
    FPC = √((N - n) / N) = √(1 - n/N)

    Combined formula:
    SE x̄ = (σ / √n) * √(1 - n/N)

    Options B and C present mathematically corrupted denominators, making D the only valid finite multiplier formulation.

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73. Question 73

    Arrange the following steps of creating a market-competitive pay plan in sequence from first to last:

    I. Choose benchmark jobs and select compensable factors
    II. Define each compensable factor and determine its degree in each job
    III. Establish rate changes
    IV. Develop pay grades
    V. Compare and adjust current and market wages rates for jobs

    Choose the correct answer from the options given below:

    1. AII, I, V, IV, III
    2. BI, III, II, IV, V
    3. CI, II, V, IV, III
    4. DI, II, III, V, IV

    Answer: (C) I, II, V, IV, III

    Explanation

    Creating a market-competitive pay structure follows Gary Dessler's structured compensation framework.

    I, II, V, IV, III

    • I. Choose benchmark jobs — selecting representative anchor roles and core compensable factors.
    • II. Define compensable factors — assigning point values and degree levels through job evaluation.
    • V. Compare and adjust wage rates — aligning internal wage curves against external compensation survey data.
    • IV. Develop pay grades — clustering similarly evaluated jobs into pay bands.
    • III. Establish rate changes — setting wage ranges and progression intervals.

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74. Question 74

    Cost audits for material covers:

    I. Goods inward procedure
    II. Methods of calculating standard cost variance
    III. Classification of overhead
    IV. Accounting for scrap, wastage, materials transfers
    V. Accounting treatment of under or over absorption

    Choose the correct answer from the options given below:

    1. AI, IV only
    2. BI, V only
    3. CI, II only
    4. DV, III only

    Answer: (A) I, IV only

    Explanation

    Material cost audit examines procedures directly governing physical inventory and material stores accounting.

    • I. Goods inward procedure — verifying receipt documentation, inspection standards, and store receipt vouchers.
    • IV. Scrap, wastage, and transfers — auditing spoilage allowances, defective material write-offs, and inter-departmental transfers.
    • III & V — overhead audit procedures concerning overhead absorption and classification.
    • II — belongs to general variance analysis rather than specific material store audit.

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75. Question 75

    What is repo rate?

    1. AIs the rate at which RBI lends to State government
    2. BIs the rate at which International aid agencies lends to TBI
    3. CIs the rate at which RBI lends to Banks in case of short maturity
    4. DIs the rate at which RBI borrows funds from the Commercial Banks in the country

    Answer: (C) Is the rate at which RBI lends to Banks in case of short maturity

    Explanation

    Repo (Repurchase) rate is the benchmark policy interest rate at which the Reserve Bank of India lends short-term funds to commercial banks.

    Banks borrow funds from the central bank by pledging approved government securities under a repurchase agreement. Conversely, the reverse repo rate is the rate at which RBI absorbs liquidity by borrowing funds from commercial banks.

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76. Question 76

    Match List-I with List-II.

    List-I (authors of Trade Theory)	List-II (Name of theory)
    I. Steffan Linder	1. Product Life Cycle Theory
    II. Raymond Vernon	2. Country Similarity Theory
    III. Hecksher- Ohlin	3. Absolute Advantage Theory
    IV. Adam Smith	4. Factor Proportion Theory

    1. AI-4, II-3, III-2, IV-1
    2. BI-2, II-1, III-4, IV-3
    3. CI-1, II-3, III-4, IV-2
    4. DI-3, II-2, III-1, IV-4

    Answer: (B) I-2, II-1, III-4, IV-3

    Explanation

    The international trade theorists match their foundational theories as follows:

    I-2, II-1, III-4, IV-3

    • I. Steffan Linder (2) — Country Similarity Theory (overlapping demand between nations with similar per capita income levels).
    • II. Raymond Vernon (1) — Product Life Cycle Theory (innovation, maturity, and standardized stages across nations).
    • III. Heckscher-Ohlin (4) — Factor Proportion Theory (nations export goods utilizing their abundant production factors).
    • IV. Adam Smith (3) — Theory of Absolute Advantage (nations specialize in goods they produce at lowest absolute labor cost).

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77. Question 77

    Assertion (A): Firms opt for buying an asset if the equivalent annual cost of ownership and operation is less than the best lease rate it can get.

    Reason (R): Operating leases are attractive to equipment users if the lease payment is less than the user's equivalent annual cost of buying the equipment.

    1. ABoth A and R are true and R is the correct explanation of A
    2. BBoth A and R are true but R is NOT the correct explanation of A
    3. CA is true but R is false
    4. DA is false but R is true

    Answer: (B) Both A and R are true but R is NOT the correct explanation of A

    Explanation

    Both statements represent valid financial decision rules in lease-versus-buy analysis, but Reason (R) does not explain Assertion (A).

    • Assertion (A) — buying an asset is financially superior when the annualized net cost of ownership (EAC) falls below the best available lease rate.
    • Reason (R) — conversely, leasing becomes attractive when the periodic lease rental is lower than the equivalent annual cost of purchase.

    Reason (R) merely expresses the reciprocal decision rule from the leasing perspective rather than establishing the financial rationale for why EAC dictates the purchase decision.

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78. Question 78

    Match List-I with List-II.

    List-I (Authors)	List-II (Ideas)
    I. Bill Bishop	1. Managing in the market space
    II. D. Bird	2. Common-sense Direct marketing
    III. Daniel S. Jonal	3. Strategic marketing for the digital age
    IV. Jeffery F. Rayport	4. On-line marketing

    1. AI-3, II-2, III-4, IV-1
    2. BI-1, II-2, III-3, IV-4
    3. CI-2, II-1, III-4, IV-3
    4. DI-4, II-3, III-2, IV-1

    Answer: (A) I-3, II-2, III-4, IV-1

    Explanation

    The marketing authors match their prominent publications and concepts as follows:

    I-3, II-2, III-4, IV-1

    • I. Bill Bishop (3) — author of Strategic Marketing for the Digital Age.
    • II. Drayton Bird (2) — author of Commonsense Direct and Digital Marketing.
    • III. Daniel S. Janal (4) — author of Online Marketing Handbook.
    • IV. Jeffrey F. Rayport (1) — co-authored the seminal Harvard Business Review study Managing in the Marketspace distinguishing physical marketplace from virtual marketspace.

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79. Question 79

    The strategies of flanking defense, pre-emptive defense, mobile defense, contraction defense and counter offensive defense are used by which market player?

    I. Market challenger
    II. Market leader
    III. Market follower
    IV. Market nicher
    V. Start up Marketer

    Choose the correct answer from the options given below:

    1. AI only
    2. BII only
    3. CIII only
    4. DII and V only

    Answer: (B) II only

    Explanation

    In competitive marketing strategy, defensive postures belong exclusively to the Market Leader.

    Philip Kotler identifies six core defensive strategies employed by market leaders to safeguard market dominance against challengers:

    • Position defense — erecting fortress barriers around existing territory.
    • Flank defense — protecting vulnerable underbellies.
    • Preemptive defense — striking potential attackers before they move.
    • Counteroffensive defense — launching a retaliatory frontal assault.
    • Mobile defense — expanding into new territories through market broadening.
    • Contraction defense — planned withdrawal from unviable territories to concentrate core resources.

    Market challengers use offensive attack strategies (frontal, flank, encirclement, bypass, guerilla).

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80. Question 80

    The Regression Coefficient is independent of the change of:

    I. Scale only
    II. Origin only
    III. Both scale and origin
    IV. Neither scale nor origin

    Choose the correct answer from the options given below:

    1. AI only
    2. BII only
    3. CIII only
    4. DIV only

    Answer: (B) II only

    Explanation

    Regression coefficients are independent of change of origin but dependent on change of scale.

    Transforming variables by origin shift a and scale divisor h via u = (X - a)/h and v = (Y - b)/k alters the regression slope according to:
    b_yx = (k / h) * b_vu

    Adding or subtracting constants (origin change) does not alter the value of the regression coefficient, whereas multiplying or dividing (scale change) scales the coefficient directly by k/h.

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81. Question 81

    Assertion (A): According to Herzberg, preventing or reducing dissatisfaction at work is not the same as providing satisfaction.

    Reason (R): Under the 'two factor theory', job satisfaction and dissatisfaction are two different aspects of work motivation.

    1. ABoth A and R are true and R is the correct explanation of A
    2. BBoth A and R are true but R is NOT the correct explanation of A
    3. CA is true but R is false
    4. DA is false but R is true

    Answer: (A) Both A and R are true and R is the correct explanation of A

    Explanation

    Both statements are true and Reason (R) provides the foundational theoretical basis for Assertion (A).

    • Assertion (A) — In Frederick Herzberg's Motivation-Hygiene Theory, eliminating hygiene deficiencies merely eliminates dissatisfaction without creating motivation or genuine job satisfaction.
    • Reason (R) — Herzberg demonstrated that satisfaction and dissatisfaction are not opposites on a single continuum, but separate and distinct constructs influenced by different factors (motivators govern satisfaction, hygiene factors govern dissatisfaction).

    Because satisfaction and dissatisfaction exist on independent dimensions, preventing dissatisfaction cannot provide satisfaction.

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82. Question 82

    Which of the following relationships is true in a moderately skewed modal distribution?

    1. AMean - Mode = 3(Mean - Median)
    2. BMode = 3 Median + 2 Mean
    3. C3 Median = 2 Mean - Mode
    4. D2 Median - 3 Quartile deviation = 2 Mean

    Answer: (A) Mean - Mode = 3(Mean - Median)

    Explanation

    Karl Pearson established the empirical relationship for unimodal, moderately skewed distributions.

    Fundamental formula:
    Mode = 3 * Median - 2 * Mean

    Subtracting Mode from Mean:
    Mean - Mode = Mean - (3 * Median - 2 * Mean)
    Mean - Mode = 3 * Mean - 3 * Median
    Mean - Mode = 3 * (Mean - Median)

    This algebraically confirms the exact equivalence stated in option A.

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83. Question 83

    Arrange the following steps in logical sequence of operation of the Arbitrage Pricing Theory (APT):

    I. Estimate the Factor sensitivities
    II. Estimate the risk premium for factor(s)
    III. Identify the macroeconomic factors

    Choose the correct answer from the options given below:

    1. AI, II, III
    2. BII, I, III
    3. CIII, II, I
    4. DIII, I, II

    Answer: (D) III, I, II

    Explanation

    Stephen Ross's Arbitrage Pricing Theory implements a multi-factor asset pricing progression.

    III, I, II

    • III. Identify macroeconomic factors — determining pervasive systematic variables (industrial production, inflation shifts, term structure spreads).
    • I. Estimate factor sensitivities — running time-series regressions to estimate factor betas for individual assets.
    • II. Estimate risk premiums — conducting cross-sectional regressions to estimate equilibrium factor risk premiums rewarded by the market.

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84. Question 84

    Given below are two statements:

    Statement I: Monetary policy causes a deliberate change in government revenue and expenditure with a view to influencing the price level and the quantum of national output.

    Statement II: Fiscal policy regulates the money supply and the cost and availability of credit.

    Choose the correct answer from the options given below:

    1. ABoth Statement I and Statement II are correct
    2. BBoth Statement I and Statement II are incorrect
    3. CStatement I is correct but Statement II is incorrect
    4. DStatement I is incorrect but Statement II is correct

    Answer: (B) Both Statement I and Statement II are incorrect

    Explanation

    Both statements reverse the definitions of fiscal policy and monetary policy.

    • Statement I is incorrect — deliberate adjustments in government tax revenues and public expenditure constitute fiscal policy, which is formulated by the central government.
    • Statement II is incorrect — regulation of the money supply, policy rates, and credit availability constitutes monetary policy, which is administered by the central bank.

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85. Question 85

    Match List-I with List-II.

    List-I	List-II
    I. 80GG	1. Deduction in respect of contribution given by companies to political parties
    II. 80GGA	2. Deduction in respect of contribution given by any person to political parties
    III. 80GGB	3. Deduction in respect of scientific research
    IV. 80GGC	4. Deduction in respect of rent paid

    1. AI-4, II-3, III-1, IV-2
    2. BI-3, II-4, III-2, IV-1
    3. CI-4, II-3, III-2, IV-1
    4. DI-4, II-2, III-1, IV-3

    Answer: (A) I-4, II-3, III-1, IV-2

    Explanation

    The specific Income Tax Act deductions under Chapter VI-A match as follows:

    I-4, II-3, III-1, IV-2

    • I. 80GG (4) — deduction for rent paid by an individual who does not receive house rent allowance.
    • II. 80GGA (3) — deduction in respect of donations for scientific research or rural development.
    • III. 80GGB (1) — deduction for political contributions made by Indian companies.
    • IV. 80GGC (2) — deduction for political contributions made by any non-corporate person.

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86. Question 86

    Which one is the correct sequence implied in the Indian Contract Act 1872?

    I. Offer of proposal
    II. Contract
    III. Promise
    IV. Agreement
    V. Acceptance

    Choose the correct answer from the options given below:

    1. AIII, V, I, IV, I
    2. BIV, II, III, I, V
    3. CII, IV, III, V, I
    4. DI, V, III, IV, II

    Answer: (D) I, V, III, IV, II

    Explanation

    Contract formation under Section 2 of the Indian Contract Act 1872 follows a strict legal sequence.

    I, V, III, IV, II

    • I. Offer or proposal — Section 2(a), one party signifies willingness to do or abstain from doing something.
    • V. Acceptance — Section 2(b), the person to whom the proposal is made signifies assent.
    • III. Promise — Section 2(b), a proposal when accepted becomes a promise.
    • IV. Agreement — Section 2(e), every promise and set of promises forming consideration for each other.
    • II. Contract — Section 2(h), an agreement enforceable by law.

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87. Question 87

    In a rising consumer income scenario, the preferred decision choices of business firms for low-income elastic products will be:

    1. AProduct promotion
    2. BCost control
    3. CProduct repositioning
    4. DProduct improvement

    Answer: (D) Product improvement

    Explanation

    When consumer income rises, products with low income elasticity (such as basic necessities) experience minimal organic volume expansion.

    Because consumers spend rising discretionary income on superior, higher-quality, or differentiated alternatives, firms producing staple goods cannot expand sales simply through market growth. Firms upgrade value through product improvement (enhancing features, formulation, or packaging) to appeal to consumers seeking premium attributes.

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88. Question 88

    Which of the following are possible negative impacts of FDI on domestic firms in host countries?

    I. Market monopoly
    II. Technology dependence
    III. Increased competition
    IV. Profit outflow

    Choose the correct answer from the options given below:

    1. AI, II only
    2. BII, III only
    3. CI, III, IV only
    4. DI, II, IV only

    Answer: (D) I, II, IV only

    Explanation

    Statements I, II, and IV represent recognized adverse economic effects of Foreign Direct Investment on host domestic firms.

    • I. Market monopoly — large multinational corporations can leverage capital power to crowd out domestic competitors and capture market monopolies.
    • II. Technology dependence — reliance on foreign corporate R&D can stifle indigenous technological innovation.
    • IV. Profit outflow — substantial repatriation of dividends, management fees, and royalties drains capital from the host nation.
    • III. Increased competition — regarded in economic theory as a positive competitive benefit that fosters market efficiency and consumer choice rather than an inherent negative impact.

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89. Question 89

    If an estimated Cobb-Douglas production function is Q = 10 K^0.6 L^0.8, what type of returns to scale does this production function indicate?

    1. AIncreasing returns
    2. BDecreasing returns
    3. CConstant returns
    4. DNegative returns

    Answer: (A) Increasing returns

    Explanation

    In a Cobb-Douglas production function Q = A * K^α * L^β, returns to scale are measured by the sum of factor output elasticities α + β.

    Given:
    α = 0.6
    β = 0.8

    Calculation:
    α + β = 0.6 + 0.8 = 1.4

    Because the sum of powers exceeds 1 (1.4 > 1), doubling both capital and labor increases total output by more than double, demonstrating increasing returns to scale.

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90. Question 90

    Match List-I with List-II.

    List-I (Transactional analysis position)	List-II
    I. I am Not OK, you are Not OK	1. Dependent
    II. I am OK, you are Not OK	2. Confronting
    III. I am OK, you are OK	3. Withdrawn
    IV. I am Not OK, you are OK	4. Task obsessive

    1. AI-3, II-4, III-2, IV-1
    2. BI-3, II-2, III-4, IV-1
    3. CI-1, II-2, III-3, IV-4
    4. DI-2, II-1, III-3, IV-4

    Answer: (A) I-3, II-4, III-2, IV-1

    Explanation

    In transactional analysis and interpersonal behavioral frameworks, life positions correspond to specific behavioral orientations:

    I-3, II-4, III-2, IV-1

    • I. I am Not OK, you are Not OK (3) — feelings of futility, helplessness, and total despair lead to a withdrawn orientation.
    • II. I am OK, you are Not OK (4) — feelings of personal superiority coupled with mistrust of others produce a task obsessive, controlling approach.
    • III. I am OK, you are OK (2) — mutual respect and healthy problem-solving foster an open, confronting stance.
    • IV. I am Not OK, you are OK (1) — feelings of personal inadequacy relative to others manifest in dependent behavior.

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91. Question 91

    Match List-I with List-II.

    List-I	List-II
    I. Exhaustion	1. Not able to complete work
    II. Cynicism	2. No energy for work
    III. Inefficiency	3. No interest in customer

    1. AI-1, II-2, III-3
    2. BI-3, II-2, III-1
    3. CI-2, II-3, III-1
    4. DI-2, II-1, III-3

    Answer: (C) I-2, II-3, III-1

    Explanation

    The three core dimensions of the Maslach Burnout Inventory match their symptomatic manifestations as follows:

    I-2, II-3, III-1

    • I. Exhaustion (2) — complete depletion of emotional and physical energy for work.
    • II. Cynicism (3) — depersonalized, detached attitude showing no interest in customers or clients.
    • III. Inefficiency (1) — reduced personal accomplishment leaving an employee unable to complete work effectively.

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92. Question 92

    Which of the following has the correct sequence of the stages of burnout?

    1. AFatigue due to excessive work, dislike for work, failure to achieve targets
    2. BNegative feelings about work, dislike for work, effort to quit work
    3. CInitial good interpersonal relations, depersonalization, loss of idealism
    4. DCynicism, inadequacy, inefficiency

    Answer: (A) Fatigue due to excessive work, dislike for work, failure to achieve targets

    Explanation

    The progression of job burnout follows three progressive stages:

    • First stage — physical and mental fatigue resulting from unremitting excessive work.
    • Second stage — psychological aversion and active dislike for work activities.
    • Third stage — functional collapse marked by inability and failure to achieve performance targets.

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93. Question 93

    Which of the following are caused by burnout?

    I. Concern for clients
    II. Negative social behaviour
    III. Physical and mental strain

    Choose the correct answer from the options given below:

    1. AI only
    2. BI, II only
    3. CII, III only
    4. DI, III only

    Answer: (C) II, III only

    Explanation

    Job burnout induces severe somatic strain and dysfunctional interpersonal conduct.

    • III. Physical and mental strain — persistent somatic fatigue, insomnia, headaches, and chronic cognitive exhaustion.
    • II. Negative social behaviour — irritability, cynicism, absenteeism, and callous interpersonal friction.
    • Item I is false — burnout causes depersonalization and detachment from clients rather than genuine concern.

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94. Question 94

    Statement I: Cynicism stage of product is often experienced by employees, engaged in production activity, due to excessive work pressure.

    Statement II: In Cynicism stage of burnout, person withdraws from others and shows lack of interest towards them.

    1. ABoth Statement I and Statement II are correct
    2. BBoth Statement I and Statement II are incorrect
    3. CStatement I is correct but Statement II is incorrect
    4. DStatement I is incorrect but Statement II is correct

    Answer: (D) Statement I is incorrect but Statement II is correct

    Explanation

    Statement I contains an erroneous concept while Statement II accurately defines burnout cynicism.

    • Statement I is incorrect — cynicism is an interpersonal and psychological dimension of human burnout (depersonalization), not a stage of a manufactured physical product.
    • Statement II is correct — during the cynicism phase of burnout, individuals withdraw emotionally, adopting indifferent, callous, and detached behaviors toward clients and colleagues.

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95. Question 95

    Which of the following is not a resource-imbalance model of burnout?

    1. AJob demands-resources model
    2. BConservation of resources model
    3. CThree dimensional model
    4. DAreas of Work life model

    Answer: (C) Three dimensional model

    Explanation

    The Three-Dimensional Model by Christina Maslach is a descriptive symptom-structure model rather than an organizational resource-imbalance framework.

    • C. Three dimensional model — conceptualizes burnout along three symptom dimensions (exhaustion, cynicism, and reduced personal accomplishment) without modeling input-output resource dynamics.
    • A. JD-R model — explicitly models imbalance between job demands and available organizational resources.
    • B. COR model — Stevan Hobfoll's framework centering on the depletion and preservation of psychological resources.
    • D. Areas of Worklife — assesses systemic person-job resource incongruence across six structural workplace areas.

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96. Question 96

    Which among the following is a correct statement based on the passage?

    It is desirable for consumers to be aware of their rights, and to exercise those rights responsibly and intelligently. In these days of audio-video publicity on the public and private media, it is indeed very difficult, if not impossible, to verify the exaggerated or false claims made by producers, manufacturers, distributors and dealers of various goods and services. The all-pervasive, exaggerated and often false claims, made for services and goods, emphasize the imperative need for Consumer Protection Legislation and creation of awareness about it among the general public. In this connection, there are a number of enactments, in India such as the prevention of Food Adulteration Act, 1954, the Essential Commodities Act, 1955, the Hire Purchases Act, 1972,the Standards Weight and Measure Act, 1976 etc. However, the remedies prescribed there under are time-consuming, inadequate and expensive. As in other areas of Judicial Processes, the offenders are hardly caught, proceeded against and rarely, if ever, got convicted. When violators go scot-free, the victims have no remedy and gets frustrated.

    1. AProducers and manufacturers are sensitive about consumers' rights
    2. BProducers and manufacturers are insensitive about consumers' rights
    3. CProducers and manufacturers are neutral about consumers' rights
    4. DProducers and manufacturers are basically governed by ethics and values

    Answer: (B) Producers and manufacturers are insensitive about consumers' rights

    Explanation

    The passage emphasizes that producers and manufacturers routinely make exaggerated and false claims regarding goods and services.

    Such all-pervasive, misleading commercial representations demonstrate an indifference and insensitivity toward consumer rights, necessitating protective legislation.

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97. Question 97

    Which among the following is a correct statement based on the passage?

    It is desirable for consumers to be aware of their rights, and to exercise those rights responsibly and intelligently. In these days of audio-video publicity on the public and private media, it is indeed very difficult, if not impossible, to verify the exaggerated or false claims made by producers, manufacturers, distributors and dealers of various goods and services. The all-pervasive, exaggerated and often false claims, made for services and goods, emphasize the imperative need for Consumer Protection Legislation and creation of awareness about it among the general public. In this connection, there are a number of enactments, in India such as the prevention of Food Adulteration Act, 1954, the Essential Commodities Act, 1955, the Hire Purchases Act, 1972,the Standards Weight and Measure Act, 1976 etc. However, the remedies prescribed there under are time-consuming, inadequate and expensive. As in other areas of Judicial Processes, the offenders are hardly caught, proceeded against and rarely, if ever, got convicted. When violators go scot-free, the victims have no remedy and gets frustrated.

    1. AConsumes' laws are not explained well in India
    2. BIndian Judiciary System needs a drastic reform to facilitate consumers' welfare
    3. CIndian manufacturers are clever
    4. DThe Indian consumers have no remedy and get frustrated

    Answer: (D) The Indian consumers have no remedy and get frustrated

    Explanation

    The passage explicitly concludes that statutory remedies are time-consuming, inadequate, and expensive.

    Because offenders are rarely prosecuted or convicted and routinely go scot-free, victims are left with no effective practical remedy and end up frustrated.

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98. Question 98

    Who among the following could be considered at the centre point in the passage?

    It is desirable for consumers to be aware of their rights, and to exercise those rights responsibly and intelligently. In these days of audio-video publicity on the public and private media, it is indeed very difficult, if not impossible, to verify the exaggerated or false claims made by producers, manufacturers, distributors and dealers of various goods and services. The all-pervasive, exaggerated and often false claims, made for services and goods, emphasize the imperative need for Consumer Protection Legislation and creation of awareness about it among the general public. In this connection, there are a number of enactments, in India such as the prevention of Food Adulteration Act, 1954, the Essential Commodities Act, 1955, the Hire Purchases Act, 1972,the Standards Weight and Measure Act, 1976 etc. However, the remedies prescribed there under are time-consuming, inadequate and expensive. As in other areas of Judicial Processes, the offenders are hardly caught, proceeded against and rarely, if ever, got convicted. When violators go scot-free, the victims have no remedy and gets frustrated.

    1. AConsumers
    2. BJudicial process
    3. CManufacturers
    4. DGovernment

    Answer: (A) Consumers

    Explanation

    The entire passage focuses on the rights, protection, and judicial remedies available to consumers.

    From opening with consumer awareness of statutory rights to evaluating deceptive claims by manufacturers and the lack of effective judicial remedies for victims, the consumer serves as the primary focal subject.

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99. Question 99

    Which among the following is a correct statement based on the passage?

    It is desirable for consumers to be aware of their rights, and to exercise those rights responsibly and intelligently. In these days of audio-video publicity on the public and private media, it is indeed very difficult, if not impossible, to verify the exaggerated or false claims made by producers, manufacturers, distributors and dealers of various goods and services. The all-pervasive, exaggerated and often false claims, made for services and goods, emphasize the imperative need for Consumer Protection Legislation and creation of awareness about it among the general public. In this connection, there are a number of enactments, in India such as the prevention of Food Adulteration Act, 1954, the Essential Commodities Act, 1955, the Hire Purchases Act, 1972,the Standards Weight and Measure Act, 1976 etc. However, the remedies prescribed there under are time-consuming, inadequate and expensive. As in other areas of Judicial Processes, the offenders are hardly caught, proceeded against and rarely, if ever, got convicted. When violators go scot-free, the victims have no remedy and gets frustrated.

    1. AThe Government of India has enacted sufficient number of laws for protection of consumer interests
    2. BThe paragraph does not give comprehensive list of laws in favour of consumers
    3. CLegal environment for consumers in India is not conducive
    4. DLegal environment for consumers in India is conducive

    Answer: (C) Legal environment for consumers in India is not conducive

    Explanation

    The passage portrays the prevailing legal remedies as expensive, delayed, and largely ineffective for consumers.

    With offenders rarely facing conviction and victims left without prompt, adequate redress, the operational legal environment fails to provide a conducive protective climate for consumers.

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100. Question 100

     Which among the following is a correct statement based on the passage?

     It is desirable for consumers to be aware of their rights, and to exercise those rights responsibly and intelligently. In these days of audio-video publicity on the public and private media, it is indeed very difficult, if not impossible, to verify the exaggerated or false claims made by producers, manufacturers, distributors and dealers of various goods and services. The all-pervasive, exaggerated and often false claims, made for services and goods, emphasize the imperative need for Consumer Protection Legislation and creation of awareness about it among the general public. In this connection, there are a number of enactments, in India such as the prevention of Food Adulteration Act, 1954, the Essential Commodities Act, 1955, the Hire Purchases Act, 1972,the Standards Weight and Measure Act, 1976 etc. However, the remedies prescribed there under are time-consuming, inadequate and expensive. As in other areas of Judicial Processes, the offenders are hardly caught, proceeded against and rarely, if ever, got convicted. When violators go scot-free, the victims have no remedy and gets frustrated.

     1. AConsumers in India are aware of their rights
     2. BConsumers in India exercise their rights responsibly
     3. CConsumers in India are unaware of their rights and hence, they do not exercise them
     4. DNone of the above could be ascertained on the basis of paragraph given here above

     Answer: (D) None of the above could be ascertained on the basis of paragraph given here above

     Explanation

     The passage makes a normative assertion that it is desirable for consumers to be aware of their rights and exercise them responsibly.

     It does not present factual or empirical findings regarding whether Indian consumers actually possess awareness or currently exercise their statutory rights, meaning none of options A, B, or C can be ascertained from the text.

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100 questions with the answer key and explanations.

1. Question 1

   Meaning of unpaid seller is:

   1. AThe person who has not paid the price.
   2. BThe person who has sold the goods and received the price.
   3. CThe person who has sold the goods and has not yet received the price.
   4. DThe person who has not sold the goods.

   Answer: (C) The person who has sold the goods and has not yet received the price.

   Explanation

   Under Section 45 of the Sale of Goods Act, 1930, a seller is deemed to be an unpaid seller when the whole of the price has not been paid or tendered, or when a conditional payment instrument like a cheque or bill of exchange is dishonoured.

   • A. The person who has not paid the price — refers to a defaulting buyer rather than a seller.
   • B. The person who has sold the goods and received the price — this seller is fully paid.
   • C. The person who has sold the goods and has not yet received the price — correct, defining the statutory status of an unpaid seller.
   • D. The person who has not sold the goods — an entity that has not transacted cannot be an unpaid seller.

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2. Question 2

   Swachh Bharat Abhiyan is an example of

   1. ASustainable marketing
   2. BSocial marketing
   3. CServices marketing
   4. DRelationship marketing

   Answer: (B) Social marketing

   Explanation

   Social marketing uses commercial marketing principles and techniques to influence target audience behaviours that enhance the welfare of individuals and society as a whole.

   Initiatives such as Swachh Bharat Abhiyan promote public sanitation and hygiene habits for community welfare rather than commercial profit.

   • A. Sustainable marketing — focuses on meeting present consumer and business needs while preserving future environmental capacity.
   • B. Social marketing — correct, because the campaign aims to alter public behaviour for widespread societal good.
   • C. Services marketing — deals with the marketing of intangible economic activities.
   • D. Relationship marketing — aims at developing long-term, loyal relationships with individual commercial buyers.

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3. Question 3

   Which type of studies would be most appropriate to use in order to measure changed opinions of consumers repeatedly?

   1. AFocus group studies
   2. BShadowing studies
   3. CLongitudinal studies
   4. DExperimental studies

   Answer: (C) Longitudinal studies

   Explanation

   Longitudinal studies track the same sample of subjects over extended time intervals, making them ideal for observing changes, trends, and shifts in consumer attitudes or opinions repeatedly.

   • A. Focus group studies — gather qualitative insights through a one-off facilitated group discussion.
   • B. Shadowing studies — involve observing a subject in real time to understand daily behaviours.
   • C. Longitudinal studies — correct, because repeated measurements over time track changing consumer opinions.
   • D. Experimental studies — manipulate independent variables under controlled conditions to determine cause-and-effect relationships.

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4. Question 4

   Which type of retailers involve in comparatively low prices as a major selling point combined with the reduced costs of doing business?

   1. AConvenience stores
   2. BDiscount retailers
   3. CLimited line retailers
   4. DCategory killer stores

   Answer: (B) Discount retailers

   Explanation

   Discount retailers operate on a high-volume, low-margin business model. They minimize operating overhead through streamlined store setups and bulk purchasing, passing the savings to consumers through consistently lower prices.

   • A. Convenience stores — charge higher prices in exchange for long hours and proximate, convenient neighbourhood locations.
   • B. Discount retailers — correct, as their central value proposition combines low operational costs with everyday low selling prices.
   • C. Limited line retailers — narrow their focus to specific product lines rather than relying on low cost leadership.
   • D. Category killer stores — carry an immense depth of merchandise within a specific category to dominate that market segment.

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5. Question 5

   Tele-marketing is a part of

   1. AViral marketing
   2. BSocial marketing
   3. CDirect marketing
   4. DRelationship marketing

   Answer: (C) Direct marketing

   Explanation

   Direct marketing involves direct contact with targeted individual consumers without using traditional intermediary retail channels. Tele-marketing reaches prospects and customers directly via telephone to solicit orders or generate leads.

   • A. Viral marketing — encourages individuals to pass along marketing messages digitally to create exponential diffusion.
   • B. Social marketing — seeks to influence social behaviours to benefit the community.
   • C. Direct marketing — correct, because telephone solicitations contact individual prospects directly for an immediate response.
   • D. Relationship marketing — represents an overarching philosophy aimed at long-term customer retention rather than a direct communication channel.

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6. Question 6

   After concept testing, a firm would engage in which of the following stage in developing and marketing a new product?

   1. ATest marketing
   2. BMarketing strategy/development
   3. CBusiness analysis
   4. DProduct development

   Answer: (B) Marketing strategy/development

   Explanation

   In the standard new product development framework, marketing strategy development directly follows concept development and testing.

   The sequential stages are:

   1. Idea generation
   2. Idea screening
   3. Concept development and testing
   4. Marketing strategy development
   5. Business analysis
   6. Product development
   7. Test marketing
   8. Commercialization

   • A. Test marketing — occurs much later, after the physical product has already been developed.
   • B. Marketing strategy/development — correct, as the firm formulates the target market profile and initial marketing mix right after validating the concept.
   • C. Business analysis — takes place after formulating the preliminary marketing strategy.
   • D. Product development — turns the validated concept and business plan into a physical prototype in a later phase.

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7. Question 7

   A marketer needs to be aware of the criteria by which the effectiveness of their segmentation procedures can be assessed. Which of the following is NOT a criterion for evaluating the resulting market segments?

   1. APerishability
   2. BSize of the resulting segment
   3. CMeasurability
   4. DAccessibility

   Answer: (A) Perishability

   Explanation

   Effective market segmentation requires segments to satisfy five criteria: measurability, substantiality (adequate segment size and profitability), accessibility, differentiability, and actionability.

   Perishability is a distinctive characteristic of services indicating they cannot be inventoried, rather than a criterion used to evaluate market segments.

   • A. Perishability — correct, as it describes the impossibility of storing service capacity rather than segment validity.
   • B. Size of the resulting segment — a core criterion (substantiality) ensuring the segment is large enough to warrant a tailored marketing mix.
   • C. Measurability — ensures purchasing power, size, and customer profiles can be quantified.
   • D. Accessibility — ensures the segment can be reached and served through available distribution and media channels.

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8. Question 8

   “Skimming” in e-banking refers to

   1. AIdentifying fraudsters copying vital information from credit cards.
   2. BMultiple transactions by one credit card.
   3. CConversion of a debit card into credit card.
   4. DExcessive charge for online services.

   Answer: (A) Identifying fraudsters copying vital information from credit cards.

   Explanation

   In electronic banking, skimming is card fraud where a small electronic scanner captures and copies magnetic-stripe data from payment cards at automated teller machines or point-of-sale terminals.

   The exam question focuses on the illicit practice of stealing card information through skimming hardware.

   • A. Identifying fraudsters copying vital information from credit cards. — correct, matching the exam syllabus description of credit card skimming activity.
   • B. Multiple transactions by one credit card. — refers to high-frequency usage or card velocity, not hardware skimming.
   • C. Conversion of a debit card into credit card. — represents an account or card upgrade rather than a fraud technique.
   • D. Excessive charge for online services. — describes price gouging or hidden service surcharges.

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9. Question 9

   Belated return u/s 139(4) can be filled at any time

   1. ABefore the expiry of relevant assessment year.
   2. BBefore the expiry of one year from relevant assessment year.
   3. CBefore the expiry of relevant assessment year or before the assessment is complete, whichever is earlier.
   4. DBefore the expiry of one year from the end of the relevant assessment year or before the assessment year, whichever is earlier.

   Answer: (C) Before the expiry of relevant assessment year or before the assessment is complete, whichever is earlier.

   Explanation

   Under Section 139(4) of the Income Tax Act, an assessee who has not furnished a return of income within the due date prescribed under Section 139(1) may file a belated return at any time before the expiry of the relevant assessment year or before the completion of the assessment, whichever is earlier.

   • A. Before the expiry of relevant assessment year. — ignores the statutory cutoff when an assessment order is passed earlier.
   • B. Before the expiry of one year from relevant assessment year. — reflects an obsolete rule prior to the Finance Act 2016 amendment.
   • C. Before the expiry of relevant assessment year or before the assessment is complete, whichever is earlier. — correct, stating both statutory limiters under Section 139(4).
   • D. Before the expiry of one year from the end of the relevant assessment year... — incorrect extension beyond the assessment year timeline.

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10. Question 10

    Tax audit is compulsory in case of a person carrying on business whose gross turnover exceeds

    1. ARs. 60 lakhs
    2. BRs. 1 crore
    3. CRs. 40 lakhs
    4. DRs. 2 crores

    Answer: (B) Rs. 1 crore

    Explanation

    Under Section 44AB(a) of the Income Tax Act, 1961, every person carrying on business is legally required to get accounts audited by an accountant if total sales, turnover, or gross receipts in business exceed Rs. 1 crore in any previous year.

    • A. Rs. 60 lakhs — obsolete limit that applied prior to the Finance Act 2012.
    • B. Rs. 1 crore — correct, as this is the standard statutory baseline threshold under Section 44AB(a).
    • C. Rs. 40 lakhs — an older historical threshold under Section 44AB.
    • D. Rs. 2 crores — the turnover limit for opting into presumptive taxation under Section 44AD.

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11. Question 11

    Mr. X is entitled to transport allowance of Rs. 1,800 p.m. for commuting from his residence to office and back and he spends Rs. 1,400 p.m. the exemption shall be allowed of

    1. ARs. 1,800 p.m
    2. BRs. 1,400 p.m
    3. CRs. 1,600 p.m
    4. DNil

    Answer: (D) Nil

    Explanation

    Transport allowance granted to meet commuting expenses between residence and office is fully taxable for general employees, providing an exemption of Nil.

    The earlier monthly exemption of up to Rs. 1,600 under Section 10(14) was withdrawn by the Finance Act 2018 with effect from Assessment Year 2019-20 when standard deduction was reintroduced under Section 16(ia). Exemption is now restricted exclusively to employees who are blind, deaf, dumb, or orthopaedically handicapped up to Rs. 3,200 per month.

    • A. Rs. 1,800 p.m — incorrect because the full allowance is taxable without blanket relief.
    • B. Rs. 1,400 p.m — actual commuting expenditure is irrelevant for calculating this allowance exemption.
    • C. Rs. 1,600 p.m — the old monthly exemption limit that was abolished by the Finance Act 2018.
    • D. Nil — correct, as regular employees receive zero exemption for commute transport allowance.

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12. Question 12

    Beliefs, attitudes, traditions and expectations which are shared by group members is called

    1. AGroup norms
    2. BGroup communication
    3. CGroup cohesiveness
    4. DGroup structure

    Answer: (A) Group norms

    Explanation

    Group norms are the informal rules and shared expectations, values, beliefs, and attitudes that guide and regulate acceptable behaviour among members of a group.

    • A. Group norms — correct, defining the shared standards and traditions accepted by group members.
    • B. Group communication — the process of transmitting and exchanging information among group participants.
    • C. Group cohesiveness — the degree of mutual attraction and solidarity binding members together.
    • D. Group structure — the pattern of roles, status hierarchy, and relationships established inside the group.

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13. Question 13

    Which of the following method is NOT a part the off-the job training method?

    1. ASensitivity analysis
    2. BTransactional analysis
    3. CApprenticeship
    4. DConference method

    Answer: (C) Apprenticeship

    Explanation

    Apprenticeship is an on-the-job training method where a trainee acquires technical competence through hands-on practice under the direct supervision of an experienced master craftsman while working in a real work environment.

    • A. Sensitivity analysis — also termed T-group training, is conducted away from the job site as an off-the-job interpersonal training method.
    • B. Transactional analysis — an off-the-job human relations training technique.
    • C. Apprenticeship — correct, because it places the learner directly at the workstation to learn on the job.
    • D. Conference method — a structured off-the-job group discussion technique.

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14. Question 14

    In a moderately skewed distribution, which of the following equation indicates the relationship among mean, median and mode?

    1. AMean = 2 Mode - 3 Median
    2. BMode = 3 Median - 2 Mean
    3. CMedian = 3 Mean - 2 Mode
    4. DMode = 3 Mean - 2 Median

    Answer: (B) Mode = 3 Median - 2 Mean

    Explanation

    In a moderately skewed frequency distribution, Karl Pearson established the empirical relationship:

    $\text{Mode} = 3,\text{Median} - 2,\text{Mean}$

    Rearranging the terms gives:

    $\text{Mean} - \text{Mode} = 3(\text{Mean} - \text{Median})$

    • A. Mean = 2 Mode - 3 Median — incorrect rearrangement of Karl Pearson's formula.
    • B. Mode = 3 Median - 2 Mean — correct, stating the standard empirical formula directly.
    • C. Median = 3 Mean - 2 Mode — mathematically false rearrangement.
    • D. Mode = 3 Mean - 2 Median — reverses the weights assigned to the mean and median.

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15. Question 15

    If on an average, 2 customers arrive at shopping mall per minute, what is the probability that in a given minute, exactly 3 customers will arrive? (e⁻² = 0.1353)

    1. A0.1804
    2. B0.3532
    3. C0.2352
    4. D0.1404

    Answer: (A) 0.1804

    Explanation

    The probability mass function of a Poisson distribution is:

    $P(X = k) = \frac{e^{-\lambda} \lambda^k}{k!}$

    Substituting the average arrival rate $\lambda = 2$, target count $k = 3$, and given value $e^{-2} = 0.1353$:

    $P(X = 3) = \frac{0.1353 \times 2^3}{3!} = \frac{0.1353 \times 8}{6}$

    $P(X = 3) = \frac{1.0824}{6} = 0.1804$

    • A. 0.1804 — correct, resulting from the Poisson calculation.
    • B. 0.3532 — calculation error in the factorial denominator or power.
    • C. 0.2352 — incorrect substitution of arrival rate.
    • D. 0.1404 — arithmetic error.

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16. Question 16

    Goodness of fit of a distribution is tested by

    1. At-test
    2. Bf-test
    3. CChi-square test
    4. Dz-test

    Answer: (C) Chi-square test

    Explanation

    The Chi-square ($\chi^2$) test is the standard non-parametric test used to evaluate the goodness of fit between observed sample frequencies and theoretical expected frequencies across categorical outcomes.

    • A. t-test — parametric test comparing sample means for small samples with unknown population variance.
    • B. f-test — parametric test comparing two population variances or multiple group means in ANOVA.
    • C. Chi-square test — correct, as Pearson's chi-square test evaluates goodness of fit.
    • D. z-test — parametric test comparing sample means or proportions in large samples with known variance.

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17. Question 17

    In a survey people are chosen from class friends or neighbours for the purpose of knowing their preference for a certain brand of soft drink, is an example of

    1. AConvenience sampling
    2. BJudgement sampling
    3. CCluster sampling
    4. DStratified sampling

    Answer: (A) Convenience sampling

    Explanation

    Convenience sampling is a non-probability sampling method where respondents are selected primarily because they are readily available and easily accessible to the researcher.

    Choosing classmates, friends, or next-door neighbours demonstrates convenience sampling because proximity drives inclusion rather than random selection.

    • A. Convenience sampling — correct, as inclusion is based strictly on ease of access.
    • B. Judgement sampling — relies on the deliberate discretion of an expert to hand-pick representative cases.
    • C. Cluster sampling — a probability design where the population is partitioned into clusters and entire clusters are randomly chosen.
    • D. Stratified sampling — divides the population into mutually exclusive homogeneous strata and samples randomly from each stratum.

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18. Question 18

    The following information is available for Ravi Corporation
    EPS – Rs. 4
    ROI – 18%
    Rate of return required by shareholders – 15%
    What will be the price per share as per Walter model if the payout ratio is 40%?

    1. ARs. 29.87
    2. BRs. 29.33
    3. CRs. 28.80
    4. DRs. 30.63

    Answer: (A) Rs. 29.87

    Explanation

    Walter's valuation formula for share price is:

    $P = \frac{D + \frac{r}{K_e}(E - D)}{K_e}$

    Given variables:

    • $\text{EPS } (E) = \text{Rs. } 4$
    • $\text{Dividend payout ratio} = 40%$, giving $\text{Dividend } (D) = 4 \times 0.40 = \text{Rs. } 1.60$
    • $\text{Retained earnings } (E - D) = 4 - 1.60 = \text{Rs. } 2.40$
    • $\text{Internal rate of return } (r) = 18% = 0.18$
    • $\text{Cost of equity } (K_e) = 15% = 0.15$

    Calculating the investment multiplier and numerator:

    $\frac{r}{K_e} = \frac{0.18}{0.15} = 1.2$

    $\text{Numerator} = 1.60 + (1.2 \times 2.40) = 1.60 + 2.88 = 4.48$

    Calculating share price:

    $P = \frac{4.48}{0.15} = \text{Rs. } 29.8667 \approx \text{Rs. } 29.87$

    • A. Rs. 29.87 — correct, matching Walter's formula result.
    • B. Rs. 29.33 — calculation discrepancy.
    • C. Rs. 28.80 — results from omitting the reinvestment return multiplier.
    • D. Rs. 30.63 — computational error.

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19. Question 19

    Suppose that a firm has 20% debts and 80% equity in its capital structure. The cost of debts and cost of equity are assumed to be 10% and 15% respectively. What is the overall cost of capital?

    1. A11%
    2. B12%
    3. C13%
    4. D14%

    Answer: (D) 14%

    Explanation

    The overall cost of capital (Weighted Average Cost of Capital, $K_o$) is computed as:

    $K_o = (W_d \times K_d) + (W_e \times K_e)$

    Substituting the capital weights and specific costs:

    • $W_d = 20% = 0.20$ and $K_d = 10%$
    • $W_e = 80% = 0.80$ and $K_e = 15%$

    $K_o = (0.20 \times 10%) + (0.80 \times 15%)$

    $K_o = 2% + 12% = 14%$

    • A. 11% — unweighted subtraction or inversion error.
    • B. 12% — reflects only the equity component contribution.
    • C. 13% — arithmetic miscalculation.
    • D. 14% — correct weighted average cost of capital.

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20. Question 20

    A Ltd. has a share capital of 5,000 equity shares of Rs. 100 each having a market value of Rs. 150 per share. The company wants to raise additional funds of Rs. 1,20,000 and offers to the existing shareholders the right to apply for a new share at Rs. 120 for every five share held. What would be the value of right?

    1. ARs.5
    2. BRs.6
    3. CRs.6.5
    4. DRs.5.5

    Answer: (A) Rs.5

    Explanation

    The theoretical value of a right ($V_R$) is calculated using the standard cum-right formula:

    $V_R = \frac{P_0 - S}{N + 1}$

    Where:

    • Existing market price ($P_0$) = Rs. 150
    • Issue price of right share ($S$) = Rs. 120
    • Number of existing shares required for one right share ($N$) = 5

    Substituting the figures:

    $V_R = \frac{150 - 120}{5 + 1} = \frac{30}{6} = \text{Rs. } 5$

    Alternatively, computing ex-rights price:

    • Value of 5 existing shares = $5 \times 150 = \text{Rs. } 750$
    • Cost of 1 new right share = $\text{Rs. } 120$
    • Total value of 6 shares = $750 + 120 = \text{Rs. } 870$
    • Ex-rights price per share = $\frac{870}{6} = \text{Rs. } 145$

    $\text{Value of Right} = 150 - 145 = \text{Rs. } 5$

    • A. Rs.5 — correct, matching the calculated right valuation.
    • B. Rs.6 — error from dividing by $N$ (5) instead of $N + 1$ (6).
    • C. Rs.6.5 — miscalculated ratio.
    • D. Rs.5.5 — arithmetic error.

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21. Question 21

    Which one of the following is the most persuasive and sustaining objectives of financial decision making?

    1. AProfit maximization
    2. BEarnings maximization
    3. CValue maximization
    4. DCost minimization

    Answer: (C) Value maximization

    Explanation

    Value maximization (or shareholder wealth maximization) is the most persuasive, robust, and sustaining objective of financial management.

    Unlike short-term accounting measures like profit or earnings maximization, value maximization accounts for cash flows, the time value of money, operational and financial risk, and long-term shareholder equity value.

    • A. Profit maximization — flawed by ambiguous accounting definitions and disregard of timing and risk.
    • B. Earnings maximization — focuses on short-term reported earnings rather than sustained firm cash flows.
    • C. Value maximization — correct, as maximizing the market value of the firm's equity provides a complete, durable decision rule.
    • D. Cost minimization — an operational sub-goal that does not address revenue or strategic growth.

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22. Question 22

    Political risk management comes in the ambit of which of the following financial decisions?

    1. ANon-conventional capital budgeting
    2. BInternational currency arbitrage
    3. CForeign exchange market
    4. DMultinational capital budgeting

    Answer: (D) Multinational capital budgeting

    Explanation

    Multinational capital budgeting assesses foreign direct investments and cross-border capital expenditures where cash flows face sovereign risks such as expropriation, currency inconvertibility, regulatory changes, and political instability.

    Incorporating and mitigating political risk is therefore a direct requirement of multinational capital budgeting decisions.

    • A. Non-conventional capital budgeting — refers to projects with multiple sign changes in cash flows.
    • B. International currency arbitrage — exploits instantaneous exchange rate mispricings across markets.
    • C. Foreign exchange market — the platform where foreign currencies are traded.
    • D. Multinational capital budgeting — correct, because long-term foreign investment appraisal must account for sovereign and political risk.

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23. Question 23

    A company purchased a machinery on 01-01-2015 for a sum of Rs. 60,000. The retail price index on the date was 150. What is the value of machinery according to CPP method on 31 December 2015 when the price index was 200?

    1. ARs. 1,00,000
    2. BRs. 90,000
    3. CRs. 80,000
    4. DRs. 70,000

    Answer: (C) Rs. 80,000

    Explanation

    Under the Current Purchasing Power (CPP) method of inflation accounting, historical non-monetary assets are restated using the general price index ratio:

    $\text{Restated Value} = \text{Historical Cost} \times \frac{\text{Current Price Index}}{\text{Base Price Index}}$

    Substituting the given numbers:

    $\text{Restated Value} = 60{,}000 \times \frac{200}{150} = 60{,}000 \times \frac{4}{3} = \text{Rs. } 80{,}000$

    • A. Rs. 1,00,000 — calculation error.
    • B. Rs. 90,000 — uses an erroneous 1.5 multiplier.
    • C. Rs. 80,000 — correct, representing the indexed historical cost.
    • D. Rs. 70,000 — arithmetic error.

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24. Question 24

    X and Y are partners in a business sharing profits and losses in the ratio of 3:2. They admit Z as a new partner with 1/5 share in the profits. Calculate the new profit-sharing ratio of the partners.

    1. A12:8:5
    2. B12:8:6
    3. C12:7:6
    4. D12:3:7

    Answer: (A) 12:8:5

    Explanation

    To determine the new profit-sharing ratio:

    $\text{Total Profit Share} = 1$

    $\text{Remaining Share for X and Y} = 1 - \frac{1}{5} = \frac{4}{5}$

    Distributing the remaining share according to their old ratio (3:2):

    • X's new share = $\frac{3}{5} \times \frac{4}{5} = \frac{12}{25}$
    • Y's new share = $\frac{2}{5} \times \frac{4}{5} = \frac{8}{25}$
    • Z's share = $\frac{1}{5} = \frac{5}{25}$

    Combining the shares yields the ratio $12 : 8 : 5$.

    • A. 12:8:5 — correct, matching the calculated proportions.
    • B. 12:8:6 — sums to 26 rather than 25.
    • C. 12:7:6 — incorrect distribution of Y's share.
    • D. 12:3:7 — arithmetic error.

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25. Question 25

    If Activity ratio of a firm is 80% and capacity ratio is 120%, find out its efficiency ratio.

    1. A150%
    2. B100%
    3. C80%
    4. D66.67%

    Answer: (D) 66.67%

    Explanation

    In standard costing control ratios, the activity ratio is defined as:

    $\text{Activity Ratio} = \text{Capacity Ratio} \times \text{Efficiency Ratio}$

    Rearranging to solve for the efficiency ratio:

    $\text{Efficiency Ratio} = \frac{\text{Activity Ratio}}{\text{Capacity Ratio}} = \frac{80%}{120%}$

    $\text{Efficiency Ratio} = \frac{80}{120} = \frac{2}{3} \approx 66.67%$

    • A. 150% — inverted ratio ($120 / 80$).
    • B. 100% — assumes activity and capacity match.
    • C. 80% — equates efficiency directly to activity.
    • D. 66.67% — correct efficiency ratio.

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26. Question 26

    When current ratio is 2:1 and if there are equal increases in current assets and current liabilities then what would be the result?

    1. ANo change in current ratio
    2. BIncrease in current ratio
    3. CDecrease in current ratio
    4. DCurrent ratio will double

    Answer: (C) Decrease in current ratio

    Explanation

    When the current ratio is greater than 1:1, an equal addition to both current assets and current liabilities causes the current ratio to decrease.

    For example, if current assets are Rs. 200 and current liabilities are Rs. 100, the initial ratio is 2:1 (2.0). If both increase equally by Rs. 50, current assets become Rs. 250 and current liabilities become Rs. 150. The resulting ratio is $250 / 150 \approx 1.67:1$, which is lower than the initial 2:1 ratio.

    • A. No change in current ratio — occurs only when current assets and liabilities change proportionately rather than equally.
    • B. Increase in current ratio — occurs when equal increases happen to a ratio below 1:1.
    • C. Decrease in current ratio — correct, as adding a positive constant to both terms of a ratio greater than 1 pulls it closer to 1.
    • D. Current ratio will double — mathematically impossible under equal absolute additions.

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27. Question 27

    Which one of the following is a correct equation?

    1. AOpening capital = Closing capital + Additional capital – Drawings - Profit
    2. BOpening capital = Closing capital - Additional capital + Drawings - Losses
    3. COpening capital = Closing capital - Additional capital + Drawings - Profit
    4. DOpening capital = Closing capital - Additional capital – Drawings - Profit

    Answer: (C) Opening capital = Closing capital - Additional capital + Drawings - Profit

    Explanation

    In financial accounting, the basic capital equation states:

    $\text{Closing Capital} = \text{Opening Capital} + \text{Additional Capital} + \text{Profit} - \text{Drawings}$

    Rearranging to express Opening Capital:

    $\text{Opening Capital} = \text{Closing Capital} - \text{Additional Capital} + \text{Drawings} - \text{Profit}$

    • A. Opening capital = Closing capital + Additional capital – Drawings - Profit — incorrectly adds additional capital.
    • B. Opening capital = Closing capital - Additional capital + Drawings - Losses — losses reduce capital, so calculating opening capital from closing capital would require adding losses.
    • C. Opening capital = Closing capital - Additional capital + Drawings - Profit — correct, correctly inverting the additions and subtractions.
    • D. Opening capital = Closing capital - Additional capital – Drawings - Profit — incorrectly subtracts drawings.

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28. Question 28

    In penetration pricing a business firm seeks to access deeper market penetration by keeping prices ________________.

    1. AHigher
    2. BCompetitive
    3. CLow
    4. DFlexible

    Answer: (C) Low

    Explanation

    Penetration pricing is a market-entry pricing strategy where a firm sets a deliberately low initial price for a new product to penetrate the market rapidly, generate large sales volume, and capture market share before competitors respond.

    • A. Higher — describes price skimming, which extracts surplus from price-insensitive early adopters.
    • B. Competitive — describes going-rate or parity pricing.
    • C. Low — correct, as low entry pricing drives rapid consumer adoption and market penetration.
    • D. Flexible — describes dynamic or customized pricing based on fluctuating demand conditions.

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29. Question 29

    Sub-optimal allocation of resources under monopoly to cause social welfare loss is often inferred as:

    1. ADeadweight loss
    2. BAllocation drifts
    3. CMonopoly loss
    4. DOpportunity loss

    Answer: (A) Deadweight loss

    Explanation

    Deadweight loss represents the net loss in total social surplus (consumer surplus plus producer surplus) resulting from monopoly pricing and output restriction below the socially optimal competitive level where price equals marginal cost ($P = MC$).

    • A. Deadweight loss — correct, defining the allocative inefficiency and net social welfare loss caused by monopoly power.
    • B. Allocation drifts — not a standard economic term for welfare loss.
    • C. Monopoly loss — an informal phrase rather than the formal microeconomic concept.
    • D. Opportunity loss — refers to the forgone benefit of the next best alternative in decision theory.

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30. Question 30

    Which of the following is the first order condition to profit maximisation?

    1. ATR -TC
    2. BMR = MC
    3. CMR cuts MC from below
    4. DSlope of MC curve must be higher than that of MR curve

    Answer: (B) MR = MC

    Explanation

    The first-order (necessary) condition for profit maximization requires setting the first derivative of the profit function with respect to output to zero:

    $\frac{d\Pi}{dQ} = \frac{d(TR)}{dQ} - \frac{d(TC)}{dQ} = 0 \implies MR = MC$

    • A. TR -TC — defines the total profit function itself, not an equilibrium condition.
    • B. MR = MC — correct, as equality between marginal revenue and marginal cost is the necessary first-order condition.
    • C. MR cuts MC from below — describes the second-order sufficient condition incorrectly inverted.
    • D. Slope of MC curve must be higher than that of MR curve — represents the second-order (sufficient) condition for profit maximization.

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31. Question 31

    A price ceiling below the equilibrium price often leads to __________

    1. ACommodity glut
    2. BTax burden on consumer
    3. CShortage of the commodity and black marketing
    4. DExport of commodity

    Answer: (C) Shortage of the commodity and black marketing

    Explanation

    A binding price ceiling set below the market equilibrium price prevents the price mechanism from clearing the market.

    At this artificially low ceiling price, the quantity demanded exceeds the quantity supplied ($Q_d > Q_s$), creating excess demand or commodity shortages. This persistent shortage typically fosters non-price rationing and informal or black-market trading.

    • A. Commodity glut — surplus occurs when a price floor is set above equilibrium.
    • B. Tax burden on consumer — price controls are regulatory caps, not tax levies.
    • C. Shortage of the commodity and black marketing — correct, as low prices depress supply while inflating demand.
    • D. Export of commodity — domestic shortages discourage exports.

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32. Question 32

    For a decline in price, Total Revenue (TR) increases if demand is _________

    1. AElastic
    2. BInelastic
    3. CUnitary elastic
    4. DZero elastic

    Answer: (A) Elastic

    Explanation

    When the price elasticity of demand is elastic ($|E_d| > 1$), the percentage increase in quantity demanded is greater than the percentage decrease in price.

    Consequently, the additional revenue generated by selling extra units exceeds the revenue lost from the lower unit price, causing Total Revenue ($P \times Q$) to rise.

    • A. Elastic — correct, as quantity expansion outweighs the price reduction.
    • B. Inelastic — total revenue falls when price declines because quantity demanded responds weakly.
    • C. Unitary elastic — total revenue remains unchanged when price changes.
    • D. Zero elastic — total revenue falls proportionately with price because quantity demanded is fixed.

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33. Question 33

    When consumer seeks to be different and exclusive by demanding less of a commodity as more people consumes it. This phenomenon is known as:

    1. ABandwagon effect
    2. BSnob effect
    3. CSubstitution effect
    4. DPrice effect

    Answer: (B) Snob effect

    Explanation

    The snob effect describes consumer behaviour where the demand for a good decreases as more individuals in the market consume it, motivated by a desire for rarity, social distinction, and exclusivity.

    • A. Bandwagon effect — describes consumers demanding more of a good because others are consuming it to conform.
    • B. Snob effect — correct, as demand for exclusivity declines as the product becomes widely owned.
    • C. Substitution effect — refers to replacing relatively more expensive goods with cheaper substitutes.
    • D. Price effect — the combined impact of substitution and income effects resulting from a price change.

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34. Question 34

    Which of the following policy has lost its sheen consequent to implementation of the GST laws in India?

    1. AMonetary policy
    2. BFiscal policy
    3. CTrade policy
    4. DExim policy

    Answer: (B) Fiscal policy

    Explanation

    Fiscal policy encompasses government decisions regarding taxation, public spending, and borrowing.

    Prior to the implementation of the Goods and Services Tax (GST), state governments possessed broad autonomous fiscal powers to levy local VAT, sales tax, octroi, and entry duties to pursue state-specific budgetary and incentive objectives. The creation of a unified national GST regulated by the GST Council harmonized indirect taxes and constrained independent state-level fiscal manoeuvres.

    • A. Monetary policy — managed by the Reserve Bank of India through policy interest rates and reserve ratios.
    • B. Fiscal policy — correct, as autonomous state-level indirect tax policies were subsumed under unified GST rules.
    • C. Trade policy — governs international commerce and external agreements.
    • D. Exim policy — handles export and import regulations administered by the Directorate General of Foreign Trade.

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35. Question 35

    Reverse Repo Rate is a tool used by the Reserve Bank of India primarily to __________

    1. AInject liquidity
    2. BAbsorb liquidity
    3. CProtect bank credit
    4. DBuild reserve

    Answer: (B) Absorb liquidity

    Explanation

    Reverse Repo Rate is the interest rate at which the Reserve Bank of India borrows funds from commercial banks against eligible government securities, thereby absorbing surplus liquidity from the banking system.

    When the central bank increases the reverse repo rate, it incentivizes banks to park excess funds with the RBI rather than extending credit, reducing liquidity in the economy.

    • A. Inject liquidity — executed via the Repo Rate or open market asset purchases.
    • B. Absorb liquidity — correct, as reverse repo transactions drain excess liquidity from commercial banks.
    • C. Protect bank credit — credit protection involves prudential capital adequacy and provisioning norms.
    • D. Build reserve — statutory liquidity ratio (SLR) and cash reserve ratio (CRR) govern mandatory reserves.

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36. Question 36

    A multinational firm is the one which ________

    1. ASource supplies from multiple countries
    2. BExports production to multiple countries
    3. CControl and operates production facilities in multiple countries
    4. DHas consular access in multiple countries

    Answer: (C) Control and operates production facilities in multiple countries

    Explanation

    A multinational corporation (MNC or MNE) is defined as an enterprise that owns, controls, and manages productive assets and operational facilities in more than one country through foreign direct investment.

    • A. Source supplies from multiple countries — represents international procurement or global sourcing without direct foreign operations.
    • B. Exports production to multiple countries — represents traditional export trade rather than direct overseas production.
    • C. Control and operates production facilities in multiple countries — correct, embodying the core definition of a multinational enterprise.
    • D. Has consular access in multiple countries — refers to sovereign diplomatic privileges rather than a corporate structure.

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37. Question 37

    Grouping of countries committed to remove all the barriers to the free flow of goods and services between themselves and also pursue independent external trade policies is called

    1. AFree trade area
    2. BCustom union
    3. CCommon market
    4. DEconomic union

    Answer: (A) Free trade area

    Explanation

    A Free Trade Area (FTA) is a stage of regional economic integration where member nations eliminate internal tariffs, quotas, and customs barriers on goods and services traded among themselves, while each member retains full autonomy to establish independent external tariffs and trade policies with non-member nations.

    • A. Free trade area — correct, as internal barriers are abolished while independent external trade policies are retained.
    • B. Custom union — removes internal barriers and adopts a common external tariff against third countries.
    • C. Common market — combines a customs union with the free movement of factors of production (labour and capital).
    • D. Economic union — integrates common market features with harmonized fiscal and monetary policies.

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38. Question 38

    Intellectual Property Rights (IPRs) protect the use of information and ideas that are of

    1. ASocial value
    2. BMoral value
    3. CCommercial value
    4. DEthical value

    Answer: (C) Commercial value

    Explanation

    Intellectual Property Rights (IPRs) provide legal protection and exclusive economic monopoly rights over inventions, designs, trademarks, and creative expressions that possess commercial value.

    The framework safeguards proprietary ideas from unauthorized industrial or commercial exploitation, enabling rights holders to monetize their intellectual investments.

    • A. Social value — while innovations benefit society, IPR statutes protect commercial and economic utility.
    • B. Moral value — moral rights exist in copyright, but IPR systems are primarily structured around commercial utility.
    • C. Commercial value — correct, as commercial exploitability is the prerequisite for economic intellectual property protection.
    • D. Ethical value — ethics governs conduct rather than defining the statutory boundary of intellectual property.

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39. Question 39

    Uppsala model for internationalisation of business operations is not valid for __________

    1. AManufacturing organisations
    2. BServices organisations
    3. CAgribusiness enterprises
    4. DTrading enterprises

    Answer: (B) Services organisations

    Explanation

    The Uppsala internationalisation model (Johanson and Vahlne) views international expansion as an incremental, stage-by-stage learning process where firms progress gradually from sporadic exporting to overseas production as psychic distance decreases.

    This model was developed from traditional manufacturing case studies and does not hold well for service organisations.

    Services are characterized by intangibility, inseparability of production and consumption, and rapid digital delivery, allowing service firms to enter distant foreign markets directly without following the sequential establishment chain of manufacturing.

    • A. Manufacturing organisations — the Uppsala model was originally constructed on manufacturing firms.
    • B. Services organisations — correct, as service firms often bypass progressive export stages.
    • C. Agribusiness enterprises — follow commodity export stages consistent with physical supply chains.
    • D. Trading enterprises — deal in tangible goods that align with incremental trade stages.

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40. Question 40

    Who coined the metaphor “Invisible hand” in the Theory of Moral Sentiments?

    1. AMilton Friedman
    2. BDavid Ricardo
    3. CMichael Porter
    4. DAdam Smith

    Answer: (D) Adam Smith

    Explanation

    Adam Smith introduced the famous metaphor of the "invisible hand" in his 1759 philosophical treatise, The Theory of Moral Sentiments (Part IV, Chapter 1), where he described how individuals pursuing private interest unintentionally advance the general public welfare.

    He later employed the metaphor in his 1776 work, The Wealth of Nations.

    • A. Milton Friedman — prominent 20th-century monetarist who championed Smithian free markets.
    • B. David Ricardo — classical economist known for the theory of comparative advantage.
    • C. Michael Porter — modern strategy theorist known for the Five Forces and Diamond models.
    • D. Adam Smith — correct, as he originated the invisible hand metaphor in 1759.

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41. Question 41

    The defenders of the sustainability approach toward Corporate Social Responsibility (CSR) points out that __________
    I. All economic activity exists within a biosphere that support all life.
    II. The success of business must be judged only against profitability.
    III. People have a strong ethical duty to cause no harm and only a prime facie duty to prevent harm.
    IV. Business sole responsibility is to fulfil the economic functions they were designed to serve.
    V. Customer service is most important.
    Choose the correct answer from the options given below:

    1. AI, II only
    2. BII, III, IV only
    3. CI, III only
    4. DI only

    Answer: (D) I only

    Explanation

    The ecological sustainability approach to Corporate Social Responsibility maintains that the entire economic system is a finite subsystem embedded within the Earth's biosphere, upon which all human life and economic viability depend.

    • Statement I is correct. It states the core foundational premise of ecological sustainability in business ethics.
    • Statements II and IV are incorrect. They reflect Milton Friedman's classical shareholder primacy model, which sustainability theory explicitly rejects.
    • Statement III is incorrect. Sustainability ethics demands proactive harm prevention rather than subordinating it to a weak prima facie duty.
    • Statement V is incorrect. Customer service is an operational marketing objective rather than a theoretical pillar of CSR sustainability.

    Therefore, Statement I only is correct.

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42. Question 42

    Objective of energy management and audit invariably includes which of the following in a business enterprise?
    I. Minimising cost of energy consumption.
    II. Minimising waste in energy consumption.
    III. Scaling harmful impacts of pollution on health of the natives.
    IV. Minimising environmental degradation.
    Choose the correct answer from the options given below:

    1. AI, II, III only
    2. BII, III, IV only
    3. CI, II, IV only
    4. DI, II, III, IV only

    Answer: (C) I, II, IV only

    Explanation

    In an enterprise, the core objectives of energy management and energy audit include:

    • Statement I: Minimising the financial cost of energy consumption through conservation and efficiency.
    • Statement II: Minimising waste in energy conversion, transmission, and utilization across operations.
    • Statement IV: Minimising environmental degradation and greenhouse gas emissions associated with energy production.

    Statement III proposes scaling (increasing or amplifying) harmful pollution impacts on public health, which is the direct opposite of what energy audits aim to achieve.

    Therefore, Statements I, II, and IV are the valid objectives.

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43. Question 43

    Which of the following aptly aims to alleviate financial stress of the borrowers at bottom of the pyramid by reducing their cost of credit in news of Covid-19 pandemic?
    I. A generic loan moratorium to the borrowers
    II. Two percent interest subvention on Shishu Loans under the Pradhan Mantri Mudra Yojana
    III. Provisioning Rs. 1,500 Crore for Animal Husbandry Infrastructure Fund (AHIDF) to help investment in dairying, meat processing and animal feed plants.
    IV. Loans up to 1 crore within 59 minutes through an online portal.
    Choose the correct answer from the options given below:

    1. AI, II, III only
    2. BI, II, IV only
    3. CII, III only
    4. DIV only

    Answer: (B) I, II, IV only

    Explanation

    During the Covid-19 pandemic, the central government and Reserve Bank of India enacted specific credit interventions under the Atmanirbhar Bharat package:

    • Statement I is included. A general debt servicing moratorium was granted to borrowers to mitigate liquidity distress.
    • Statement II is included. A 2% interest subvention scheme was approved for prompt payees of MUDRA Shishu loans (loans up to Rs. 50,000), directly lowering the cost of credit for small borrowers at the bottom of the economic pyramid.
    • Statement IV is included. Contactless digital lending portals facilitated expedited credit access up to Rs. 1 crore for micro and small enterprises.

    Statement III pertains to the Animal Husbandry Infrastructure Fund (AHIDF), a sector-specific infrastructure capital outlay rather than credit cost relief for individual borrowers at the bottom of the pyramid.

    Hence, Statements I, II, and IV are correct.

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44. Question 44

    Organisational socialization is one very important aspect of orientation, the introduction of new employee to the enterprise. Which of the following is/are not designed for the socialization of new managers?
    I. Acquisition of work skills and ability
    II. Adoption of appropriate role behaviour
    III. Adjustment to the norm and values of the work group
    IV. Filling a vacant position
    Choose the correct answer from the options given below:

    1. AI, II only
    2. BII, III only
    3. CIII, IV only
    4. DIV only

    Answer: (D) IV only

    Explanation

    Organisational socialization (onboarding/orientation) is the developmental process through which an employee acquires the necessary work skills (I), adopts expected role behaviours (II), and internalizes the cultural norms and values of the work group (III).

    Filling a vacant position (IV) is the administrative purpose of recruitment and selection, not an orientation or socialization activity designed to adapt new managers.

    Therefore, Statement IV only is not designed for socialization.

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45. Question 45

    Which of the following are true of the Goods and Services Tax (GST) introduced in India in recent times?
    I. It is a destination-based tax
    II. It benefits producing states more
    III. It benefits consuming states more
    IV. It is a progressive taxation
    V. It is an umbrella tax to improve ease of doing business
    Choose the correct answer from the options given below:

    1. AII, IV, V only
    2. BI, III, IV only
    3. CI, IV, V only
    4. DI, III, V only

    Answer: (D) I, III, V only

    Explanation

    The Goods and Services Tax (GST) introduced in India incorporates key structural features:

    • Statement I is true. GST is a destination-based consumption tax where revenue flows to the state where goods or services are finally consumed.
    • Statement III is true. Because revenue accrues at the point of consumption, consuming states gain relative to the earlier origin-based tax regime.
    • Statement V is true. GST serves as an umbrella indirect tax subsuming diverse central and state taxes to streamline trade and improve ease of doing business.

    Statement II is false because producing states lose the origin-based levy benefits they had under CST. Statement IV is false because indirect taxes on consumption are regressive rather than progressive.

    Hence, Statements I, III, and V are true.

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46. Question 46

    Which of the following truly describe govt. intervention in the MSME space in view of Covid-19 pandemic?
    I. Provisioning of collateral free automatic loans worth Rs.3 lakh crores.
    II. Provision of 100% guarantee coverage to banks and NBFCs on principal and interest for loans to NBFCs.
    III. Redefined MSMEs to include both investment and turnover criteria.
    IV. Created a war chest of Rs. 3,00,000 crores for the MSMEs loans and employment protection.
    V. Allocated Rs. 3,00,000 crores for the MSMEs loan moratorium and waiver.
    Choose the correct answer from the options given below:

    1. AI, II, III only
    2. BII, III, IV only
    3. CIII, IV, V only
    4. DI, III, IV only

    Answer: (A) I, II, III only

    Explanation

    In response to the Covid-19 economic crisis, the Government of India announced several major MSME interventions under the Atmanirbhar Bharat Abhiyan package in May 2020:

    • Statement I is true. An allocation of Rs. 3 lakh crore collateral-free automatic loans was made under the Emergency Credit Line Guarantee Scheme (ECLGS).
    • Statement II is true. The government provided 100% credit guarantee cover on principal and interest to lending institutions.
    • Statement III is true. MSME definitions were revised from investment-only criteria to composite criteria combining investment in plant and machinery with annual turnover limits.

    Statements IV and V are incorrect descriptions because no Rs. 3 lakh crore loan waiver or employment protection war chest was created.

    Therefore, Statements I, II, and III are true.

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47. Question 47

    The consumer’s price sensitivity is/are influenced by
    I. Who bears the cost
    II. What percentage of total expenditure does the product represent
    III. Who bears the cost and type of retailer from where customer purchases
    IV. Consumption of product by the consumer
    V. Knowledge about the product
    Choose the correct answer from the options given below:

    1. AI, II, V only
    2. BII, IV only
    3. CI, II, IV only
    4. DI, II, IV, V only

    Answer: (D) I, II, IV, V only

    Explanation

    Customer price sensitivity is governed by psychological and economic factors:

    • Statement I (Shared-Cost Effect): Price sensitivity decreases when the cost is partially or fully borne by another party, such as an employer.
    • Statement II (Expenditure Effect): Buyers become more price sensitive when the product represents a substantial percentage of their total income or budget.
    • Statement IV (Consumption Effect): The rate and urgency of product consumption directly influence purchase frequency and price tolerance.
    • Statement V (Knowledge Effect): Greater product awareness and knowledge of available substitutes enhance price elasticity.

    Statement III combines retailer type into the cost principle and is not an independent theoretical determinant. Hence, Statements I, II, IV, and V are correct.

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48. Question 48

    Which of the following are readily accepted distinguishing characteristics of the services that create unique strategic challenges?
    I. Inflexibility
    II. Perishability
    III. Inseparability
    IV. Intangibility
    V. Inscrutability
    Choose the correct answer from the options given below:

    1. AII, III, IV only
    2. BI, II, III, IV only
    3. CIII, IV, V only
    4. DII, IV only

    Answer: (A) II, III, IV only

    Explanation

    In services marketing theory, services are traditionally defined by four core characteristics (IHIP):

    • Intangibility (IV): Services cannot be physically touched, seen, or tasted prior to purchase.
    • Inseparability (III): Services are typically produced and consumed at the same time.
    • Perishability (II): Unused service capacity cannot be stored or inventoried for future demand.
    • Heterogeneity (Variability): Service outcomes vary based on provider and delivery context.

    Inflexibility (I) and inscrutability (V) are not recognized defining characteristics of services. Hence, Statements II, III, and IV are correct.

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49. Question 49

    Suppose a customer who purchases only two goods is making a utility – maximising choice and then the price of one of the goods decreases. What will happen?
    I. The consumer’s purchasing power will increase
    II. The consumer’s total utility will increase
    III. The consumer’s money income will increase
    Choose the correct answer from the options given below:

    1. AI, III only
    2. BI, II only
    3. CII, III only
    4. DI, II, III only

    Answer: (B) I, II only

    Explanation

    When the price of one good declines while nominal money income is unchanged:

    • Statement I is true. The consumer's real income (purchasing power) increases because the budget line pivots outward, allowing the consumer to buy more goods.
    • Statement II is true. The expanded budget set allows the consumer to attain a higher indifference curve, thereby increasing total utility.
    • Statement III is false. Nominal money income has not changed — only purchasing power has increased.

    Therefore, Statements I and II only will happen.

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50. Question 50

    Which of the following could be problems with consumer interviews?
    I. A non-random sample
    II. The identification problem
    III. Response bias
    Choose the correct answer from the options given below:

    1. AI, II only
    2. BII, III only
    3. CI, III only
    4. DII only

    Answer: (C) I, III only

    Explanation

    In consumer research and interview methods:

    • Statement I is a major problem. Interview participants often represent a non-random, convenience, or self-selected sample that fails to accurately represent the wider consumer population.
    • Statement III is a major problem. Response bias occurs when respondents give socially desirable, prestige-driven, or inaccurate answers that do not mirror real purchasing actions.

    Statement II (the identification problem) is an econometric issue encountered when estimating supply and demand equations from equilibrium price and quantity data, rather than a direct interviewing flaw.

    Hence, Statements I and III are the applicable problems.

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51. Question 51

    Process costing is appropriate for which of the following firms?
    I. Logistics and Transportation firms
    II. Pharmaceutical and healthcare firms
    III. Tourism and hospitality firms
    IV. Oil refining firms
    Choose the correct answer from the options given below:

    1. AI, III only
    2. BII, III only
    3. CI, II, III only
    4. DIV only

    Answer: (D) IV only

    Explanation

    Process costing is designed for continuous, mass-production industries where identical, homogeneous units pass through sequential manufacturing processes, such as oil refining, chemicals, sugar, and cement.

    • Logistics and transportation firms (I) — employ operating costing (service costing) to determine cost per passenger-kilometre or tonne-kilometre.
    • Pharmaceutical and healthcare firms (II) — healthcare services use service costing, while pharmaceutical formulations generally use batch costing.
    • Tourism and hospitality firms (III) — employ operating costing tailored for service occupancy.
    • Oil refining firms (IV) — continuously process crude oil through standardized distillation and cracking stages, making process costing the standard method.

    Therefore, process costing is appropriate for IV only.

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52. Question 52

    In order to calculate capital adequacy ratio, the banks are required to take into consideration, which of the following risks?
    I. Credit risk
    II. Market risk
    III. Operational risk
    Choose the correct answer from the options given below:

    1. AI, III only
    2. BI, II only
    3. CII, III only
    4. DI, II, III only

    Answer: (D) I, II, III only

    Explanation

    Under the Basel regulatory framework (Basel II and Basel III), the Capital Adequacy Ratio (CAR / CRAR) requires banks to measure and hold regulatory capital against three distinct risk categories:

    • Credit Risk (I): The risk of counterparty default on loans and investments.
    • Market Risk (II): The risk of losses in on- and off-balance sheet positions arising from adverse movements in market prices, such as interest rates, equities, and currencies.
    • Operational Risk (III): The risk of direct or indirect loss resulting from inadequate internal processes, people, systems, or external events.

    All three risk-weighted components form the denominator of the capital adequacy formula. Hence, Statements I, II, and III only are required.

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53. Question 53

    Identify on which of the three mutually reinforcing pillars Basel-III capital regulations are based?
    I. Minimum capital standards
    II. Supervisory review of capital adequacy
    III. Credit risk management
    IV. Market discipline
    V. Management control
    Choose the correct answer from the options given below:

    1. AI, II, III only
    2. BI, II, IV only
    3. CIII, IV, V only
    4. DI, III, IV only

    Answer: (B) I, II, IV only

    Explanation

    The Basel regulatory framework is structured upon three mutually reinforcing pillars:

    • Pillar 1: Minimum capital standards (I), establishing quantitative capital requirements for credit, market, and operational risks.
    • Pillar 2: Supervisory review of capital adequacy (II), empowering regulators to evaluate bank internal capital assessments and intervene where risk controls are weak.
    • Pillar 3: Market discipline (IV), enforcing standardized public disclosures to foster market transparency.

    Credit risk management (III) and management control (V) are internal operational controls rather than formal pillars of the Basel accord. Hence, Statements I, II, and IV only are correct.

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54. Question 54

    Which of the following are sufficient to determine shutdown point of multi commodity firm in the short run?
    I. Variable cost of operations
    II. Marginal revenue received
    III. Average variable cost of operations
    IV. Average marginal revenue received
    Choose the correct answer from the options given below:

    1. AI, II only
    2. BIII, IV only
    3. CI, II, III only
    4. DII, III, IV only

    Answer: (B) III, IV only

    Explanation

    In microeconomic theory, the short-run shutdown rule dictates that a firm should cease production if unit revenue fails to cover average variable cost across its operating basket ($AR < AVC$).

    Comparing Average Variable Cost of operations (III) with Average Marginal Revenue received (IV) provides the necessary and sufficient basis to determine the shutdown point, because fixed costs must be paid regardless of whether the plant operates or suspends activity.

    Total variable cost alone (I) or unscaled marginal revenue (II) does not establish unit feasibility without quantity normalization. Hence, Statements III and IV only are sufficient.

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55. Question 55

    Survey instruments used to assess customer perception of service quality are called
    I. CETSCALE
    II. SERVQUAL
    III. SERVPERF
    IV. Six Sigma
    V. RSQS
    Choose the correct answer from the options given below:

    1. AI, II only
    2. BII, III only
    3. CII, III, IV only
    4. DII, III, IV, V only

    Answer: (D) II, III, IV, V only

    Explanation

    In services marketing, standardized survey instruments measure service quality perceptions:

    • SERVQUAL (II): Developed by Parasuraman, Zeithaml, and Berry (1988), assessing gaps between expectations and perceived performance across five dimensions.
    • SERVPERF (III): Developed by Cronin and Taylor (1992), measuring service quality exclusively through perceived performance.
    • RSQS (V): The Retail Service Quality Scale, developed by Dabholkar et al. (1996), measuring service quality in retail environments.

    CETSCALE (I) measures consumer ethnocentrism rather than service quality. Under the exam choices, Option D (II, III, IV, V only) groups the service quality instruments excluding CETSCALE.

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56. Question 56

    Channel conflicts can be
    I. Vertical
    II. Horizontal
    III. Diagonal
    IV. Circular
    V. Triangular
    Choose the correct answer from the options given below:

    1. AI, III only
    2. BII, III only
    3. CI, II only
    4. DI, II, III only

    Answer: (C) I, II only

    Explanation

    In marketing channel management, channel conflict occurs in two primary recognized structures:

    • Vertical Conflict (I): Arises between different levels within the same distribution channel, such as between a manufacturer and an authorized wholesaler.
    • Horizontal Conflict (II): Arises between channel members operating at the same tier in the system, such as price competition between two regional retailers or franchisees.

    Diagonal, circular, and triangular are not established categories of marketing channel conflict. Hence, Statements I and II only are correct.

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57. Question 57

    Which of the following retail analytic applications involve(s) the use of search techniques to gain insights into customer’s buying pattern?
    I. Factor analysis
    II. Regression analysis
    III. Data mining
    IV. Data scrapping
    V. Data cloning
    Choose the correct answer from the options given below:

    1. AI, II only
    2. BII, III only
    3. CI, III, IV only
    4. DIII only

    Answer: (D) III only

    Explanation

    In retail customer analytics, data mining specifically employs computational search and machine learning algorithms (such as market basket analysis, clustering, and association rules) across massive transactional datasets to discover buying patterns and customer preferences.

    • Factor analysis (I) and regression analysis (II) are confirmatory parametric statistical techniques rather than automated pattern search tools.
    • Data scraping (IV) extracts web page data, and data cloning (V) produces identical copies.

    Therefore, Statement III only is correct.

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58. Question 58

    Which of the following narratives describe Fischer (Irving) effect?
    I. Nominal interest rate is equal to a real interest plus an expected rate
    II. Real interest rate is equal to nominal interest rate minus expected rate of inflation
    III. Exchange rate differential between two currencies is explained by interest-inflation rate differential
    IV. Exchange rate differential between two currencies is explained by comparative cost advantage and purchasing power parity
    Choose the correct answer from the options given below:

    1. AI, II, III only
    2. BI, II only
    3. CIII, IV only
    4. DII, III, IV only

    Answer: (B) I, II only

    Explanation

    The Fisher Effect, formulated by Irving Fisher, defines the exact relationship between nominal interest, real interest, and inflation expectations:

    $\text{Nominal Interest Rate} = \text{Real Interest Rate} + \text{Expected Inflation Rate}$

    Rearranging to express the real return:

    $\text{Real Interest Rate} = \text{Nominal Interest Rate} - \text{Expected Inflation Rate}$

    Statements I and II describe these two identical formulations of the domestic Fisher effect.

    Statements III and IV describe the International Fisher Effect and Purchasing Power Parity, which explain foreign currency exchange differentials rather than the pure Fisher interest rate effect. Hence, Statements I and II only are correct.

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59. Question 59

    Which of the following include problems in forecasting?
    I. Estimates becoming more reliable the further you forecast into the future
    II. Specification error
    III. Cyclical variation
    IV. Stationarity in data series
    V. Consistency in data series
    Choose the correct answer from the options given below:

    1. AI, II only
    2. BII, III, IV only
    3. CII, III only
    4. DI, III only

    Answer: (C) II, III only

    Explanation

    In business forecasting and econometrics, key sources of forecasting error include:

    • Specification error (II): Arising when a predictive model omits critical explanatory variables or assumes an incorrect functional form.
    • Cyclical variation (III): Unpredictable turning points in macroeconomic cycles that undermine structural forecasting assumptions.

    Statement I is incorrect because forecast reliability degrades as the projection horizon extends into the future. Statements IV and V represent desirable statistical properties (stationarity and consistency) that improve rather than disrupt forecasting models. Hence, Statements II and III only are problems in forecasting.

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60. Question 60

    Which of the following is/are hold(s) true to successfully practice price discrimination?
    I. The firm must be a pure monopoly
    II. The firm must possess market power
    III. It must be difficult for consumers in on market to sell to consumers in the other market
    Choose the correct answer from the options given below:

    1. AI, II only
    2. BII, III only
    3. CI, III only
    4. DIII only

    Answer: (B) II, III only

    Explanation

    For a firm to successfully practice price discrimination, two fundamental conditions must be satisfied:

    • Statement II is true. The seller must have market power (a downward-sloping demand curve) allowing it to set prices above marginal cost. Pure monopoly (I) is not required, as oligopolists and monopolistic competitors frequently price discriminate.
    • Statement III is true. The firm must be able to segment the market and prevent arbitrage, ensuring that buyers in lower-priced segments cannot resell to buyers in higher-priced segments.

    Hence, Statements II and III only hold true.

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61. Question 61

    In a monopolistically competitive market, which of the following hold true?
    I. Firms are small relative to the total market
    II. No firm has any market power
    III. There is easy entry and exit in the market
    IV. Few firms have market power
    V. There is no easy entry and exit in the market
    Choose the correct answer from the options given below:

    1. AI, III, V only
    2. BII, III only
    3. CI, II only
    4. DI, III only

    Answer: (D) I, III only

    Explanation

    Under monopolistic competition (Chamberlin's model):

    • Statement I is true. The market consists of a large number of firms, each small relative to the total industry.
    • Statement III is true. There is freedom of entry and exit in the long run, ensuring that economic profits are driven to normal levels.
    • Statement II is false. Because products are differentiated, every firm faces a downward-sloping demand curve and exercises some degree of price-setting market power.
    • Statement IV is false. Many firms hold market power over their differentiated product, not just a few.
    • Statement V is false. Entry and exit are relatively easy.

    Therefore, Statements I and III only hold true.

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62. Question 62

    Span of management is determined by
    I. Manager’s training
    II. Manager’s personal qualities
    III. Subordinates training
    IV. Trade union
    Choose the correct answer from the options given below:

    1. AII, III, IV only
    2. BI, II, III only
    3. CI, III, IV only
    4. DI, II, IV only

    Answer: (B) I, II, III only

    Explanation

    The span of management (span of control) specifies the number of direct reports a manager can supervise effectively. Its scope is determined by:

    • Manager's training (I): Well-trained managers with proficient administrative skills can supervise wider spans.
    • Manager's personal qualities (II): Decisiveness, leadership aptitude, and communication skills directly expand supervisory capacity.
    • Subordinates' training (III): Competent, well-trained subordinates require less routine guidance, allowing a wider span.

    Trade union presence (IV) is an external collective bargaining body that does not govern supervisory span limits. Hence, Statements I, II, and III only are correct.

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63. Question 63

    The shutdown refers to complete cessation or closing down of the business. It involves which of the following?
    I. No buying or selling
    II. No manufacturing
    III. Shifting of business from one place to another place
    IV. Assets to be sold or disposed off
    V. Returning capital to owners
    Choose the correct answer from the options given below:

    1. AI, II, IV, V only
    2. BI, II, III, IV only
    3. CI, II, III, V only
    4. DI, III, IV, V only

    Answer: (A) I, II, IV, V only

    Explanation

    A complete shutdown or liquidation of a business entails ending all operations and winding up the corporate entity:

    • Statement I: All commercial transactions (buying and selling) cease permanently.
    • Statement II: Production and manufacturing operations are halted.
    • Statement IV: Plant, property, and other assets are sold off to satisfy creditors.
    • Statement V: Residual capital proceeds are distributed back to the business owners.

    Statement III describes business relocation, which represents operational continuation rather than closing down. Hence, Statements I, II, IV, and V only are involved.

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64. Question 64

    Which of the following are false?
    I. Partners are not bound to carry on the business of the firm to the greatest common advantage.
    II. Where a partner is entitled to interest on capital subscribed by him, such interest shall be payable whether or not there are profits.
    III. An outgoing partner has a right to claim a share in the profits of the firm till his account is finally settled.
    IV. A partner may be expelled from the firm only with the consent of all other partners.
    Choose the correct answer from the options given below:

    1. AI, II, IV only
    2. BI, III, IV only
    3. CII, IV, III only
    4. DIII, IV only

    Answer: (A) I, II, IV only

    Explanation

    Under the Indian Partnership Act, 1932:

    • Statement I is false. Section 9 dictates that partners are bound to carry on the business of the firm to the greatest common advantage.
    • Statement II is false. Section 13(c) establishes that interest on capital is payable only out of profits.
    • Statement IV is false. Under Section 33, a partner cannot be expelled by majority or unanimous consent unless such an expulsion power is explicitly conferred by contract between the partners and exercised in good faith.
    • Statement III is true. Section 37 gives an outgoing partner whose accounts are unsettled the right to claim a share of profits or 6% per annum interest.

    Therefore, Statements I, II, and IV are false.

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65. Question 65

    Which of the following are related to vouching of sales?
    I. Dispatch of goods
    II. Sales book
    III. Direct notes
    IV. Credit notes
    Choose the correct answer from the options given below:

    1. AII, IV only
    2. BI, IV only
    3. CII, I only
    4. DII, III only

    Answer: (C) II, I only

    Explanation

    In an audit, vouching sales requires verifying the entries recorded in the Sales Book (II) against authentic supporting outward documentation.

    The auditor examines evidence of dispatch of goods (I) — such as delivery challans, goods outward registers, and freight notes — to confirm that recorded sales correspond to genuine dispatches.

    Credit notes (IV) are used to record sales returns rather than original sales. Hence, Statements II and I only are directly related to vouching sales.

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66. Question 66

    Match List I with List II.

    List-I	List-II
    I. Ad-hoc team formed to solve unusual problem	1. Virtual organization
    II. Suitable when there are large numbers of small projects	2. Task force
    III. Status-free and hierarchy-free organization	3. Free form organization
    IV. Digital or dot com organization	4. Matrix organization

    Match List-I with List-II

    1. AI-3, II-1, III-4, IV-2
    2. BI-1, II-2, III-4, IV-3
    3. CI-2, II-4, III-3, IV-1
    4. DI-4, II-1, III-2, IV-3

    Answer: (C) I-2, II-4, III-3, IV-1

    Explanation

    The resolved mapping is:
    I-2, II-4, III-3, IV-1

    • I. Ad-hoc team formed to solve unusual problem matches 2 (Task force): A task force is a temporary unit convened specifically to resolve non-routine organizational challenges.
    • II. Suitable when there are large numbers of small projects matches 4 (Matrix organization): Combines functional and project manager roles, optimizing talent across multiple ongoing projects.
    • III. Status-free and hierarchy-free organization matches 3 (Free form organization): Organic, boundaryless structures that minimize formal ranks to foster agile coordination.
    • IV. Digital or dot com organization matches 1 (Virtual organization): Relies on networked communication technologies to coordinate outsourced core operations.

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67. Question 67

    Match List I with List II.

    List-I	List-II
    I. P(Hᵢ/E) = P[(Hᵢ∩E)/P(E)]	1. Theorem of addition
    II. P(E₂/E₁) = P[(E₁∩E₂)/P(E₁)]	2. Theorem of multiplication
    III. P(E₁∩E₂) = P(E₁) × P(E₂)	3. Conditional probability
    IV. P(E₁ ∪ E₂) = P(E₁) + P(E₂)	4. Baye’s theorem

    Match List-I with List-II

    1. AI-1, II-4, III-2, IV-3
    2. BI-4, II-3, III-2, IV-1
    3. CI-3, II-4, III-2, IV-1
    4. DI-4, II-3, III-1, IV-2

    Answer: (B) I-4, II-3, III-2, IV-1

    Explanation

    The resolved mapping is:
    I-4, II-3, III-2, IV-1

    • I matches 4 (Baye’s theorem): Calculates posterior probability of hypothesis $H_i$ given empirical evidence $E$.
    • II matches 3 (Conditional probability): Standard formula for the conditional probability of $E_2$ given that $E_1$ has occurred.
    • III matches 2 (Theorem of multiplication): States the compound probability for independent events, where joint probability equals the product of individual probabilities.
    • IV matches 1 (Theorem of addition): Expresses the probability of the union of mutually exclusive events.

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68. Question 68

    Match List I with List II.

    List-I	List-II
    I. Inability to pay interest	1. Current ratio
    II. Liquidity crisis	2. Debt turnover ratio
    III. Inefficient collection of receivables	3. Interest coverage ratio
    IV. Return of shareholder’s fund being much higher than the overall return on investment	4. Debts equity ratio

    Match List-I with List-II

    1. AI-3, II-1, III-2, IV-4
    2. BI-3, II-2, III-1, IV-4
    3. CI-2, II-3, III-1, IV-4
    4. DI-1, II-2, III-3, IV-4

    Answer: (A) I-3, II-1, III-2, IV-4

    Explanation

    The resolved mapping is:
    I-3, II-1, III-2, IV-4

    • I. Inability to pay interest matches 3 (Interest coverage ratio): Evaluates debt servicing ability — a low ratio indicates difficulty meeting interest payments.
    • II. Liquidity crisis matches 1 (Current ratio): Measures short-term solvency — a severely depressed ratio points to imminent liquidity distress.
    • III. Inefficient collection of receivables matches 2 (Debt turnover ratio): Debtors turnover ratio reflects collection efficiency from trade credit.
    • IV. Return of shareholder’s fund being much higher than overall ROI matches 4 (Debts equity ratio): Represents favourable financial leverage (trading on equity), where debt capital amplifies equity returns.

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69. Question 69

    Match List I with List II.

    List-I	List-II
    I. Perfect competition	1. Price rigidity
    II. Monopoly	2. Product improvements
    III. Monopolistic competition	3. Homogenous products
    IV. Oligopoly	4. Price discrimination

    Match List-I with List-II

    1. AI-2, II-1, III-4, IV-3
    2. BI-4, II-3, III-1, IV-2
    3. CI-3, II-4, III-2, IV-1
    4. DI-1, II-2, III-3, IV-4

    Answer: (C) I-3, II-4, III-2, IV-1

    Explanation

    The resolved mapping is:
    I-3, II-4, III-2, IV-1

    • I. Perfect competition matches 3 (Homogenous products): Standardized, identical commodities sold by numerous price-taking firms.
    • II. Monopoly matches 4 (Price discrimination): A single seller with absolute market power charging differing prices across market segments.
    • III. Monopolistic competition matches 2 (Product improvements): Firms compete primarily through product differentiation and continuous feature improvements.
    • IV. Oligopoly matches 1 (Price rigidity): Characterized by sticky prices due to kinked demand curve dynamics under mutual interdependence.

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70. Question 70

    Match List I with List II.

    List-I	List-II
    I. Sunk cost	1. Change in total cost for a unit change in output
    II. Marginal cost	2. Value of inputs owned and used in production
    III. Investment cost	3. Costs that are unaffected by firm decision
    IV. Implicit cost	4. Total increase in costs resulting from a decision

    Match List-I with List-II

    1. AI-2, II-1, III-4, IV-3
    2. BI-1, II-3, III-4, IV-2
    3. CI-4, II-2, III-3, IV-1
    4. DI-1, II-2, III-3, IV-4

    Answer: (A) I-2, II-1, III-4, IV-3

    Explanation

    In economics cost analysis, the standard concepts are defined as follows:

    • Marginal cost (II) matches 1: The incremental change in total cost resulting from a unit change in output.
    • Investment / incremental cost (III) matches 4: The total increase in costs resulting from a business decision.
    • Sunk cost (I) conceptually corresponds to 3: Costs unaffected by current firm decisions because they have already been incurred.
    • Implicit cost (IV) conceptually corresponds to 2: The estimated opportunity value of self-owned resources used in production.

    Under the official question key, Option A (I-2, II-1, III-4, IV-3) pairs Marginal Cost with 1 and Investment Cost with 4, representing the official published option.

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71. Question 71

    Match List I with List II.

    List-I	List-II
    I. Absolute cost advantage	1. Michael Porter
    II. Factor endowment theory	2. David Ricardo
    III. National competitive advantage	3. Hecksher and Ohlin
    IV. Comparative cost advantage	4. Adam Smith

    Match List-I with List-II

    1. AI-4, II-3, III-1, IV-2
    2. BI-3, II-2, III-1, IV-4
    3. CI-1, II-4, III-3, IV-2
    4. DI-3, II-4, III-2, IV-1

    Answer: (A) I-4, II-3, III-1, IV-2

    Explanation

    The resolved mapping is:
    I-4, II-3, III-1, IV-2

    • I. Absolute cost advantage matches 4 (Adam Smith): Formulated in 1776, proposing that countries specialize in goods they can produce at lower absolute cost.
    • II. Factor endowment theory matches 3 (Hecksher and Ohlin): Asserts that nations export goods using their relatively abundant factors of production.
    • III. National competitive advantage matches 1 (Michael Porter): Introduces the Diamond Model explaining industry competitiveness.
    • IV. Comparative cost advantage matches 2 (David Ricardo): Formulated in 1817, demonstrating mutual trade gains based on lower relative opportunity cost.

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72. Question 72

    Match List I with List II.

    List-I	List-II
    I. Indian Contract Act	1. 2002
    II. Right to Information Act	2. 1872
    III. Information Technology Act	3. 2005
    IV. Competition Act	4. 2000

    Match List-I with List-II

    1. AI-1, II-2, III-3, IV-4
    2. BI-2, II-4, III-1, IV-3
    3. CI-3, II-4, III-2, IV-1
    4. DI-2, II-3, III-4, IV-1

    Answer: (D) I-2, II-3, III-4, IV-1

    Explanation

    The resolved mapping is:
    I-2, II-3, III-4, IV-1

    • I. Indian Contract Act matches 2 (1872): Governs mercantile contracts in India, enacted in 1872.
    • II. Right to Information Act matches 3 (2005): Mandates timely citizen access to public records, enacted in 2005.
    • III. Information Technology Act matches 4 (2000): Provides legal recognition for electronic data and e-commerce, enacted in 2000.
    • IV. Competition Act matches 1 (2002): Replaced the MRTP Act to promote and sustain market competition, enacted in 2002.

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73. Question 73

    Match List I with List II.

    List-I	List-II
    I. Relationship banking	1. Dealing in hundis and acceptance of deposits
    II. Merchant Banking	2. Widening the entrepreurial base and assist in a rapid rate of industrial growth
    III. Indigenous banking	3. Engaged in the business of capital issue management
    IV. Development banking	4. Creating, maintaining and enhancing strong relationship with customers

    Match List-I with List-II

    1. AI-4, II-2, III-1, IV-3
    2. BI-2, II-3, III-1, IV-4
    3. CI-4, II-3, III-1, IV-2
    4. DI-2, II-1, III-4, IV-3

    Answer: (C) I-4, II-3, III-1, IV-2

    Explanation

    The resolved mapping is:
    I-4, II-3, III-1, IV-2

    • I. Relationship banking matches 4: A holistic banking approach focused on cultivating and deepening multi-service relationships with clients.
    • II. Merchant Banking matches 3: Fee-based investment banking services specializing in capital issue management, syndication, and underwriting.
    • III. Indigenous banking matches 1: Traditional unorganized private bankers in India dealing in hundis and private deposit acceptance.
    • IV. Development banking matches 2: Term-lending institutions designed to nurture entrepreneurship and finance long-term industrial projects.

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74. Question 74

    Match List I with List II.

    List-I	List-II
    I. 80GGC	1. Deduction in respect of rent paid
    II. 80GG	2. Deduction in respect of contribution given by company to political parties
    III. 80GGA	3. Deduction in respect of contribution given by any person to political parties
    IV. 80GGB	4. Deduction in respect of certain donations for scientific research

    Match List-I with List-II

    1. AI-3, II-1, III-2, IV-4
    2. BI-3, II-2, III-4, IV-1
    3. CI-3, II-1, III-4, IV-2
    4. DI-1, II-2, III-3, IV-4

    Answer: (C) I-3, II-1, III-4, IV-2

    Explanation

    The resolved mapping is:
    I-3, II-1, III-4, IV-2

    • I. Section 80GGC matches 3: Deduction for political donations made by any person other than a company or local authority.
    • II. Section 80GG matches 1: Deduction for rent paid by assessees not receiving House Rent Allowance (HRA).
    • III. Section 80GGA matches 4: Deduction for donations made towards scientific research or rural development.
    • IV. Section 80GGB matches 2: Deduction for political contributions made by an Indian company.

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75. Question 75

    Match List I with List II.

    List-I	List-II
    I. Introduction	1. Companies from other high-income countries increase exports to the innovating country
    II. Growth	2. Competitors from other high-income countries may begin production in developing countries
    III. Maturity	3. A few competitors at home
    IV. Decline	4. Competitors in other high-income countries begin production for their domestic markets

    Match List-I with List-II

    1. AI-3, II-4, III-1, IV-2
    2. BI-3, II-1, III-4, IV-2
    3. CI-2, II-4, III-1, IV-3
    4. DI-4, II-2, III-1, IV-3

    Answer: (A) I-3, II-4, III-1, IV-2

    Explanation

    The resolved mapping is:
    I-3, II-4, III-1, IV-2

    Under Raymond Vernon's International Product Life Cycle (IPLC) theory:

    • I. Introduction stage matches 3: The innovating firm produces locally in the domestic market facing a few competitors at home.
    • II. Growth stage matches 4: Export demand expands in other high-income countries, prompting foreign competitors to begin production for their own domestic markets.
    • III. Maturity stage matches 1: Product standardization and economies of scale allow foreign advanced-country producers to export back into the innovating country.
    • IV. Decline stage matches 2: Price competition intensifies, prompting multinational competitors to relocate production to developing countries with low labor costs to supply global markets.

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76. Question 76

    What is the correct sequence of distribution of amount realised under section 154 of CGST rules?

    I. Appropriated against the administrative cost of the recovery process
    II. Appropriated against any other amount due from defaulter under the Act of IGST Act, 2017.
    III. Appropriated against the amount due to be recovered from defaulter.
    IV. Balance amount, if any shall be refunded to the defaulter

    Choose the correct answer from the options given below:

    1. AI, II, IV, III
    2. BI, III, II, IV
    3. CIII, I, II, IV
    4. DIII, II, I, IV

    Answer: (B) I, III, II, IV

    Explanation

    Under Rule 154 of the CGST Rules, 2017, any amount realised through recovery proceedings against a defaulter must be distributed in a strict statutory priority order.

    I -> III -> II -> IV

    • I. Cost of recovery: The amount is first applied toward the administrative costs incurred in the recovery process.
    • III. Primary liability: Next, the amount is appropriated against the tax, interest, or penalty due to be recovered from the defaulter under the Act.
    • II. Other dues: Any remaining amount is appropriated against other dues payable by the defaulter under the CGST Act, SGST Act, or IGST Act, 2017.
    • IV. Refund of surplus: Finally, any balance surplus is refunded to the defaulter.

    Therefore, the correct sequence is I, III, II, IV.

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77. Question 77

    Arrange the following in correct sequence.

    I. Income under the different heads of income
    II. Deduction from gross total income
    III. Adjustment of losses of the current year and earlier years
    IV. Rounding off

    Choose the correct answer from the options given below:

    1. AI, III, II, IV
    2. BI, II, III, IV
    3. CI, II, IV, III
    4. DI, IV, II, III

    Answer: (A) I, III, II, IV

    Explanation

    The computation of total taxable income under the Income-tax Act, 1961 follows a structured statutory sequence.

    I -> III -> II -> IV

    • I. Income under different heads: Income is first computed separately under the five heads of income.
    • III. Adjustment of losses: Losses of the current year and brought-forward losses of earlier years are set off against profits to determine Gross Total Income.
    • II. Deductions: Eligible deductions under Chapter VI-A (Sections 80C to 80U) are subtracted from Gross Total Income to arrive at Total Income.
    • IV. Rounding off: The final total income is rounded off to the nearest multiple of ten rupees under Section 288A.

    Therefore, the correct sequence is I, III, II, IV.

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78. Question 78

    Which of the following industry verticals received boost amid covid-19 pandemic lockdowns?

    I. Online education, gaming and entertainment
    II. E-commerce and E-payment infrastructure
    III. Retailing and pharmaceuticals
    IV. Hospitality and healthcare services
    V. Manufacturing and MSMEs

    Choose the correct answer from the options given below:

    1. AI, II, IV only
    2. BI, III, V only
    3. CI, II, III only
    4. DIII, IV, V only

    Answer: (C) I, II, III only

    Explanation

    During the COVID-19 lockdowns, containment restrictions created unprecedented demand for digital and contactless business models, while traditional contact-intensive sectors faced severe disruption.

    • Online education, gaming and entertainment (I) — experienced exponential growth as educational institutions shifted online and home confinement drove digital entertainment.
    • E-commerce and E-payment infrastructure (II) — saw rapid adoption as consumers relied on home delivery and contactless digital payments.
    • Retailing and pharmaceuticals (III) — essential retail and pharmaceutical firms surged due to heightened health awareness and panic buying.
    • Hospitality (IV) — hospitality, travel, and tourism were among the hardest hit sectors globally due to strict travel bans, making combination IV invalid despite healthcare demand.
    • Manufacturing and MSMEs (V) — factory closures and supply chain shocks severely curtailed manufacturing output.

    Therefore, only industry verticals I, II, and III received a boost.

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79. Question 79

    Arrange the following management functions in logical sequence of getting things done.

    I. Planning
    II. Staffing
    III. Organising
    IV. Coordinating
    V. Controlling
    VI. Directing

    Choose the correct answer from the options given below:

    1. AI, II, III, IV, VI, V
    2. BI, III, II, VI, IV, V
    3. CI, III, II, IV, VI, V
    4. DI, III, II, IV, V, VI

    Answer: (B) I, III, II, VI, IV, V

    Explanation

    The classical administrative process of management follows a logical progression from defining objectives to verifying execution.

    I -> III -> II -> VI -> IV -> V

    • I. Planning: Establishing organizational objectives and deciding courses of action in advance.
    • III. Organising: Grouping activities, allocating resources, and establishing authority relationships.
    • II. Staffing: Manning the organizational structure by recruiting, selecting, and training suitable personnel.
    • VI. Directing: Guiding, supervising, motivating, and leading employees toward established goals.
    • IV. Coordinating: Harmonizing diverse departmental activities and individual efforts into a unified drive.
    • V. Controlling: Measuring actual performance against predetermined standards and taking corrective actions.

    Therefore, the correct logical sequence is I, III, II, VI, IV, V.

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80. Question 80

    Sequence the following CSR eligibility criteria and spending as per the provisions of the Indian Companies Act 2013.

    I. Positive net worth of Rs. 500 crores or more
    II. Two percent of average profit spends on CSR
    III. Net profit of Rs. 5 crore or more in given financial year
    IV. Turnover of Rs. 1,000 crore or more
    V. Penal action for non-compliance

    Choose the correct answer from the options given below:

    1. AV, II, IV, III, I
    2. BII, V, I, III, IV
    3. CI, IV, III, II, V
    4. DIII, II, I, IV, V

    Answer: (C) I, IV, III, II, V

    Explanation

    Section 135 of the Companies Act, 2013 lays down Corporate Social Responsibility (CSR) provisions in a sequential structure, starting with qualification thresholds, proceeding to spending mandates, and ending with enforcement.

    I -> IV -> III -> II -> V

    • I. Net worth threshold (Section 135(1)): Net worth of Rs. 500 crore or more during the immediately preceding financial year.
    • IV. Turnover threshold (Section 135(1)): Turnover of Rs. 1,000 crore or more during the immediately preceding financial year.
    • III. Net profit threshold (Section 135(1)): Net profit of Rs. 5 crore or more during the immediately preceding financial year.
    • II. Spending requirement (Section 135(5)): Spend at least two percent of the average net profits of the company made during the three immediately preceding financial years.
    • V. Penal action (Section 135(7)): Penalties imposed on the company and defaulting officers for failure to comply with CSR spending and reporting requirements.

    Therefore, the correct sequence is I, IV, III, II, V.

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81. Question 81

    Sequence the steps in CRM process?

    I. Developing CRM programmes
    II. Collection of customer data
    III. Analyzing customer data
    IV. Identify the target customers
    V. Implementing programs

    Choose the correct answer from the options given below:

    1. AI, II, III, V, IV
    2. BII, III, IV, I, V
    3. CII, III, I, V, IV
    4. DIII, IV, V, I, II

    Answer: (B) II, III, IV, I, V

    Explanation

    The Customer Relationship Management (CRM) cycle begins with customer insights and concludes with programmatic execution and monitoring.

    II -> III -> IV -> I -> V

    • II. Collection of customer data: Gathering customer interaction, transaction, and demographic data across all touchpoints.
    • III. Analyzing customer data: Applying data mining and analytics to uncover patterns, preferences, and customer profitability.
    • IV. Identify the target customers: Segmenting the customer base and pinpointing target segments for targeted relationship-building.
    • I. Developing CRM programmes: Designing customized loyalty schemes, communication channels, and retention strategies.
    • V. Implementing programs: Rolling out the tailored CRM campaigns and monitoring long-term relationship outcomes.

    Therefore, the correct sequence is II, III, IV, I, V.

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82. Question 82

    Sequence the following activities in the process of standard costing

    I. Establishing standard costs
    II. Measurement of actual costs
    III. Identifying variances and causes of variance
    IV. Disposing the variances to cost and profit centres
    V. Comparison of actual and standard costs

    Choose the correct answer from the options given below:

    1. AI, II, V, III, IV
    2. BI, II, III, IV, V
    3. CI, II, V, IV, III
    4. DI, II, IV, III, V

    Answer: (A) I, II, V, III, IV

    Explanation

    Standard costing is a control technique that measures operational efficiency by comparing actual costs against pre-determined benchmark costs.

    I -> II -> V -> III -> IV

    • I. Establishing standard costs: Setting realistic and engineered cost standards for materials, labour, and overheads under specified operating conditions.
    • II. Measurement of actual costs: Recording and accumulating the actual costs incurred during the operating period.
    • V. Comparison of actual and standard costs: Comparing actual costs against the established standard costs to compute the magnitude of variations.
    • III. Identifying variances and causes: Analyzing favourable and adverse variances to isolate operational root causes and assign management responsibility.
    • IV. Disposing the variances: Transferring or apportioning variances to cost and profit centres or charging them to the costing profit and loss account.

    Therefore, the correct sequence is I, II, V, III, IV.

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83. Question 83

    Sequence the following activities in the process of accounting

    I. Journalising the transaction in the ledger of accounts
    II. Recording of the business transaction in the books of entry
    III. Preparation of annual financial statements
    IV. Preparation of trial balance
    V. Deriving meaningful inferences for business decisions

    Choose the correct answer from the options given below:

    1. AI, II, III, IV, V
    2. BI, II, IV, V, III
    3. CIV, III, V, II, I
    4. DII, I, IV, III, V

    Answer: (D) II, I, IV, III, V

    Explanation

    The accounting cycle follows a chronological progression from transaction capture to managerial interpretation.

    II -> I -> IV -> III -> V

    • II. Recording transactions: Entering source business transactions into the books of original entry.
    • I. Posting to ledger: Transferring journal entries into respective ledger accounts (referred to as journalising into ledger in the question stem).
    • IV. Preparation of trial balance: Extracting debit and credit ledger balances to establish arithmetic accuracy.
    • III. Preparation of financial statements: Compiling the income statement and balance sheet to determine financial performance and position.
    • V. Deriving inferences: Analyzing and interpreting financial reports to support managerial decision-making.

    Therefore, the correct sequence is II, I, IV, III, V.

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84. Question 84

    Sequence the following in the capital budgeting process

    I. Cash flow estimation
    II. Identify discounting rate
    III. Project selection decision
    IV. Determination of NPV

    Choose the correct answer from the options given below:

    1. AI, II, III, IV
    2. BI, II, IV, III
    3. CIV, I, II, III
    4. DII, I, IV, III

    Answer: (B) I, II, IV, III

    Explanation

    Evaluating long-term capital investments under the Net Present Value (NPV) technique requires forecasting cash flows before discounting and deciding.

    I -> II -> IV -> III

    • I. Cash flow estimation: Projecting initial capital outlay and subsequent periodic incremental cash inflows and outflows over the economic life of the project.
    • II. Identify discounting rate: Determining the appropriate hurdle rate or weighted average cost of capital (WACC) reflecting the risk profile of the project.
    • IV. Determination of NPV: Discounting expected cash flows at the chosen rate and subtracting the initial outlay to arrive at the Net Present Value.
    • III. Project selection decision: Applying the investment criterion (accepting projects with positive NPV or ranking mutually exclusive proposals) to make the final choice.

    Therefore, the correct sequence is I, II, IV, III.

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85. Question 85

    Which of the following are correct about TDS certificates?

    I. TDS on salary payment- Form 16
    II. TDS on non-salary payment- Form 16A
    III. TDS on rent- Form 16 B
    IV. TDS on sale of property- Form 16 C

    Choose the correct answer from the options given below:

    1. AI, II only
    2. BI, III only
    3. CI, IV only
    4. DII, III only

    Answer: (A) I, II only

    Explanation

    Under the Income-tax Rules, 1962, distinct certificate forms are prescribed for confirming Tax Deducted at Source (TDS) depending on the nature of payment.

    • Form 16 (I) — correct. It is the annual certificate issued by employers to employees for tax deducted at source on salary income under Section 192.
    • Form 16A (II) — correct. It is the quarterly certificate issued for TDS on non-salary payments, such as interest, professional fees, contractor payments, and commission.
    • Form 16B (III) — incorrect. Form 16B is the TDS certificate for sale of immovable property under Section 194-IA, not for rent.
    • Form 16C (IV) — incorrect. Form 16C is the TDS certificate for rent payments made by individuals and HUFs under Section 194-IB, not for sale of property.

    Because statements III and IV cross-swap the forms for rent and sale of property, only statements I and II are correct.

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86. Question 86

    Given below are two statements:

    Statement I: Contracts whose objects or consideration are unlawful are void.
    Statement II: Contracts in restraint of legal proceedings are void.

    In the light of the above statements, choose the most appropriate answer from the options given below:

    1. ABoth Statement I and Statement II are correct
    2. BBoth Statement I and Statement II are incorrect
    3. CStatement I is correct but Statement II is incorrect
    4. DStatement I is incorrect but Statement II is correct

    Answer: (A) Both Statement I and Statement II are correct

    Explanation

    Under the Indian Contract Act, 1872, legality of object and free access to legal remedies are essential elements of an enforceable agreement.

    • Statement I is correct: Section 23 specifies that the consideration or object of an agreement is lawful unless it is forbidden by law, defeats the provisions of any law, is fraudulent, involves injury to person or property, or is regarded by court as immoral or opposed to public policy. Any agreement with an unlawful object or consideration is expressly void.
    • Statement II is correct: Section 28 provides that every agreement by which any party is restricted absolutely from enforcing their contractual rights through ordinary legal proceedings is void to that extent.

    Because both provisions are statutory principles of the Indian Contract Act, both Statement I and Statement II are correct.

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87. Question 87

    Given below are two statements: One is labelled as Assertion A and the other is labelled as Reason R:

    Assertion (A): Workers participation in management is involvement of workers only in such areas of activities of the enterprises where they can make positive contribution
    Reason (R): Workers may not be competent enough to understand and appreciate the managerial aspects of the enterprise.

    In the light of the above statements, choose the most appropriate answer from the options given below:

    1. ABoth A and R are correct and R is the correct explanation of A
    2. BBoth A and R are correct but R is NOT the correct explanation of A
    3. CA is correct but R is not correct
    4. DA is not correct but R is correct

    Answer: (A) Both A and R are correct and R is the correct explanation of A

    Explanation

    Workers participation in management succeeds when participation is channeled into functional areas aligned with shop-floor capabilities.

    • Assertion A is correct: Effective participation programs focus worker involvement on operational areas where their first-hand work knowledge yields positive contributions, such as working conditions, shop-floor safety, work methods, and welfare amenities.
    • Reason R is correct and explains A: Workers generally lack the specialized technical, strategic, and financial training required to navigate complex corporate planning, financial structuring, and executive policy decisions. This competence boundary explains why management structures employee participation around operational matters where workers can genuinely add value.

    Therefore, both A and R are correct and R is the correct explanation of A.

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88. Question 88

    Given below are two statements: One is labelled as Assertion A and the other is labelled as Reason R:

    Assertion (A): Credit flows to agriculture and SME sector have increased in recent years
    Reason (R): Reserve Bank of India has gradually relaxed various controls in credit market.

    In the light of the above statements, choose the most appropriate answer from the options given below:

    1. ABoth A and R are correct and R is the correct explanation of A
    2. BBoth A and R are correct but R is NOT the correct explanation of A
    3. CA is correct but R is not correct
    4. DA is not correct but R is correct

    Answer: (A) Both A and R are correct and R is the correct explanation of A

    Explanation

    Financial sector deregulation and targeted credit policies have driven sustained expansion of formal bank credit to priority sectors in India.

    • Assertion A is correct: Commercial bank credit flows to agriculture and Micro, Small, and Medium Enterprises (MSMEs) have grown substantially due to revised Priority Sector Lending (PSL) targets, sub-targets, and dedicated refinancing windows.
    • Reason R is correct and explains A: Following banking reforms, the Reserve Bank of India deregulated lending interest rates, simplified credit appraisal norms, and eased collateral requirements for small loans. This regulatory relaxation incentivized scheduled commercial banks to expand credit delivery to agriculture and small enterprises.

    Therefore, both A and R are correct and R is the correct explanation of A.

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89. Question 89

    Given below are two statements: One is labelled as Assertion A and the other is labelled as Reason R:

    Assertion (A): TRIMs and TRIPs provisions facilitate and promote FDI
    Reason (R): TRIMs and TRIPs provisions remove restrictions and address capital flow sensitivities.

    In the light of the above statements, choose the most appropriate answer from the options given below:

    1. ABoth A and R are correct and R is the correct explanation of A
    2. BBoth A and R are correct but R is NOT the correct explanation of A
    3. CA is correct but R is not correct
    4. DA is not correct but R is correct

    Answer: (A) Both A and R are correct and R is the correct explanation of A

    Explanation

    Multilateral agreements under the World Trade Organization (WTO) provide international legal protections that encourage cross-border capital deployment.

    • Assertion A is correct: Trade-Related Investment Measures (TRIMs) and Trade-Related Aspects of Intellectual Property Rights (TRIPs) establish predictable international operating conditions that directly promote Foreign Direct Investment (FDI).
    • Reason R is correct and explains A: TRIMs eliminates restrictive host-nation conditionalities (such as local content requirements, trade balancing, and export obligations), while TRIPs secures intellectual property rights (patents, trademarks, and trade secrets) of foreign investors. By dismantling these trade distortions and mitigating risks to intangible capital, these provisions explain why foreign direct investment is fostered.

    Therefore, both A and R are correct and R is the correct explanation of A.

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90. Question 90

    Given below are two statements: One is labelled as Assertion A and the other is labelled as Reason R:

    Assertion (A): Equilibrium price of a commodity is the price at which the quantity demanded of the commodity equals the quantity supplied
    Reason (R): Equilibrium is the condition once determined tends to persist in time.

    In the light of the above statements, choose the most appropriate answer from the options given below:

    1. ABoth A and R are correct and R is the correct explanation of A
    2. BBoth A and R are correct but R is NOT the correct explanation of A
    3. CA is correct but R is not correct
    4. DA is not correct but R is correct

    Answer: (B) Both A and R are correct but R is NOT the correct explanation of A

    Explanation

    In microeconomic market analysis, market clearance defines the equilibrium price, while self-perpetuation is an inherent behavioural characteristic of equilibrium states.

    • Assertion A is correct: The equilibrium price is defined as the market-clearing price at which quantity demanded by buyers equals quantity supplied by sellers, leaving neither excess demand nor excess supply.
    • Reason R is correct: Economic equilibrium is inherently a state of balance where opposing economic forces are equal, so once reached, the market exhibits no endogenous tendency to move away unless disturbed by external shocks.
    • Relationship: While both statements are factually accurate economic principles, the tendency of an equilibrium state to persist describes its stability property, not the reason why equilibrium price is defined by the intersection of demand and supply.

    Therefore, both A and R are correct but R is NOT the correct explanation of A.

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91. Question 91

    Who among the following monitors the compliance of SEBI regulations by the mutual fund?

    A mutual fund is a special type of investment institution which acts as an investment conduit. It pools the savings of relatively small investors in a well diversifies portfolio of sound investment. Mutual funds issue securities (known as units) to the investors (known as unit holders) in accordance with the quantum of money invested by them. The profit (or losses) are shared by investors in proportion to their investments. A mutual fund is set up in the form of a trust which has (i) a sponsor, (ii) trustee, (iii) Asset management company (AMC) and (iv) Custodian. The trust is established by the sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of unit-holders. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of The SEBI regulations by the mutual fund. The AMC manages the funds by making investment in types of securities. The custodian holds the securities of the various schemes of the mutual fund in its safe custody. As an investment intermediary, mutual funds offer a variety of services/advantages to the relatively small investors who, on their own, cannot successfully construct and manage an investment portfolio mainly due to the small size of their funds, lack of expertise/experience and so on. This inter-alia, include convenience in terms of lower denomination of investment and liquidity, lower risk through diversification, export management and reduced transaction cost due to economies of scale.

    1. ASponsor
    2. BTrustee
    3. CAMC
    4. DCustodian

    Answer: (B) Trustee

    Explanation

    The trustees of a mutual fund hold its property for the benefit of unit-holders and are vested with general superintendence over the fund.

    • B. Trustee — correct. The passage explicitly states that the trustees monitor the performance and compliance of SEBI regulations by the mutual fund.
    • A. Sponsor — the passage identifies the sponsor as the entity establishing the trust, functioning like the promoter of a company.
    • C. AMC — the Asset Management Company manages the funds through investment operations under the oversight of the trustees.
    • D. Custodian — the custodian holds the securities in safe custody rather than monitoring regulatory compliance.

    Therefore, the trustee monitors compliance with SEBI regulations.

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92. Question 92

    The sponsor of a mutual fund is similar to

    A mutual fund is a special type of investment institution which acts as an investment conduit. It pools the savings of relatively small investors in a well diversifies portfolio of sound investment. Mutual funds issue securities (known as units) to the investors (known as unit holders) in accordance with the quantum of money invested by them. The profit (or losses) are shared by investors in proportion to their investments. A mutual fund is set up in the form of a trust which has (i) a sponsor, (ii) trustee, (iii) Asset management company (AMC) and (iv) Custodian. The trust is established by the sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of unit-holders. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of The SEBI regulations by the mutual fund. The AMC manages the funds by making investment in types of securities. The custodian holds the securities of the various schemes of the mutual fund in its safe custody. As an investment intermediary, mutual funds offer a variety of services/advantages to the relatively small investors who, on their own, cannot successfully construct and manage an investment portfolio mainly due to the small size of their funds, lack of expertise/experience and so on. This inter-alia, include convenience in terms of lower denomination of investment and liquidity, lower risk through diversification, export management and reduced transaction cost due to economies of scale.

    1. ASole proprietor of a firm
    2. BPartner of a partnership firm
    3. CPromoter of a company
    4. DDirector of a company

    Answer: (C) Promoter of a company

    Explanation

    The passage outlines the creation and governance structure of a mutual fund trust.

    • C. Promoter of a company — correct. The passage explicitly states that the trust is established by the sponsor who is like promoter of a company.
    • A. Sole proprietor of a firm — a mutual fund is structured as a trust rather than an individual proprietorship.
    • B. Partner of a partnership firm — the sponsor acts as the founding promoter rather than a partner sharing contractual liability.
    • D. Director of a company — directors manage ongoing board affairs, whereas the sponsor is the initial promoter who establishes the entity.

    Therefore, the sponsor is similar to the promoter of a company.

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93. Question 93

    AMC manages funds by investing in

    A mutual fund is a special type of investment institution which acts as an investment conduit. It pools the savings of relatively small investors in a well diversifies portfolio of sound investment. Mutual funds issue securities (known as units) to the investors (known as unit holders) in accordance with the quantum of money invested by them. The profit (or losses) are shared by investors in proportion to their investments. A mutual fund is set up in the form of a trust which has (i) a sponsor, (ii) trustee, (iii) Asset management company (AMC) and (iv) Custodian. The trust is established by the sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of unit-holders. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of The SEBI regulations by the mutual fund. The AMC manages the funds by making investment in types of securities. The custodian holds the securities of the various schemes of the mutual fund in its safe custody. As an investment intermediary, mutual funds offer a variety of services/advantages to the relatively small investors who, on their own, cannot successfully construct and manage an investment portfolio mainly due to the small size of their funds, lack of expertise/experience and so on. This inter-alia, include convenience in terms of lower denomination of investment and liquidity, lower risk through diversification, export management and reduced transaction cost due to economies of scale.

    1. AStock market securities only
    2. BCredit instruments only
    3. CGovernment bonds only
    4. DVarious types of securities

    Answer: (D) Various types of securities

    Explanation

    The role of the Asset Management Company (AMC) is to manage pooled funds across a diversified investment portfolio.

    • D. Various types of securities — correct. The passage confirms that the AMC manages the funds by making investment in types of securities across multiple asset classes to achieve portfolio diversification.
    • A. Stock market securities only — incorrect because mutual funds invest in debt, equity, and money market instruments rather than equity stocks exclusively.
    • B. Credit instruments only — incorrect because mutual fund portfolios are not restricted solely to credit and debt instruments.
    • C. Government bonds only — incorrect because sovereign securities form only one component of possible mutual fund allocations.

    Therefore, the AMC manages funds by investing in various types of securities.

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94. Question 94

    Which among the following is not a part of mutual funds trust?

    A mutual fund is a special type of investment institution which acts as an investment conduit. It pools the savings of relatively small investors in a well diversifies portfolio of sound investment. Mutual funds issue securities (known as units) to the investors (known as unit holders) in accordance with the quantum of money invested by them. The profit (or losses) are shared by investors in proportion to their investments. A mutual fund is set up in the form of a trust which has (i) a sponsor, (ii) trustee, (iii) Asset management company (AMC) and (iv) Custodian. The trust is established by the sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of unit-holders. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of The SEBI regulations by the mutual fund. The AMC manages the funds by making investment in types of securities. The custodian holds the securities of the various schemes of the mutual fund in its safe custody. As an investment intermediary, mutual funds offer a variety of services/advantages to the relatively small investors who, on their own, cannot successfully construct and manage an investment portfolio mainly due to the small size of their funds, lack of expertise/experience and so on. This inter-alia, include convenience in terms of lower denomination of investment and liquidity, lower risk through diversification, export management and reduced transaction cost due to economies of scale.

    1. ASponsor
    2. BCustodian
    3. CDepository
    4. DTrustees

    Answer: (C) Depository

    Explanation

    The structural composition of a mutual fund trust is explicitly defined in the passage.

    • C. Depository — correct. The passage lists four constituent components: sponsor, trustee, Asset Management Company (AMC), and custodian. A depository is an external capital market infrastructure institution and not one of the four foundational parts of the trust itself.
    • A. Sponsor — explicitly listed as the entity establishing the trust.
    • B. Custodian — explicitly listed as the entity holding scheme securities in safe custody.
    • D. Trustees — explicitly listed as the fiduciaries holding property for the benefit of unit-holders.

    Therefore, a depository is not part of the mutual fund trust.

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95. Question 95

    Mutual fund is

    A mutual fund is a special type of investment institution which acts as an investment conduit. It pools the savings of relatively small investors in a well diversifies portfolio of sound investment. Mutual funds issue securities (known as units) to the investors (known as unit holders) in accordance with the quantum of money invested by them. The profit (or losses) are shared by investors in proportion to their investments. A mutual fund is set up in the form of a trust which has (i) a sponsor, (ii) trustee, (iii) Asset management company (AMC) and (iv) Custodian. The trust is established by the sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of unit-holders. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of The SEBI regulations by the mutual fund. The AMC manages the funds by making investment in types of securities. The custodian holds the securities of the various schemes of the mutual fund in its safe custody. As an investment intermediary, mutual funds offer a variety of services/advantages to the relatively small investors who, on their own, cannot successfully construct and manage an investment portfolio mainly due to the small size of their funds, lack of expertise/experience and so on. This inter-alia, include convenience in terms of lower denomination of investment and liquidity, lower risk through diversification, export management and reduced transaction cost due to economies of scale.

    1. AInvestment intermediary
    2. BVenture capitalist
    3. CNBFC
    4. DNon-profit organization

    Answer: (A) Investment intermediary

    Explanation

    The passage outlines the core identity and economic function of mutual funds in the financial system.

    • A. Investment intermediary — correct. The passage explicitly defines a mutual fund as an investment conduit and an investment intermediary that pools savings from small investors to construct a professionally managed portfolio.
    • B. Venture capitalist — venture capital firms provide early-stage equity financing to startups, whereas mutual funds pool public capital for diversified securities.
    • C. NBFC — Non-Banking Financial Companies provide banking and credit services under a separate regulatory regime.
    • D. Non-profit organization — mutual funds are collective investment vehicles whose net profits and capital gains are distributed proportionally to unit holders.

    Therefore, a mutual fund is an investment intermediary.

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96. Question 96

    Hiring the right people for organization like Taj hotel requires which of the following?

    I. Compete to get best employees
    II. Hire for competency and inclination
    III. Be the most preferred employer
    IV. Choose the most talented

    Choose the correct answer from the options:

    The famous Taj palace hotel and towers became the centre of one of the most deadly terrorist attack in the Indian sub continent on 26 Nov. 2018. The employee’s behaviour during the crisis saved the lives of nearly 300 guests. The condition of Taj after this was so disastrous that it would have been profitable to leave the hotel as it is rather than reopening it.

    However, Taj made remarkable effort to recovering not just to restore its damaged installations but also to ensure customer satisfaction as well as to uplift the spirit of all employees and staff.

    The employee of Taj is viewed as an asset and is the real profit centre. “The criterion of the Taj people philosophy displays our commitment to and belief in our people” says Bernard Martyis, is former senior VP,HR. In it is “Special Thanks and Recognition System” (STARS) it aims at rewarding employees across all levels. The employee can earn points on the recommendation of colleagues or guests. Taj People Philosophy (TPP) covered all the aspects of and employee career planning from his joining till the death. Taj also implemented the popular performance management system called Balance Score Card in which employee could reviews his performance and make improvements.

    1. AI, II
    2. BII, III
    3. CI, II, III
    4. DII, III, IV

    Answer: (B) II, III

    Explanation

    Under the service-leadership philosophy exemplified by the Taj Group, attracting and selecting suitable service personnel prioritizes behavioural alignment and employer reputation.

    • Hire for competency and inclination (II): Hospitality organizations place exceptional weight on genuine service orientation, warmth, and behavioral inclination alongside core functional competence.
    • Be the most preferred employer (III): Establishing an admired employer brand attracts candidates who naturally identify with the company culture and values.
    • Compete to get best employees (I) and Choose the most talented (IV): Merely competing aggressively on compensation or selecting purely for abstract academic talent does not guarantee service commitment.

    Therefore, hiring the right people requires II and III.

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97. Question 97

    Developing the employees to provide service quality does require which of the following?

    I. Training of employees
    II. Continuous instruction with employees
    III. Setting standard for employees
    IV. Recognize and reward the employees across all levels

    Choose the correct answer from the options:

    The famous Taj palace hotel and towers became the centre of one of the most deadly terrorist attack in the Indian sub continent on 26 Nov. 2018. The employee’s behaviour during the crisis saved the lives of nearly 300 guests. The condition of Taj after this was so disastrous that it would have been profitable to leave the hotel as it is rather than reopening it.

    However, Taj made remarkable effort to recovering not just to restore its damaged installations but also to ensure customer satisfaction as well as to uplift the spirit of all employees and staff.

    The employee of Taj is viewed as an asset and is the real profit centre. “The criterion of the Taj people philosophy displays our commitment to and belief in our people” says Bernard Martyis, is former senior VP,HR. In it is “Special Thanks and Recognition System” (STARS) it aims at rewarding employees across all levels. The employee can earn points on the recommendation of colleagues or guests. Taj People Philosophy (TPP) covered all the aspects of and employee career planning from his joining till the death. Taj also implemented the popular performance management system called Balance Score Card in which employee could reviews his performance and make improvements.

    1. AI, II
    2. BIII, IV
    3. COnly I
    4. DI, II, III, IV

    Answer: (D) I, II, III, IV

    Explanation

    Developing frontline employees to deliver consistent service excellence requires an integrated human resource approach.

    • I. Training of employees: Providing rigorous hospitality skills and crisis response capabilities.
    • II. Continuous instruction with employees: Maintaining continuous communication, feedback, and managerial coaching.
    • III. Setting standard for employees: Establishing clear performance metrics and service quality expectations.
    • IV. Recognize and reward the employees across all levels: Reinforcing exceptional service behavior through recognition systems such as STARS, as highlighted in the passage.

    Because all four elements are essential to employee service quality development, the correct answer is I, II, III, IV.

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98. Question 98

    Providing necessary support system for employees requires which of the following?

    I. Friendly environment
    II. Providing all the equipment and system needed by employees to deliver service
    III. Internal controls
    IV. Service oriented process

    Choose the correct answer from the options:

    The famous Taj palace hotel and towers became the centre of one of the most deadly terrorist attack in the Indian sub continent on 26 Nov. 2018. The employee’s behaviour during the crisis saved the lives of nearly 300 guests. The condition of Taj after this was so disastrous that it would have been profitable to leave the hotel as it is rather than reopening it.

    However, Taj made remarkable effort to recovering not just to restore its damaged installations but also to ensure customer satisfaction as well as to uplift the spirit of all employees and staff.

    The employee of Taj is viewed as an asset and is the real profit centre. “The criterion of the Taj people philosophy displays our commitment to and belief in our people” says Bernard Martyis, is former senior VP,HR. In it is “Special Thanks and Recognition System” (STARS) it aims at rewarding employees across all levels. The employee can earn points on the recommendation of colleagues or guests. Taj People Philosophy (TPP) covered all the aspects of and employee career planning from his joining till the death. Taj also implemented the popular performance management system called Balance Score Card in which employee could reviews his performance and make improvements.

    1. AOnly I
    2. BII, III
    3. CI, II, III
    4. DII, III, IV

    Answer: (C) I, II, III

    Explanation

    In service management, internal employee support systems empower staff by providing the work environment, tools, and operational boundaries necessary for effective service delivery.

    • I. Friendly environment: Fostering a supportive, respectful workplace climate that sustains employee morale.
    • II. Providing equipment and systems: Ensuring employees have all requisite physical tools, software, and operational resources to perform their roles.
    • III. Internal controls: Implementing operational procedures and checks that maintain standard operating consistency.
    • IV. Service oriented process: This reflects overarching service design rather than a frontline employee support mechanism.

    Therefore, providing a necessary support system requires I, II, and III.

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99. Question 99

    Retaining the best people by Taj did not include

    The famous Taj palace hotel and towers became the centre of one of the most deadly terrorist attack in the Indian sub continent on 26 Nov. 2018. The employee’s behaviour during the crisis saved the lives of nearly 300 guests. The condition of Taj after this was so disastrous that it would have been profitable to leave the hotel as it is rather than reopening it.

    However, Taj made remarkable effort to recovering not just to restore its damaged installations but also to ensure customer satisfaction as well as to uplift the spirit of all employees and staff.

    The employee of Taj is viewed as an asset and is the real profit centre. “The criterion of the Taj people philosophy displays our commitment to and belief in our people” says Bernard Martyis, is former senior VP,HR. In it is “Special Thanks and Recognition System” (STARS) it aims at rewarding employees across all levels. The employee can earn points on the recommendation of colleagues or guests. Taj People Philosophy (TPP) covered all the aspects of and employee career planning from his joining till the death. Taj also implemented the popular performance management system called Balance Score Card in which employee could reviews his performance and make improvements.

    1. AMaking them as a part of vision
    2. BPromoting them out of turn
    3. CRewarding the employees
    4. DTreating employees as customers

    Answer: (B) Promoting them out of turn

    Explanation

    The Taj People Philosophy focuses on equitable career planning, recognition, and employee empowerment rather than arbitrary promotion practices.

    • B. Promoting them out of turn — correct. Out-of-turn promotions undermine transparency, damage workforce morale, and violate structured career planning principles.
    • A. Making them as a part of vision — retaining top talent requires aligning employee personal growth with organizational vision.
    • C. Rewarding the employees — structured recognition systems such as STARS actively incentivize and retain high performers.
    • D. Treating employees as customers — internal marketing treats employees as internal customers to ensure job satisfaction and high retention.

    Therefore, retaining the best people did not include promoting them out of turn.

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100. Question 100

     Which approach did not help Taj to restore its glory?

     The famous Taj palace hotel and towers became the centre of one of the most deadly terrorist attack in the Indian sub continent on 26 Nov. 2018. The employee’s behaviour during the crisis saved the lives of nearly 300 guests. The condition of Taj after this was so disastrous that it would have been profitable to leave the hotel as it is rather than reopening it.

     However, Taj made remarkable effort to recovering not just to restore its damaged installations but also to ensure customer satisfaction as well as to uplift the spirit of all employees and staff.

     The employee of Taj is viewed as an asset and is the real profit centre. “The criterion of the Taj people philosophy displays our commitment to and belief in our people” says Bernard Martyis, is former senior VP,HR. In it is “Special Thanks and Recognition System” (STARS) it aims at rewarding employees across all levels. The employee can earn points on the recommendation of colleagues or guests. Taj People Philosophy (TPP) covered all the aspects of and employee career planning from his joining till the death. Taj also implemented the popular performance management system called Balance Score Card in which employee could reviews his performance and make improvements.

     1. ACollective bargaining
     2. BCustomer retention
     3. CTreating employee as customer
     4. DImplementation of performance management system

     Answer: (A) Collective bargaining

     Explanation

     The revival of the Taj Hotel was driven by internal marketing, leadership, customer trust, and performance systems rather than industrial conflict resolution mechanisms.

     • A. Collective bargaining — correct. Collective bargaining is a formal negotiation process between management and trade unions regarding wages and service conditions. It was not one of the internal motivational and leadership strategies used by Taj to restore its glory.
     • B. Customer retention — restoring guest satisfaction and rebuilding trust was central to reopening the property.
     • C. Treating employee as customer — adopting an internal marketing approach inspired deep employee commitment during the recovery.
     • D. Implementation of performance management system — implementing the Balanced Scorecard allowed staff to review performance and drive continuous service improvements.

     Therefore, collective bargaining was not an approach used to restore its glory.

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