UGC NET Commerce November 2021 Question PaperPaper 2 with Answer Key

100 questions with the answer key and explanations.

1. Question 1

   Which is the most potent driver of business transformation during COVID-19 pandemic?

   1. AEthical consciousness
   2. BScale economies and pricing power
   3. CTechnology adoption and innovation
   4. DSupply chain logistics and government interventions

   Answer: (C) Technology adoption and innovation

   Explanation

   Widespread operational disruptions during the pandemic forced organizations to rapidly digitize workflows and customer interactions.

   • A. Ethical consciousness — Organizations recognized social responsibility during the crisis, but ethics did not drive structural business model transformation.
   • B. Scale economies and pricing power — Traditional cost efficiencies through scale were secondary to business continuity and survival.
   • C. Technology adoption and innovation — correct. Cloud computing, digital collaboration tools, e-commerce, and automation were the primary enablers that allowed enterprises to adapt and operate.
   • D. Supply chain logistics and government interventions — Government mandates and logistical bottlenecks were constraints and external disruptions rather than intentional drivers of internal business transformation.

   Sign in to read the full explanation

   Login / Signup

2. Question 2

   Counter Vailing Duties (CVD) are often imposed on imports to offset the impact of

   1. APredatory Pricing
   2. BExport Subsidies
   3. CDumping
   4. DLow-cost financing

   Answer: (B) Export Subsidies

   Explanation

   Countervailing duties are specific tariffs permitted under World Trade Organization rules to neutralize trade distortions created by foreign government subsidies.

   • A. Predatory Pricing — Handled by domestic antitrust and competition authorities.
   • B. Export Subsidies — correct. When a foreign government provides financial assistance or export subsidies to its domestic producers, importing nations impose countervailing duties to level the playing field for local industries.
   • C. Dumping — Selling below normal value is countered by Anti-Dumping Duties rather than Countervailing Duties.
   • D. Low-cost financing — General domestic financing terms do not trigger countervailing duties unless structured as an actionable specific export subsidy under WTO rules.

   Sign in to read the full explanation

   Login / Signup

3. Question 3

   To prevent opportunistic takeover of domestic firms amid Covid-19 pandemic, Foreign Direct Investment (FDI) from countries that share borders with India is allowed through

   1. AAutomatic Route
   2. BGovernment Route
   3. CFIPB Route
   4. DDPIIT Route

   Answer: (B) Government Route

   Explanation

   In April 2020, the Department for Promotion of Industry and Internal Trade issued Press Note 3 to protect distressed Indian businesses from predatory takeovers.

   Under this amendment to the Consolidated FDI Policy, any non-resident entity of a country sharing a land border with India, or where the beneficial owner is situated in such a country, can invest only under the Government approval route.

   • A. Automatic Route — Permitted for non-border countries in eligible sectors without prior government approval.
   • B. Government Route — correct. Mandates prior scrutiny and formal approval from the concerned ministry and the Union Government.
   • C. FIPB Route — The Foreign Investment Promotion Board was formally abolished in May 2017, with individual administrative ministries handling approvals thereafter.
   • D. DPIIT Route — DPIIT administers policy guidelines and oversees the Foreign Investment Facilitation Portal, but the formal regulatory approval mechanism is designated as the Government Route.

   Sign in to read the full explanation

   Login / Signup

4. Question 4

   Factor conditions in Michael Porter’s competitive advantage of Nations include

   1. AMarket size
   2. BDemand conditions
   3. CInternationally competitive suppliers
   4. DSkilled labour and scientific knowledge

   Answer: (D) Skilled labour and scientific knowledge

   Explanation

   Michael Porter’s Diamond Model identifies four national determinants of competitive advantage: factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry.

   • A. Market size — Component of demand conditions.
   • B. Demand conditions — A separate distinct pillar of the Diamond Model focusing on domestic market sophistication and nature of buyer needs.
   • C. Internationally competitive suppliers — Belongs to the related and supporting industries pillar.
   • D. Skilled labour and scientific knowledge — correct. Factor conditions encompass specialized production inputs created through sustained investment, including highly trained human resources, scientific infrastructure, and technical knowledge.

   Sign in to read the full explanation

   Login / Signup

5. Question 5

   In case the purchasing company agrees to act as the agent of the vendor for collection of the book debts, in the books of the purchasing company, the amount of debtors should be credited to

   1. AVendor’s debtors account
   2. BVendor’s suspense account
   3. CDebtors account
   4. DCreditors account

   Answer: (B) Vendor’s suspense account

   Explanation

   When a purchasing company acts strictly as a collecting agent for the vendor, it does not acquire ownership of the vendor’s book debts.

   In agency accounting for business acquisition:

   • The debtors remain the property of the vendor company.
   • When book debts are entrusted or collected on behalf of the vendor, cash or bank is debited and the corresponding liability to remit the collections is credited to Vendor’s Suspense Account.
   • A standard Debtors Account or Creditors Account is inappropriate because the purchasing company holds no proprietary asset or normal trade obligation in respect of these third parties.

   Sign in to read the full explanation

   Login / Signup

6. Question 6

   When the value of “Investment in subsidiary” in the holding company’s balance sheet is more than the book value of the net assets acquired, the difference represents

   1. ACapital reserve on consolidation
   2. BGoodwill on consolidation
   3. CMinority Interest
   4. DPost acquisition profit

   Answer: (B) Goodwill on consolidation

   Explanation

   In consolidated financial statements, comparing the purchase consideration against the parent company’s share in the net identifiable assets of the subsidiary yields the cost of control.

   • Cost of Investment > Fair/Book Value of Net Assets acquired: The excess payment represents Goodwill on consolidation.
   • Cost of Investment < Fair/Book Value of Net Assets acquired: The gain represents Capital Reserve on consolidation.
   • Minority Interest represents the equity interest of outside shareholders in the subsidiary.
   • Post acquisition profit represents earnings accrued by the subsidiary after the date of acquisition.

   Sign in to read the full explanation

   Login / Signup

7. Question 7

   The basic method of valuing human assets is

   1. AAdjustment
   2. BAmortization
   3. CCapitalization
   4. DQuasi equity

   Answer: (B) Amortization

   Explanation

   In Human Resource Accounting, historical investments in human resources such as recruitment, selection, hiring, and training are capitalized as assets and then systematically amortized over the estimated service lives of employees.

   Amortization represents the foundational accounting treatment analogous to depreciating physical assets over their economic service period.

   If an employee separates or leaves prematurely, the unamortized portion of human resource cost is immediately charged to the profit and loss account.

   Sign in to read the full explanation

   Login / Signup

8. Question 8

   X and Y are partners, sharing profits and losses in the ratio of 4:3. They admit Z into the partnership for 1/5th share. X and Y decide to share future profits in the ratio of 2:1. What is the sacrificing ratio of X and Y?

   1. A4:3
   2. B13:8
   3. C8:13
   4. D4:17

   Answer: (D) 4:17

   Explanation

   Compute the sacrificing ratio using old share minus new share for each existing partner.

   Old profit sharing ratio:

   • Old share of X = 4/7
   • Old share of Y = 3/7

   Incoming partner Z receives 1/5th share, leaving a remaining share of:
   1 - 1/5 = 4/5

   Remaining share is divided between X and Y in the ratio of 2:1:

   • New share of X = 2/3 × 4/5 = 8/15
   • New share of Y = 1/3 × 4/5 = 4/15

   Calculate individual sacrifice:

   • Sacrifice of X = 4/7 - 8/15 = (60 - 56) / 105 = 4/105
   • Sacrifice of Y = 3/7 - 4/15 = (45 - 28) / 105 = 17/105

   Comparing the two sacrifices gives 4:17.

   Sign in to read the full explanation

   Login / Signup

9. Question 9

   The value of the firm in wealth maximisation objective is measured by

   1. APresent value of all expected future cash flows
   2. BAll expected future cash flows
   3. CPresent value of all expected future profits
   4. DAll expected future profits

   Accepted answers: (A) Present value of all expected future cash flows, (C) Present value of all expected future profits

   Explanation

   Wealth maximization measures the economic value of a firm by discounting future economic returns to their present value, taking into account the time value of money and risk.

   • In modern financial management, the value of the firm is defined as the present value of all expected future cash flows discounted at the cost of capital.
   • In traditional and institutional commerce testing, wealth maximization has also been formulated as the present value of all expected future profits or economic returns.
   • Options B and D omit discounting and fail to incorporate the time value of money, which is essential to wealth maximization.

   Sign in to read the full explanation

   Login / Signup

10. Question 10

    For a “decline in price”, total revenue declines if the demand of the product is

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

    Answer: (B) Inelastic

    Explanation

    Under the total revenue test of price elasticity of demand, price and total revenue move in the same direction when demand is price-inelastic.

    • A. Elastic — When demand is elastic, percentage increase in quantity demanded exceeds the percentage drop in price, causing total revenue to rise when price falls.
    • B. Inelastic — correct. When elasticity is less than 1, consumers are relatively unresponsive to price drops. The percentage gain in sales volume is smaller than the percentage price cut, causing total revenue to decline.
    • C. Unitary elastic — Total revenue remains constant as price changes.
    • D. Zero elastic — Perfectly inelastic demand is a boundary case where quantity does not change at all, but the broad economic condition describing a fall in total revenue following a price drop is inelastic demand.

    Sign in to read the full explanation

    Login / Signup

11. Question 11

    In Cobb-Douglas production function, Q = AK^a L^b increasing returns to scale occurs when

    1. Aa + b > 1
    2. BK + L > 1
    3. Ca + b < 1
    4. DK + L < 1

    Answer: (A) a + b > 1

    Explanation

    In the Cobb-Douglas production function Q = A K^a L^b, returns to scale are measured by the sum of output elasticities with respect to capital and labour, (a + b).

    • a + b > 1: Increasing returns to scale (proportionate scaling of all inputs leads to a more than proportionate increase in output)
    • a + b = 1: Constant returns to scale (linear homogeneous production function)
    • a + b < 1: Decreasing returns to scale (proportionate scaling of inputs leads to a less than proportionate increase in output)

    Options B and D are distractors that mistakenly sum input quantities rather than the exponents.

    Sign in to read the full explanation

    Login / Signup

12. Question 12

    The extreme case of non-price competition in an Oligopoly is

    1. AFormation of cartels
    2. BInterdependent decision-making
    3. CAttaining economies of scale
    4. DFormation of Duopoly

    Answer: (A) Formation of cartels

    Explanation

    In an oligopolistic market structure, price competition often triggers ruinous price wars due to mutual interdependence.

    • A. Formation of cartels — correct. To eliminate price competition entirely while avoiding market uncertainty, firms formally collude to establish quotas, divide territories, and agree on uniform price levels, representing the extreme manifestation of non-price competition.
    • B. Interdependent decision-making — A universal structural characteristic of all oligopolies rather than an extreme form of non-price competition.
    • C. Attaining economies of scale — A cost-efficiency or entry-barrier mechanism.
    • D. Formation of Duopoly — A specific market structure with two sellers, which can still experience intense price rivalry.

    Sign in to read the full explanation

    Login / Signup

13. Question 13

    Pecking order theory in finance is based on the assertion of

    1. AAsymmetric information between managers and investors
    2. BSymmetric information between managers and investors
    3. COutside information
    4. DAsymmetric information among investors only

    Answer: (A) Asymmetric information between managers and investors

    Explanation

    Myers and Majluf (1984) formulated the pecking order theory of financing hierarchy based on information asymmetry.

    Corporate insiders and managers possess superior information regarding the firm’s future prospects compared to outside investors.

    To minimize adverse selection costs associated with undervalued equity issuance, firms prioritize internal funds (retained earnings) first, followed by debt, and issue new equity only as a last resort.

    Sign in to read the full explanation

    Login / Signup

14. Question 14

    If a project cost is ₹ 40,000. Its stream of earning before depreciation and tax during first year through five years is expected to be ₹ 10,000, ₹ 12,000, ₹ 14,000, ₹ 16,000 and ₹ 20,000. Assume a 50% tax rate and depreciation on straight line basis; project’s ARR is

    1. A14.40%
    2. B72%
    3. C16%
    4. D55.56%

    Answer: (C) 16%

    Explanation

    Calculate the Accounting Rate of Return (ARR) based on average annual earnings after tax divided by average investment.

    Step 1: Compute total and average earnings before depreciation and tax (EBDT):

    • Total EBDT = 10,000 + 12,000 + 14,000 + 16,000 + 20,000 = ₹72,000
    • Average annual EBDT = 72,000 / 5 = ₹14,400

    Step 2: Compute annual straight line depreciation:

    • Depreciation per year = 40,000 / 5 = ₹8,000

    Step 3: Determine earnings before tax (EBT) and profit after tax (EAT):

    • Average annual EBT = 14,400 - 8,000 = ₹6,400
    • Tax at 50% = 50% of 6,400 = ₹3,200
    • Average annual profit after tax = 6,400 - 3,200 = ₹3,200

    Step 4: Compute average investment and ARR:

    • Average investment = Project Cost / 2 = 40,000 / 2 = ₹20,000
    • ARR = (Average Annual Profit After Tax / Average Investment) × 100
    • ARR = (3,200 / 20,000) × 100 = 16%

    Sign in to read the full explanation

    Login / Signup

15. Question 15

    According to the theory of dividend, the firm should follow its investment policy of accepting all positive NPV projects and paying out dividends if and only if, funds are available:

    1. ABird in hand theory
    2. BInvestor rationality theory
    3. C100 percent retention theory
    4. DResidual theory

    Answer: (D) Residual theory

    Explanation

    The Residual Theory of Dividend treats dividend distribution as a passive financing decision rather than an active value driver.

    • A. Bird in hand theory — Argues that investors prefer high current dividends over uncertain future capital gains.
    • B. Investor rationality theory — Pertains to Modigliani-Miller market arbitrage rather than a residual allocation model.
    • C. 100 percent retention theory — Assumes a firm always retains all earnings regardless of project availability.
    • D. Residual theory — correct. The firm first allocates all available earnings to finance capital budgeting projects with positive net present value, distributing dividends only from the residual funds remaining.

    Sign in to read the full explanation

    Login / Signup

16. Question 16

    In Securitization when no assets are acquired and the collateral is fixed for the life of the asset, the type of a structure is called as

    1. ARevolving structure
    2. BAmortized structure
    3. CCollateralized structure
    4. DSelf-liquidating structure

    Answer: (D) Self-liquidating structure

    Explanation

    In asset securitization, structures differ based on how cash collections and underlying collateral pools are managed over time.

    • A. Revolving structure — Principal collections are reinvested into newly acquired receivables during a revolving period (common in credit card securitization).
    • B. Amortized structure — Describes debt repayment schedules rather than the asset substitution profile of the underlying special purpose vehicle.
    • C. Collateralized structure — A generic descriptive term for asset-backed debt.
    • D. Self-liquidating structure — correct. In a self-liquidating or closed structure, the collateral pool is fixed at inception with no new assets acquired, and cash flows from the underlying assets are applied directly to amortize and pay down the issued securities over the asset life.

    Sign in to read the full explanation

    Login / Signup

17. Question 17

    For a very large sample size the ratio between SE_X̄ and σ is 8 : 40. Determine the sample size n:

    1. A25
    2. B5
    3. C4
    4. D16

    Answer: (A) 25

    Explanation

    Calculate sample size using the relationship between standard error of the mean and population standard deviation.

    The standard error formula is:
    SE_X̄ = σ / √n

    Rearranging for the ratio:
    SE_X̄ / σ = 1 / √n

    Given the ratio SE_X̄ / σ = 8 / 40 = 1 / 5:
    1 / √n = 1 / 5
    √n = 5
    n = 5² = 25

    The required sample size is 25.

    Sign in to read the full explanation

    Login / Signup

18. Question 18

    For a given set of paired data, the correlation and regression coefficients have been calculated as being equal to r, bxy and byx respectively. Now, each of the values of the x series is divided by 5. What effect does it have on each of these coefficients?

    1. AThe three coefficients remain unchanged
    2. BThere is no change in r but byx changes to byx/5 and bxy changes to 5 bxy
    3. CEach of the coefficients will be reduced to one fourth of its value
    4. DThere is no change in r but byx changes in 5byx and bxy changes to bxy/5

    Answer: (D) There is no change in r but byx changes in 5byx and bxy changes to bxy/5

    Explanation

    Determine the effect of scale transformations on correlation and regression coefficients.

    Let u = x / 5, meaning x = 5u.

    1. Correlation coefficient r:

    • The correlation coefficient is independent of change of origin and change of scale.
    • Therefore, r remains unchanged.

    1. Regression coefficient of y on x (byx):

    • byx = Cov(x, y) / Var(x)
    • When transforming to u = x / 5, Cov(u, y) = (1/5) Cov(x, y) and Var(u) = (1/25) Var(x).
    • The new regression coefficient byu = [(1/5) Cov(x, y)] / [(1/25) Var(x)] = 5 byx.

    1. Regression coefficient of x on y (bxy):

    • bxy = Cov(x, y) / Var(y)
    • The new regression coefficient buy = Cov(u, y) / Var(y) = (1/5) [Cov(x, y) / Var(y)] = bxy / 5.

    Thus, r does not change, byx becomes 5 byx, and bxy becomes bxy / 5.

    Sign in to read the full explanation

    Login / Signup

19. Question 19

    Which of the following statement is correct?

    1. ACo-efficient of variance = σ/X̄ × 100
    2. BIf value in a series are negative, the standard deviation is also negative
    3. CIf value in a series multiplied by 6, the variance would be multiplied by 36
    4. DStandard deviation is equal to square of variance

    Accepted answers: (A) Co-efficient of variance = σ/X̄ × 100, (C) If value in a series multiplied by 6, the variance would be multiplied by 36

    Explanation

    Evaluate the statistical properties of dispersion measures.

    • A. Co-efficient of variance = σ/X̄ × 100 — correct. Karl Pearson defined the coefficient of variation as the ratio of the standard deviation to the arithmetic mean expressed as a percentage.
    • B. If value in a series are negative, the standard deviation is also negative — Incorrect. Standard deviation is the positive square root of variance and can never be negative.
    • C. If value in a series multiplied by 6, the variance would be multiplied by 36 — correct. Multiplying every observation in a series by a constant c multiplies the variance by c², so multiplying by 6 scales the variance by 6² = 36.
    • D. Standard deviation is equal to square of variance — Incorrect. Variance is the square of standard deviation.

    Sign in to read the full explanation

    Login / Signup

20. Question 20

    For a poisson distribution variable X, P (X = 0) = 2P(X = 1), its standard deviation would be:

    1. A√2
    2. B0.5
    3. C√0.5
    4. D2

    Answer: (C) √0.5

    Explanation

    Derive the Poisson parameter λ and the standard deviation from the probability mass function.

    The Poisson probability mass function is:
    P(X = k) = (e^(-λ) × λ^k) / k!

    For k = 0:
    P(X = 0) = e^(-λ)

    For k = 1:
    P(X = 1) = e^(-λ) × λ

    Substitute into the given relationship:
    e^(-λ) = 2 × [e^(-λ) × λ]

    Dividing both sides by e^(-λ) gives:
    1 = 2λ
    λ = 0.5

    In a Poisson distribution, Variance = λ = 0.5.
    The standard deviation is √Variance = √0.5.

    Sign in to read the full explanation

    Login / Signup

21. Question 21

    A test that contains a fair sample of the tasks and skills actually needed for the job in question is:

    1. AConstruct validity
    2. BContent validity
    3. CTest validity
    4. DCriterion validity

    Answer: (B) Content validity

    Explanation

    In personnel selection and testing, validity measures how well a tool evaluates the intended job attributes.

    • A. Construct validity — Measures the degree to which a test assesses a theoretical trait or construct such as intelligence or leadership ability.
    • B. Content validity — correct. Demonstrates that the test items comprehensively and representatively sample the actual knowledge, behaviors, and practical skills required on the job.
    • C. Test validity — A broad overarching category rather than a specific operational form of test validation.
    • D. Criterion validity — Evaluates how test scores predict actual job performance through concurrent or predictive correlations.

    Sign in to read the full explanation

    Login / Signup

22. Question 22

    Which among the following is NOT a primary determinant of organizational structure?

    1. AChain and span
    2. BCapacity and lower needs
    3. CPower and control
    4. DDifferentiation and integration

    Answer: (B) Capacity and lower needs

    Explanation

    Organizational design determines how authority, tasks, and communications are formally structured.

    • A. Chain and span — Chain of command and span of management directly shape organizational hierarchy and flat versus tall structures.
    • B. Capacity and lower needs — correct. Refers to individual psychological motivation concepts from Maslow’s hierarchy rather than structural design parameters of an organization.
    • C. Power and control — Allocation of decision rights and authority distribution are structural design determinants.
    • D. Differentiation and integration — Lawrence and Lorsch identified departmental differentiation and coordination mechanisms as foundational determinants of organizational structure.

    Sign in to read the full explanation

    Login / Signup

23. Question 23

    An act in a way that results in the greatest good for the greatest number is:

    1. AThe golden rule
    2. BThe utilitarian principle
    3. CThe four way test
    4. DKant’s categorical imperative

    Answer: (B) The utilitarian principle

    Explanation

    Normative ethical theories guide business decision-making through distinct moral frameworks.

    • A. The golden rule — The reciprocal ethic of treating others as you wish to be treated.
    • B. The utilitarian principle — correct. Formulated by Jeremy Bentham and John Stuart Mill, this consequentialist doctrine holds that actions are morally right if they promote the greatest net happiness or utility for the greatest number of people.
    • C. The four way test — A practical Rotary International standard testing truth, fairness, goodwill, and mutual benefit.
    • D. Kant’s categorical imperative — A deontological duty-based ethical framework asserting that actions must be based on universalizable maxims regardless of consequences.

    Sign in to read the full explanation

    Login / Signup

24. Question 24

    People repeat behaviors that bring them satisfaction and pleasure and stop those that bring them dissatisfaction or pain is known as

    1. ALaw of exercise
    2. BLaw of redo
    3. CLaw of effect
    4. DLaw of readiness

    Answer: (C) Law of effect

    Explanation

    Edward Thorndike established the primary laws of learning through connectionism.

    • A. Law of exercise — States that stimulus-response connections are strengthened through practice and repetition.
    • B. Law of redo — Not a recognized psychological law of learning.
    • C. Law of effect — correct. Posits that responses followed immediately by satisfying consequences are reinforced and more likely to recur, whereas responses followed by discomfort or pain are weakened.
    • D. Law of readiness — Refers to physiological preparedness and willingness to learn before engaging in an activity.

    Sign in to read the full explanation

    Login / Signup

25. Question 25

    Which one of the following statements is true under the Basel I Accord, BCBS, fixed the minimum requirement of capital fund for banks at?

    1. A8 percent of the total weighted assets
    2. B9 percent of the total risk weighted assets
    3. C10 percent of the total risk weighted assets
    4. D1000 crore

    Answer: (A) 8 percent of the total weighted assets

    Explanation

    The Basel Committee on Banking Supervision (BCBS) published the Basel I Capital Accord in 1988.

    Under Basel I, internationally active commercial banks were required to maintain a minimum capital adequacy ratio of 8 percent relative to their total risk-weighted assets.

    While individual national regulators like the Reserve Bank of India subsequently prescribed a higher domestic threshold of 9 percent, the global benchmark set by the BCBS under Basel I was 8 percent.

    Sign in to read the full explanation

    Login / Signup

26. Question 26

    Which of the following statements is correct relating to Indian Financial System?

    1. ARBI has direct supervision over depositories and mutual funds.
    2. BMonetary control is exercised through cash reserve ratio and statutory liquidity ratio.
    3. CPrimary dealers mainly deal in shares, mutual fund units.
    4. DThe decrease in statutory liquidity ratio contracts the credit creation.

    Answer: (B) Monetary control is exercised through cash reserve ratio and statutory liquidity ratio.

    Explanation

    Monetary policy transmission in India relies on quantitative and qualitative instruments administered by the Reserve Bank of India.

    • A. RBI has direct supervision over depositories and mutual funds. — Mutual funds and depositories are capital market intermediaries regulated directly by SEBI.
    • B. Monetary control is exercised through cash reserve ratio and statutory liquidity ratio. — correct. CRR and SLR are statutory reserve requirements through which the RBI regulates liquidity and credit expansion in the banking system.
    • C. Primary dealers mainly deal in shares, mutual fund units. — Primary dealers act as market makers specifically in government securities.
    • D. The decrease in statutory liquidity ratio contracts the credit creation. — Reducing SLR frees bank deposits for lending, expanding rather than contracting credit creation.

    Sign in to read the full explanation

    Login / Signup

27. Question 27

    Which one of the following is not one of the advantages of Derivatives market?

    1. ALeveraging increases risk
    2. BThey enhance liquidity in the market for underlying assets
    3. CThey represent a form of insurance against risks
    4. DThey reduce price volatility

    Answer: (A) Leveraging increases risk

    Explanation

    Financial derivatives provide hedging, price discovery, and portfolio adjustment benefits, but high leverage creates downside risk.

    • A. Leveraging increases risk — correct. High leverage amplifies speculative exposure and potential losses, which represents a structural hazard or limitation of derivatives rather than an advantage.
    • B. They enhance liquidity in the market for underlying assets — Derivative trading attracts diverse market participants and boosts trading volume in spot markets.
    • C. They represent a form of insurance against risks — Options and futures allow commercial hedgers to protect against adverse price movements.
    • D. They reduce price volatility — Continuous price discovery helps smooth out extreme spot price fluctuations.

    Sign in to read the full explanation

    Login / Signup

28. Question 28

    Which one of the following statements is not true about Indian Money Market?

    1. ANon-Banking Finance Companies (NBFCs) are financial institutions that constitute organized component of money market.
    2. BMoney market mutual funds are allowed to sell units to corporates and individuals.
    3. CA well-developed money market is essential for a modern economy.
    4. DIn the Indian Money Market, the predominant place is enjoyed by government and semi-government securities.

    Answer: (A) Non-Banking Finance Companies (NBFCs) are financial institutions that constitute organized component of money market.

    Explanation

    The Indian money market is historically segmented into organized and unorganized sectors.

    • A. Non-Banking Finance Companies (NBFCs) are financial institutions that constitute organized component of money market. — correct as the false statement. The core organized money market consists of the RBI, scheduled commercial banks, cooperative banks, and DFIs. NBFCs operate largely in intermediate and shadow lending spaces.
    • B. Money market mutual funds are allowed to sell units to corporates and individuals. — MMMFs provide institutional and retail investors access to short-term money market instruments.
    • C. A well-developed money market is essential for a modern economy. — Efficient money markets provide liquidity equilibrium and facilitate monetary policy transmission.
    • D. In the Indian Money Market, the predominant place is enjoyed by government and semi-government securities. — Treasury bills and government securities dominate transaction volume in the money market.

    Sign in to read the full explanation

    Login / Signup

29. Question 29

    Which of the following is NOT true while determining length of distribution channel?

    1. AThe larger the market size, the longer the channel.
    2. BIf the average lot size is large, it is better to have a longer channel.
    3. CIf the product and the market require a high level of service, it is advisable to keep a shorter channel.
    4. DIf customers shop for an assortment of products, it demands for a water channel of distribution.

    Answer: (B) If the average lot size is large, it is better to have a longer channel.

    Explanation

    Channel length decisions balance distribution costs, market reach, and order characteristics.

    • A. The larger the market size, the longer the channel. — Geographically dispersed mass markets require multiple tiers of intermediaries to achieve intensive coverage.
    • B. If the average lot size is large, it is better to have a longer channel. — correct as the false statement. When customers order large lot sizes, direct or short distribution channels are economically optimal because direct shipping reduces handling costs and intermediaries are not needed to break bulk.
    • C. If the product and the market require a high level of service, it is advisable to keep a shorter channel. — Complex after-sales support requires close control via direct sales or single-tier agents.
    • D. If customers shop for an assortment of products, it demands for a water channel of distribution. — Preserves source text where wider retail assortment intermediaries are utilized.

    Sign in to read the full explanation

    Login / Signup

30. Question 30

    Which of the following can be categorized as people processing services?

    1. AHealth care
    2. BLegal services
    3. CEducation
    4. DTransportation

    Answer: (A) Health care

    Explanation

    Christopher Lovelock classified services into four categories based on the nature of the service act (tangible versus intangible) and the recipient (people versus possessions).

    • A. Health care — correct. Involves tangible actions directed at the customer’s physical body requiring direct physical presence.
    • B. Legal services — Information processing service involving intangible actions directed at intangible assets.
    • C. Education — Mental stimulus processing service involving intangible actions directed at customer minds.
    • D. Transportation — Involves passenger transit, but healthcare represents the quintessential personal care people-processing service in standard marketing exam taxonomy.

    Sign in to read the full explanation

    Login / Signup

31. Question 31

    SBUs or products that have lost their position of leadership and are in the low growth markets, are known as

    1. AStar
    2. BProblem Child
    3. CDog
    4. DCash cow

    Answer: (C) Dog

    Explanation

    In the Boston Consulting Group (BCG) Growth-Share Matrix, business units are categorized along market growth rate and relative market share.

    • A. Star — High market growth with high market share.
    • B. Problem Child (Question Mark) — High market growth with low market share.
    • C. Dog — correct. Operates in a low-growth or mature industry with low relative market share after losing market leadership, generating weak or negative cash flows.
    • D. Cash cow — Low market growth where the firm maintains a dominant market leadership share.

    Sign in to read the full explanation

    Login / Signup

32. Question 32

    Which of the following is NOT a valid basis for market segmentation?

    1. ACustomer Based Segmentation
    2. BTechnology Oriented Segmentation
    3. CCompetition Related Segmentation
    4. DProduct Related Segmentation

    Answer: (B) Technology Oriented Segmentation

    Explanation

    Market segmentation groups buyers based on distinct needs, characteristics, or buying patterns.

    • A. Customer Based Segmentation — Demographic, socio-economic, and psychographic divisions of the customer base.
    • B. Technology Oriented Segmentation — correct as the invalid basis. Segmentation must reflect market and customer demand characteristics rather than internal manufacturing or operational technology.
    • C. Competition Related Segmentation — Segments markets relative to competitor positioning and brand loyalty tiers.
    • D. Product Related Segmentation — Segments customers by product usage rate, benefits sought, and brand response.

    Sign in to read the full explanation

    Login / Signup

33. Question 33

    Which one of the following statements is a promissory note?

    1. AI promise to pay Q ₹ 7,000, 7 days after my marriage
    2. BOn demand, I promise to pay B or bearer ₹ 5,000
    3. CI promise to pay ₹ 5,000 on C’s death provided C leaves with me enough money to pay that sum.
    4. DI acknowledge to be indebted to you for ₹ 10,000 to be paid on demand for value received.

    Answer: (D) I acknowledge to be indebted to you for ₹ 10,000 to be paid on demand for value received.

    Explanation

    Section 4 of the Negotiable Instruments Act, 1881, defines a promissory note as an instrument in writing containing an unconditional undertaking signed by the maker to pay a certain sum of money.

    • A. I promise to pay Q ₹ 7,000, 7 days after my marriage — Conditional because marriage is an uncertain future event.
    • B. On demand, I promise to pay B or bearer ₹ 5,000 — Section 31 of the RBI Act prohibits any person other than the RBI or Central Government from issuing a promissory note payable to bearer on demand.
    • C. I promise to pay ₹ 5,000 on C’s death provided C leaves with me enough money to pay that sum. — The proviso makes the payment contingent on having sufficient funds, violating the unconditional undertaking requirement.
    • D. I acknowledge to be indebted to you for ₹ 10,000 to be paid on demand for value received. — correct. Combines an acknowledgment of debt with an express, unconditional undertaking to pay on demand.

    Sign in to read the full explanation

    Login / Signup

34. Question 34

    A claim for quantum meruit’ cannot succeed:

    1. Awhen a divisible contract is partly performed.
    2. Bwhen an indivisible contract for a lumpsum is partly performed.
    3. Cwhen a contract is discovered to be unenforceable due to some technical defect.
    4. DIn the case of breach of contract, the aggrieved party can claim reasonable compensation for what he has done under the contract.

    Answer: (B) when an indivisible contract for a lumpsum is partly performed.

    Explanation

    Under contract law, the doctrine of quantum meruit allows compensation for reasonable value of work done when full performance is prevented.

    • A. when a divisible contract is partly performed. — An injured party can claim pro-rata compensation for the completed divisible parts.
    • B. when an indivisible contract for a lumpsum is partly performed. — correct. In an indivisible lump-sum contract, complete performance is a condition precedent to payment (the rule in Sumpter v. Hedges). A defaulting party who partially performs cannot claim quantum meruit unless the defendant voluntarily accepted the benefit of partial work.
    • C. when a contract is discovered to be unenforceable due to some technical defect. — Section 65 of the Indian Contract Act permits quantum meruit restitution if an agreement is discovered to be void or unenforceable.
    • D. In the case of breach of contract, the aggrieved party can claim reasonable compensation for what he has done under the contract. — The innocent party who was prevented from completing the contract has an established right to sue on quantum meruit.

    Sign in to read the full explanation

    Login / Signup

35. Question 35

    The first offence for infringement of copyright can be for a maximum of imprisonment for a term of

    1. A6 month and a fine of ₹ 20,000
    2. B3 years and a fine of ₹ 50,000
    3. C3 years and a fine of ₹ 2,00,000
    4. D1 year and a fine of ₹ 3,00,000

    Answer: (C) 3 years and a fine of ₹ 2,00,000

    Explanation

    Section 63 of the Copyright Act, 1957, prescribes penal provisions for knowing infringement of copyright.

    For a first conviction:

    • Minimum term of imprisonment is 6 months, which may extend to a maximum of 3 years.
    • Minimum fine is ₹50,000, which may extend to a maximum of ₹2,00,000.

    Therefore, the maximum statutory punishment is imprisonment up to 3 years and a fine of ₹2,00,000.

    Sign in to read the full explanation

    Login / Signup

36. Question 36

    Which one of the following conditions does not constitute a valid agency by necessity?

    1. AThere should have been actual and definite commercial necessity for the agent to act promptly.
    2. BThe agent should have acted bonafide and for the benefit of the principal.
    3. CThe agent should have adopted the most reasonable and practicable course under the circumstances.
    4. DDestruction of the subject matter of the contract of agency.

    Answer: (D) Destruction of the subject matter of the contract of agency.

    Explanation

    Agency by necessity arises by operation of law during an emergency to protect the property or interests of the principal.

    The required legal conditions are:

    • Actual commercial necessity to act immediately without opportunity to communicate with the principal.
    • The agent must act bona fide in the best interests of the principal.
    • The agent must adopt a reasonable, prudent course of action under the circumstances.

    Destruction of the subject matter terminates an existing agency contract under Section 201 of the Indian Contract Act, rather than creating an agency by necessity.

    Sign in to read the full explanation

    Login / Signup

37. Question 37

    If assessee is engaged in the business of growing and manufacturing tea in India, the non-agricultural income in that case be:

    1. A40% the income from such business
    2. B25% the income from such business
    3. C60% the income from such business
    4. D75% the income from such business

    Answer: (A) 40% the income from such business

    Explanation

    Rule 8 of the Income Tax Rules, 1962, governs the apportionment of composite income derived from the sale of tea grown and manufactured by the seller in India.

    • Agricultural income: 60% is treated as agricultural income and is exempt from income tax under Section 10(1).
    • Non-agricultural income: 40% is treated as business income liable to income tax.

    Since the question asks specifically for non-agricultural income, the correct proportion is 40%.

    Sign in to read the full explanation

    Login / Signup

38. Question 38

    AMT provisions are applicable on:

    1. ACorporate assessee
    2. BNon corporate assessee
    3. CHUF
    4. DAn Individual

    Answer: (B) Non corporate assessee

    Explanation

    The Income-tax Act, 1961, contains two distinct minimum tax frameworks to curb zero-tax scenarios:

    • Minimum Alternate Tax (MAT): Governed by Section 115JB and applies exclusively to corporate assessees (companies).
    • Alternate Minimum Tax (AMT): Governed by Chapter XII-BA (Section 115JC) and applies to all non-corporate assessees.

    While individuals and HUFs are non-corporate entities, the broadest and definitive legal classification under Chapter XII-BA is non-corporate assessee.

    Sign in to read the full explanation

    Login / Signup

39. Question 39

    X, an employee of the private company, gets ₹ 30,000 p.m. basic salary and entitled to ₹ 1,500 p.m. as entertainment allowance. What is the deductions u/s 16(ii) from gross salary in respect of entertainment allowance?

    1. A₹ 5,000
    2. B₹ 18,000
    3. C₹ 72,000
    4. DNil

    Answer: (D) Nil

    Explanation

    Under Section 16(ii) of the Income-tax Act, 1961, deduction for entertainment allowance is restricted strictly to Government employees.

    • Government employees are eligible for deduction equal to the least of: ₹5,000, 20% of basic salary, or actual allowance received.
    • Non-government and private sector employees receive zero deduction under Section 16(ii).

    Because employee X works for a private company, the allowable deduction under Section 16(ii) is Nil.

    Sign in to read the full explanation

    Login / Signup

40. Question 40

    Which of the following provident fund is approved by the provident fund commissioner?

    1. AStatutory provident fund
    2. BRecognized provident fund
    3. CUnrecognized provident fund
    4. DPublic provident fund

    Answer: (B) Recognized provident fund

    Explanation

    Provident funds are categorized by their establishing authority and regulatory recognition:

    • A. Statutory provident fund — Established under the Provident Funds Act, 1925, for government and railway employees.
    • B. Recognized provident fund — correct. Governed by the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, and approved by the Commissioner of Income Tax and the Provident Fund Commissioner.
    • C. Unrecognized provident fund — Not approved by the Commissioner.
    • D. Public provident fund — Established under the Public Provident Fund Act, 1968, for the general public through post offices and designated banks.

    Sign in to read the full explanation

    Login / Signup

41. Question 41

    Which of the following institutions are included in the “World Bank Group”?

    1. International Finance Corporation
    2. International Monetary Fund
    3. World Trade Organization
    4. Multilateral Investment Guarantee Agency
    5. International Development Association

    Choose the correct answer from the options given below.

    1. A1, 2 and 3 only
    2. B1, 2 and 4 only
    3. C1, 2, 4 and 5 only
    4. D1, 4 and 5 only

    Answer: (D) 1, 4 and 5 only

    Explanation

    The World Bank Group comprises five international development institutions:

    1. International Bank for Reconstruction and Development (IBRD)
    2. International Development Association (IDA) (Item 5)
    3. International Finance Corporation (IFC) (Item 1)
    4. Multilateral Investment Guarantee Agency (MIGA) (Item 4)
    5. International Centre for Settlement of Investment Disputes (ICSID)

    Neither the International Monetary Fund (Item 2) nor the World Trade Organization (Item 3) is a member of the World Bank Group. The IMF is a distinct Bretton Woods sister institution, and the WTO is an independent multilateral trade body.

    Sign in to read the full explanation

    Login / Signup

42. Question 42

    Corporate social responsibility is the continuing commitment by business to behave ethically and contribute to:

    1. Political awareness, social security and inclusion
    2. Public health, education and literacy
    3. Maintaining ecological balances and protecting environment
    4. Gender diversity, profiteering and market controlling
    5. Rendering, Sponsoring and donating to social and charitable activities

    Choose the correct answer from the options given below.

    1. A1, 2 and 4 only
    2. B2, 3 and 5 only
    3. C3, 4 and 5 only
    4. D1, 2 and 3 only

    Answer: (B) 2, 3 and 5 only

    Explanation

    Corporate Social Responsibility focuses on sustainable social, economic, and environmental development.

    • Statement 2 (Public health, education and literacy), Statement 3 (Maintaining ecological balance and environmental protection), and Statement 5 (Sponsoring and donating to social and charitable activities) are core pillars of CSR as codified in Schedule VII of the Companies Act, 2013.
    • Statement 4 explicitly lists profiteering and market controlling, which contradict ethical CSR conduct.
    • Statement 1 lists political awareness, whereas political contributions are excluded from eligible CSR activities.

    Sign in to read the full explanation

    Login / Signup

43. Question 43

    Firm characteristics that help managers identify core competencies include:

    1. Potential access to wide variety of markets
    2. Significantly contribute to the perceived customer benefits
    3. Value accretive and non-competitive
    4. Distinctive and difficult for competitors to imitate

    Choose the most appropriate answer from the options given below.

    1. A1, 2 and 3 only
    2. B2, 3 and 4 only
    3. C1, 2, and 4 only
    4. D1, 3, and 4 only

    Answer: (C) 1, 2, and 4 only

    Explanation

    Prahalad and Hamel (1990) established three tests to identify a firm’s core competence:

    1. Market access test: It provides potential access to a wide variety of markets (Item 1).
    2. Customer benefit test: It makes a significant contribution to the perceived customer benefits of the end product (Item 2).
    3. Imitability test: It is distinctive and difficult for competitors to imitate (Item 4).

    Item 3 is incorrect because core competencies provide competitive advantage and are intensely competitive rather than non-competitive.

    Sign in to read the full explanation

    Login / Signup

44. Question 44

    Which of the following distinction(s) is/are not correct between public issue and rights issue?

    (1) In public issue, application for shares are invited from the general public and in rights issue, the shares are offered to existing shareholder.
    (2) In public issue, there is no question of any over-subscription and in in rights issue the shares may be under subscribed or oversubscribed leading to prorate allotment.
    (3) The price of public issue is generally less than the market price and in rights issue, the price is deliberately made less than the market price.
    (4) In a public issue, the communication of the issue is through prospects or advertisements and in rights issue the communication is between the company and the existing numbers of the company.

    Choose the most appropriate answer from the options given below.

    1. A2 only
    2. B4 only
    3. C1 and 3 only
    4. D3 and 4 only

    Answer: (A) 2 only

    Explanation

    Evaluate the distinctions between public issues and rights issues under corporate finance.

    • Statement (1) is a correct distinction: public issues invite public applications, whereas rights issues target existing equity holders.
    • Statement (2) is completely incorrect: public issues frequently experience heavy oversubscription leading to pro-rata allotment, whereas rights issues are structured around pre-emptive entitlements where general oversubscription by the public does not occur.
    • Statements (3) and (4) reflect valid operational distinctions regarding pricing concessions and direct shareholder communications.

    Therefore, statement 2 alone represents an incorrect distinction.

    Sign in to read the full explanation

    Login / Signup

45. Question 45

    According to AS-2, which of the following costs should be included in valuing the inventories of a manufacturing company?

    (1) Freight and insurance
    (2) Carriage outwards
    (3) Depreciation of factory plant
    (4) General administrative overheads

    Choose the most appropriate answer from the options given below.

    1. A1 and 4 only
    2. B1, 2 and 4 only
    3. C2 and 3 only
    4. D1 and 3 only

    Answer: (D) 1 and 3 only

    Explanation

    Accounting Standard 2 (Valuation of Inventories) defines cost of inventory as all costs of purchase, costs of conversion, and other costs incurred in bringing inventories to their present location and condition.

    • Item (1) (Freight and insurance on purchases) is part of purchase cost.
    • Item (3) (Depreciation of factory plant) is an allocable fixed production overhead included in conversion cost.
    • Item (2) (Carriage outwards) is a selling and distribution expense, which AS-2 specifically excludes.
    • Item (4) (General administrative overheads) is excluded unless directly related to production.

    Hence, only items 1 and 3 are included.

    Sign in to read the full explanation

    Login / Signup

46. Question 46

    Which of the following rules stands true while preparing schedule of changes in working capital?

    1. An increase in current assets increases working capital
    2. An increase in current assets decreases working capital
    3. An increase in current liabilities decreases working capital
    4. An increase in current liabilities increases working capital

    Choose the most appropriate answer from the options given below.

    1. A1 and 3 only
    2. B1 and 4 only
    3. C2 and 4 only
    4. D1, 2 and 3 only

    Answer: (A) 1 and 3 only

    Explanation

    Working capital is defined as Net Working Capital = Current Assets - Current Liabilities.

    • Rule 1: An increase in current assets directly increases net working capital.
    • Rule 3: An increase in current liabilities increases the deduction from current assets, decreasing net working capital.
    • Rules 2 and 4 describe inverted relationships and are false.

    Therefore, rules 1 and 3 stand true.

    Sign in to read the full explanation

    Login / Signup

47. Question 47

    Characteristics constituting the core of consumers rationality includes:

    1. Homogeneous expectations
    2. Non-satiation
    3. Selfish motive
    4. Clarity of preferences
    5. Possession of information

    Choose the correct answer from the options given below.

    1. A1, 2 and 3 only
    2. B2, 3 and 4 only
    3. C1, 2, 3 and 4 only
    4. D2, 3, 4 and 5 only

    Answer: (D) 2, 3, 4 and 5 only

    Explanation

    Microeconomic consumer theory assumes rational consumer behavior governed by key behavioral axioms:

    • Non-satiation (Item 2): Consumers strictly prefer more of a good to less.
    • Selfish motive (Item 3): Consumers act in self-interest to maximize their own total utility.
    • Clarity of preferences (Item 4): Consumer preferences satisfy completeness and transitivity.
    • Possession of information (Item 5): The consumer has full information on prices, alternatives, and budget constraints.

    Item 1 (Homogeneous expectations) is a capital market assumption from the Capital Asset Pricing Model, not a core axiom of individual consumer rationality.

    Sign in to read the full explanation

    Login / Signup

48. Question 48

    Why is an indifference curve convex to the origin?

    1. Indifference curve slope downward to the right
    2. Two commodities are imperfect substitutes
    3. Declining marginal rate of substitution between commodities
    4. Diminishing marginal utilities

    Choose the most appropriate answer from the options given below.

    1. A1 and 2 only
    2. B2 and 3 only
    3. C3 and 4 only
    4. D1 and 4 only

    Answer: (B) 2 and 3 only

    Explanation

    Convexity of an indifference curve reflects the diminishing willingness of a consumer to substitute one commodity for another.

    • Two commodities are imperfect substitutes (Item 2): If goods were perfect substitutes, the indifference curve would be a straight line. Imperfect substitutability ensures a curved trade-off.
    • Declining marginal rate of substitution (Item 3): As a consumer obtains more units of good X, they are willing to give up progressively fewer units of good Y to stay equally satisfied, making MRS_xy decline.
    • Statement 1 explains the negative slope of the curve rather than its convexity.
    • Statement 4 relies on cardinal utility theory rather than the ordinal framework of indifference analysis.

    Therefore, reasons 2 and 3 establish convexity.

    Sign in to read the full explanation

    Login / Signup

49. Question 49

    Financial crises takes the form of:

    1. Currency crisis
    2. Banking crisis
    3. Systematic financial crisis
    4. Foreign debt crisis

    Choose the correct answer from the options given below.

    1. A1, 2, 3 only
    2. B1, 2 4 only
    3. C2, 3, 4 only
    4. D1, 2, 3, 4 only

    Answer: (B) 1, 2 4 only

    Explanation

    Macroeconomic and international finance literature classifies financial crises into distinct categories.

    • Currency crisis (Item 1): Speculative attacks cause sharp devaluation and collapse of foreign exchange reserves.
    • Banking crisis (Item 2): Runs, defaults, and systemic bank illiquidity.
    • Foreign debt crisis (Item 4): Sovereign or external private debt default and inability to service foreign obligations.

    Item 3 uses the phrasing Systematic financial crisis (confusing systematic with systemic risk), leading standard examination taxonomy to identify the triad of Currency, Banking, and Foreign debt crises as the primary accepted grouping.

    Sign in to read the full explanation

    Login / Signup

50. Question 50

    Following are the problems that mar an optimal international diversification:

    1. Unfavourable exchange rate movements
    2. Frictions in international markets
    3. Manipulation of security prices
    4. Unequal access to information

    Choose the appropriate answer from the options given below.

    1. A1, 2, 3 only
    2. B2, 3, 4 only
    3. C1, 3, 4 only
    4. D1, 2, 3, 4

    Answer: (D) 1, 2, 3, 4

    Explanation

    International portfolio diversification aims to lower portfolio risk by investing across foreign capital markets, but multiple cross-border barriers reduce its effectiveness.

    • 1. Unfavourable exchange rate movements: Currency volatility can erase foreign capital gains.
    • 1. Frictions in international markets: Withholding taxes, transaction costs, and capital transfer restrictions impede free capital mobility.
    • 1. Manipulation of security prices: Weaker regulatory protections and market manipulation in foreign exchanges heighten downside risk.
    • 1. Unequal access to information: Distance, accounting differences, and disclosure disparities create information asymmetry for foreign investors.

    All four factors collectively mar optimal international diversification.

    Sign in to read the full explanation

    Login / Signup

51. Question 51

    Which of the following statement is correct about Mann-Whitney U-test?

    1. It is nonparametric test
    2. It requires that samples are independent
    3. It can be used when populations involved are normally distributed
    4. It is used to test the null hypothesis that the two populations are involved are identical.
    5. It is always a two tailed test.

    Choose the correct answer from the options given below.

    1. A1, 2, 4 only
    2. B1, 3, 4 only
    3. C1, 4, 5 only
    4. D1, 2, 5 only

    Answer: (A) 1, 2, 4 only

    Explanation

    The Mann-Whitney U-test (Wilcoxon rank-sum test) evaluates whether two independent groups originate from identical continuous distributions.

    • Statement 1 is correct: It is a non-parametric distribution-free statistical test.
    • Statement 2 is correct: It requires two mutually independent random samples.
    • Statement 3 is incorrect: It is used specifically when population normality cannot be assumed.
    • Statement 4 is correct: It tests the null hypothesis that two population distributions are identical.
    • Statement 5 is incorrect: It can be conducted as either a one-tailed or a two-tailed test depending on directional hypotheses.

    Thus, statements 1, 2, and 4 are correct.

    Sign in to read the full explanation

    Login / Signup

52. Question 52

    Which of the following are correct about complementary events?

    1. Mutually exclusive
    2. Independent
    3. Such that their probabilities add up to 1
    4. Collective exhaustive

    Choose the most appropriate answer from the options given below.

    1. A1, 2, 3 only
    2. B1, 2, 4 only
    3. C2, 3, 4 only
    4. D1, 3, 4 only

    Answer: (D) 1, 3, 4 only

    Explanation

    In probability theory, complementary events A and A' encompass all outcomes of the sample space S.

    • 1. Mutually exclusive: A and A' cannot occur simultaneously (A ∩ A' = ∅).
    • 1. Independent: Complementary events are inherently dependent because the occurrence of one precludes the occurrence of the other.
    • 1. Such that their probabilities add up to 1: P(A) + P(A') = 1.
    • 1. Collective exhaustive: Together they cover all possible outcomes in the sample space (A ∪ A' = S).

    Therefore, statements 1, 3, and 4 are correct.

    Sign in to read the full explanation

    Login / Signup

53. Question 53

    Which of the following statements are correct about Chi-Square test?

    1. The only parameter of a Chi-Square distribution is its number of degrees of freedom.
    2. The null hypothesis in given Chi-Square test is rejected when calculated value of variable exceed its critical value.
    3. The rejection region in a goodness of fit test lies only in the right tail of the distribution.
    4. The Ch-Square test is a parametric test.
    5. At α = .05 and V = 1 the critical value of χ² is equal to Z – value at the same level of significance.

    Choose the most appropriate answer from the options given below:

    1. A2, 4, 5 only
    2. B1, 3, 5 only
    3. C1, 2, 3 only
    4. D2, 3, 4 only

    Answer: (C) 1, 2, 3 only

    Explanation

    Review the properties and decision rules of the chi-square (χ²) distribution.

    • Statement 1 is correct: The shape and mean of a chi-square distribution are determined entirely by its degrees of freedom (v).
    • Statement 2 is correct: A calculated test statistic exceeding the critical table value falls in the critical region, rejecting the null hypothesis.
    • Statement 3 is correct: Goodness-of-fit tests are strictly right-tailed because discrepancies between observed and expected frequencies inflate the statistic positively.
    • Statement 4 is incorrect: The chi-square test is a non-parametric distribution-free test.
    • Statement 5 is incorrect: For 1 degree of freedom, χ² equals Z² rather than Z.

    Thus, statements 1, 2, and 3 are correct.

    Sign in to read the full explanation

    Login / Signup

54. Question 54

    The Principles of Management have the following distinct features:

    1. Flexibility
    2. Universal application
    3. Principles are relative, not absolute
    4. Based on situation

    Choose the most appropriate answer from the options given below.

    1. A1, 2 only
    2. B2, 3 only
    3. C1, 3, 4 only
    4. D1, 2, 3, 4

    Answer: (D) 1, 2, 3, 4

    Explanation

    Henri Fayol and modern management theorists defined core characteristics of management principles.

    • 1. Flexibility: Principles are adaptable guidelines rather than rigid scientific laws.
    • 1. Universal application: Principles apply across diverse organizations, industries, and cultures.
    • 1. Principles are relative, not absolute: Application varies with organizational context and managerial discretion.
    • 1. Based on situation: Principles are contingent on prevailing organizational and environmental circumstances.

    All four statements are distinct, recognized features of management principles.

    Sign in to read the full explanation

    Login / Signup

55. Question 55

    Use of interviews as a training needs assessment technique has the following advantages:

    1. Questions can be modified
    2. Easy to analyze
    3. Can explore unanticipated issues that come up
    4. Less time consuming

    Choose the most appropriate answer from the options given below.

    1. A1, 2 only
    2. B2, 3 only
    3. C1, 3 only
    4. D2, 3, 4 only

    Answer: (C) 1, 3 only

    Explanation

    Interviews provide rich qualitative insights during training needs assessment.

    • 1. Questions can be modified: The interviewer can adapt phrasing, probe responses, and clarify ambiguities dynamically.
    • 1. Can explore unanticipated issues that come up: Open discussion uncovers unexpected skill gaps and underlying operational issues.
    • 2 is incorrect: Qualitative interview data is unstructured and difficult to code or analyze statistically.
    • 4 is incorrect: Conducting individual interviews is highly time-consuming compared to survey questionnaires.

    Therefore, advantages are 1 and 3 only.

    Sign in to read the full explanation

    Login / Signup

56. Question 56

    The advantages of incentive payments are:

    1. Ease in the introduction of new machines
    2. Better utilization of equipment
    3. Reduced absenteeism and turnover
    4. Increased scrap

    Choose the most appropriate answer from the options given below.

    1. A1, 2 only
    2. B2, 3 only
    3. C2, 3, 4 only
    4. D1, 2, 3 only

    Answer: (B) 2, 3 only

    Explanation

    Incentive wage systems link worker remuneration directly to output performance.

    • 1. Better utilization of equipment: Workers are motivated to minimize machine idle time to boost their output and earnings.
    • 1. Reduced absenteeism and turnover: Direct financial rewards increase job commitment and daily attendance.
    • 1 is incorrect: Workers often resist new machinery fearing piece-rate increases or standard revisions.
    • 4 is incorrect: Increased scrap and defective production is a primary drawback when speed is prioritized over quality.

    Hence, statements 2 and 3 are genuine advantages.

    Sign in to read the full explanation

    Login / Signup

57. Question 57

    Which of the following forms may not result in credit risk?

    1. Principle and/or interest amount may not be repaid in the case of direct lending.
    2. In case of guarantees or letter of credit, fund may not be forth coming from the constituents upon crystallization of the liability.
    3. Funds/ Securities settlement may not be effected, in case of securities trading business.
    4. Provide information for determining adequacy of loan loss provision.

    Choose the correct answer from the options given below.

    1. A1, 2 and 3 only
    2. B1, 3 and 4 only
    3. C2 and 3 only
    4. D4 only

    Answer: (D) 4 only

    Explanation

    Credit risk is the potential that a borrower or counterparty fails to meet debt or contractual obligations.

    • Form 1 (direct loan default), Form 2 (off-balance sheet guarantee default), and Form 3 (settlement default by trading counterparty) represent direct manifestations of credit risk.
    • Form 4 (providing information for determining loan loss provisioning) is an accounting and risk measurement activity that evaluates existing exposure rather than creating a credit risk event.

    Thus, only item 4 does not result in credit risk.

    Sign in to read the full explanation

    Login / Signup

58. Question 58

    Which of the following statements are false regarding electronic purse? Indicate the correct code.

    1. Retinal pattern verification
    2. Visual recognition
    3. No risk of bad payment
    4. Method of accepting payments with no cash float to manage and no risk of theft

    Choose the correct answer from the options given below.

    1. A1, 2 and 3 only
    2. B2, 3 and 4 only
    3. C1 and 2 only
    4. D3 and 4 only

    Answer: (C) 1 and 2 only

    Explanation

    An electronic purse is a smart card or digital token that stores prepaid monetary value on an embedded microchip.

    • Statements 1 and 2 are false: Traditional e-purses authenticate transactions via secure PIN and smart card chip protocols, not biometric retinal scanning or facial visual recognition.
    • Statement 3 is true: Stored-value balances ensure merchant payment without bad debt risk.
    • Statement 4 is true: Merchants eliminate cash handling, drawer float management, and cash robbery risk.

    Therefore, statements 1 and 2 are the false statements.

    Sign in to read the full explanation

    Login / Signup

59. Question 59

    Which of the following statements are the defects of Indian Money Market?

    1. Profitable Investment
    2. Dichotomy in Indian Money Market
    3. Financing Industry
    4. Diversity in interest rates

    Choose the correct answer from the options given below.

    1. A1, 2 and 3 only
    2. B2 and 3 only
    3. C1, 2 and 4 only
    4. D2 and 4 only

    Answer: (D) 2 and 4 only

    Explanation

    Examine the structural weaknesses and defects of the Indian money market.

    • 1. Dichotomy in Indian Money Market: The sharp division between the formal organized sector and unregulated indigenous bankers or money lenders undermines monetary control.
    • 1. Diversity in interest rates: Lack of complete market integration historically created sharp interest rate disparities across different segments and regions.
    • Items 1 and 3 are standard economic functions and commercial benefits of financial markets rather than systemic defects.

    Therefore, items 2 and 4 represent defects.

    Sign in to read the full explanation

    Login / Signup

60. Question 60

    Penetration pricing strategy delivers results:

    1. where price quality association is weak
    2. when the product is perceived as a ‘high technology’ product
    3. when the market is characterized by intensive competition
    4. when the firm uses it as an entry strategy

    Choose the most appropriate answer from the options given below.

    1. A2, 3 only
    2. B1, 4 only
    3. C1, 3, 4 only
    4. D1, 2, 3 only

    Answer: (C) 1, 3, 4 only

    Explanation

    Penetration pricing sets an initial low price to rapidly secure significant market share.

    • Condition 1: Effective when consumers do not equate low price with inferior product quality.
    • Condition 3: In intensely competitive markets, a low price captures market volume and erects cost barriers against competitors.
    • Condition 4: A proven market entry tactic for breaking consumer habits and building quick trial.
    • Condition 2 is incorrect: High-technology innovations with novelty appeal are typically introduced using price skimming to recoup heavy R&D outlays.

    Thus, conditions 1, 3, and 4 deliver positive results.

    Sign in to read the full explanation

    Login / Signup

61. Question 61

    Which of the following represents traditional logistics management approach?

    1. Independent inventory management efforts
    2. Minimize firm costs
    3. Amount of information sharing and monitoring limited to current processes
    4. Small breadth of supplier base to increase coordination

    Choose the correct answer from the options given below.

    1. A1, 2 only
    2. B2, 3 only
    3. C1, 3, 4 only
    4. D2, 3, 4 only

    Answer: (A) 1, 2 only

    Explanation

    Traditional logistics operates through fragmented corporate silos focused on internal sub-optimization.

    • Statement 1 (Independent inventory management efforts) and Statement 2 (Minimizing individual firm costs) are central hallmarks of traditional logistics.
    • In contrast, modern integrated supply chain management focuses on total supply chain value, strategic end-to-end information sharing, and consolidating suppliers into a focused cooperative base.

    Between the available option groupings, statements 1 and 2 capture the traditional operational scope.

    Sign in to read the full explanation

    Login / Signup

62. Question 62

    Which of the following statements are false? Indicate the correct code.

    1. No company has to file any prescribed declaration before commencement of business.
    2. A company can ratify the contract entered into by the promoters with third parties on behalf of the company before its formation.
    3. The date mentioned in the certificate for commencement of business is taken as the date of birth of a public company.
    4. A private company has to file a “Settlement in lieu of prospectus” with the registrar.
    1. A1, 2 and 4 only
    2. B1 and 2 only
    3. C2, 3 and 4 only
    4. D3 and 4 only

    Answer: (C) 2, 3 and 4 only

    Explanation

    Examine corporate legal principles regarding company incorporation and pre-incorporation acts under company law.

    • Statement 2 is false: A company cannot ratify a promoter’s pre-incorporation contract because the company had no legal existence when the contract was made (Kelner v. Baxter).
    • Statement 3 is false: The date printed on the Certificate of Incorporation marks the legal birth and incorporation of a company.
    • Statement 4 is false: Private companies do not issue a prospectus and are never required to file a Statement in lieu of prospectus.

    Statements 2, 3, and 4 are legally false.

    Sign in to read the full explanation

    Login / Signup

63. Question 63

    Which of the following are not the objectives of Competition Act, 2002?

    1. Ensure freedom of trade for other participants in incidental and connected markets.
    2. Provide a reasonable level of reliability and connect operation.
    3. Adhere to generally accepted security procedures.
    4. Protect the interests of consumer

    Choose the correct answer from the options given below.

    1. A1, 3, 4 only
    2. B2, 3, 4 only
    3. C1, 3 only
    4. D2, 3 only

    Answer: (D) 2, 3 only

    Explanation

    The Preamble to the Competition Act, 2002, defines its legislative objectives:

    • Prevent practices having adverse effect on competition
    • Promote and sustain competition in markets
    • Protect the interests of consumers (Statement 4)
    • Ensure freedom of trade carried on by other participants in markets in India (Statement 1)

    In contrast, providing operational reliability and adhering to security procedures (Statements 2 and 3) are technical objectives defined under the Information Technology Act, 2000, not the Competition Act.

    Therefore, statements 2 and 3 are not objectives of the Competition Act.

    Sign in to read the full explanation

    Login / Signup

64. Question 64

    Which of the following persons cannot use ITR-4?

    1. who is director of a company
    2. who has held any unlisted equity shares
    3. who has any asset located outside India
    4. a firm (other than LLP) if assessee is a Resident
    5. who has income from other sources

    Choose the most appropriate answer from the options given below.

    1. A1, 2, 3 only
    2. B1, 2, 4 only
    3. C2, 4, 5 only
    4. D3, 4, 5 only

    Answer: (A) 1, 2, 3 only

    Explanation

    ITR-4 (Sugam) applies to resident individuals, HUFs, and partnership firms (other than LLPs) opting for presumptive taxation under sections 44AD, 44ADA, or 44AE.

    An individual is expressly barred from filing ITR-4 if they:

    • Serve as a Director in any company (Item 1)
    • Held any unlisted equity shares at any time during the financial year (Item 2)
    • Own foreign assets or hold signing authority outside India (Item 3)

    Resident partnership firms (other than LLPs) are eligible (Item 4), and individuals with income from other sources up to ₹50 lakh can file ITR-4 (Item 5).

    Hence, persons matching items 1, 2, and 3 cannot use ITR-4.

    Sign in to read the full explanation

    Login / Signup

65. Question 65

    Which of the following losses are not deductible from business income?

    1. Loss sustained before the business is commenced.
    2. Losses incurred in the closing down of the business.
    3. Loss incurred due to damage, destruction etc. of capital assets.
    4. Loss of raw material and finished goods in transit.
    5. Loss of stock-in-trade due to enemy action.

    Choose the correct answer from the options given below.

    1. A1, 2, 3 only
    2. B2, 3, 4 only
    3. C1, 4, 5 only
    4. D1, 2, 4 only

    Answer: (A) 1, 2, 3 only

    Explanation

    Under business taxation, only revenue losses incidental to the trade or operations during the tax year are deductible.

    • 1. Loss sustained before business commences is capital in nature and non-deductible.
    • 1. Loss incurred in winding up or closing down the business is a capital loss.
    • 1. Loss arising from destruction of capital assets represents a capital loss governed by capital gains provisions rather than ordinary business deductions.
    • 4 and 5 represent trading losses of circulating capital (raw materials, stock-in-trade) and are fully deductible revenue losses.

    Thus, losses 1, 2, and 3 are not deductible from business income.

    Sign in to read the full explanation

    Login / Signup

66. Question 66

    Match List-I with List-II.

    List I	List II (International Trade Theories)
    (a) David Ricardo (1817)	(i) Theory of absolute advantage
    (b) Michael Porter (1900)	(ii) Factor endowment theory
    (c) Adam Smith (1776)	(iii) Theory of comparative advantage
    (d) Heckscher (1919) – Ohlin (1933)	(iv) Theory of competitive advantage

    1. A(a)-(i), (b)-(ii), (c)-(iii), (d)-(iv)
    2. B(a)-(iii), (b)-(iv), (c)-(i), (d)-(ii)
    3. C(a)-(iv), (b)-(iii), (c)-(ii), (d)-(i)
    4. D(a)-(iii), (b)-(iv), (c)-(ii), (d)-(i)

    Answer: (B) (a)-(iii), (b)-(iv), (c)-(i), (d)-(ii)

    Explanation

    Match classical and modern international trade theorists with their respective trade theories.

    Resolved mapping: (a)-(iii), (b)-(iv), (c)-(i), (d)-(ii)

    • (a) David Ricardo (1817) formulated the (iii) Theory of comparative advantage.
    • (b) Michael Porter developed the (iv) Theory of competitive advantage (Diamond model).
    • (c) Adam Smith (1776) formulated the (i) Theory of absolute advantage.
    • (d) Heckscher (1919) and Ohlin (1933) formulated the (ii) Factor endowment theory.

    Sign in to read the full explanation

    Login / Signup

67. Question 67

    Match List-I with List-II.

    List I (Method)	List II (Purchase consideration)
    (a) Lump-sum payment method	(i) Calculated by adding up the total amount (money value) of existing shares, preference shares and cash received from the purchasing company for the shareholders of the vendor company.
    (b) Net Assets Method	(ii) On the basis of ratio in which the shares of the transferee company are to be exchanged for the shares of the transferor company
    (c) Net Payment Method	(iii) The amount to be paid by the transferee company to transferor company for amalgamation of its business
    (d) Swap Ratio Method	(iv) Arrived at by adding the agreed value of assets taken over and deducting there from the agreed values of liabilities.

    1. A(a)-(iii), (b)-(ii), (c)-(i), (d)-(iv)
    2. B(a)-(iii), (b)-(iv), (c)-(i), (d)-(ii)
    3. C(a)-(iv), (b)-(i), (c)-(ii), (d)-(iii)
    4. D(a)-(iv), (b)-(ii), (c)-(ii), (d)-(i)

    Answer: (B) (a)-(iii), (b)-(iv), (c)-(i), (d)-(ii)

    Explanation

    Match the purchase consideration calculation methods in corporate amalgamations under AS-14.

    Resolved mapping: (a)-(iii), (b)-(iv), (c)-(i), (d)-(ii)

    • (a) Lump-sum payment method matches (iii): Fixed aggregate amount agreed to be paid by the transferee company.
    • (b) Net Assets Method matches (iv): Agreed value of assets taken over minus agreed value of liabilities assumed.
    • (c) Net Payment Method matches (i): Aggregate value of shares, debentures, and cash paid directly to shareholders of the vendor company.
    • (d) Swap Ratio Method matches (ii): Exchange ratio of transferee company shares issued for transferor company shares.

    Sign in to read the full explanation

    Login / Signup

68. Question 68

    Match the items in List-I with List-II.

    List I (Pricing Strategies)	List II (Description)
    (a) Ramsay pricing	(i) Setting a high price when a product is first introduced and gradually lowering price as it gains scale
    (b) Price skimming	(ii) Firm charges lower price (than the ongoing price) to gain market entry
    (c) Cost plus pricing	(iii) Price deviations from marginal cost should be inversely proportional to price elasticity of the product
    (d) Penetration pricing	(iv) It is full cost pricing strategy that also includes mark up for target return, degree of competition, price elasticity and availability of substitutes.

    1. A(a)-(iii), (b)-(iv), (c)-(i), (d)-(ii)
    2. B(a)-(ii), (b)-(i), (c)-(iii), (d)-(iv)
    3. C(a)-(iii), (b)-(i), (c)-(iv), (d)-(ii)
    4. D(a)-(i), (b)-(iv), (c)-(ii), (d)-(iii)

    Answer: (C) (a)-(iii), (b)-(i), (c)-(iv), (d)-(ii)

    Explanation

    Match pricing strategies with their foundational economic definitions.

    Resolved mapping: (a)-(iii), (b)-(i), (c)-(iv), (d)-(ii)

    • (a) Ramsey pricing matches (iii): The Ramsey pricing rule sets markups above marginal cost inversely proportional to price elasticity of demand to minimize deadweight welfare loss.
    • (b) Price skimming matches (i): Launching with a premium price to capture early surplus, then lowering prices systematically over time.
    • (c) Cost plus pricing matches (iv): Adding a target markup percentage over full unit production costs.
    • (d) Penetration pricing matches (ii): Pricing below market levels to establish rapid market entry and scale.

    Sign in to read the full explanation

    Login / Signup

69. Question 69

    Match List-I with List-II.

    List I	List II
    (a) Market risk	(i) Associated with the efficiency with which a firm conducts its operations within the broader environment imposed upon it.
    (b) Financial risk	(ii) Arises due to change in operating conditions caused by conditions thrust upon the firm which are beyond its control.
    (c) External business risk	(iii) Variations in price sparked off due to real, social, political and economic events.
    (d) Internal business risk	(iv) Associated with the capital structure of a firm.

    1. A(a)-(i), (b)-(ii), (c)-(iii), (d)-(iv)
    2. B(a)-(iii), (b)-(iv), (c)-(ii), (d)-(i)
    3. C(a)-(iii), (b)-(i), (c)-(ii), (d)-(iv)
    4. D(a)-(iv), (b)-(iii), (c)-(i), (d)-(ii)

    Answer: (B) (a)-(iii), (b)-(iv), (c)-(ii), (d)-(i)

    Explanation

    Match the categories of business and financial risk with their operational drivers.

    Resolved mapping: (a)-(iii), (b)-(iv), (c)-(ii), (d)-(i)

    • (a) Market risk matches (iii): Systematic price variability driven by macroeconomic, political, and social developments.
    • (b) Financial risk matches (iv): Additional risk imposed on equity holders arising from debt usage in the firm’s capital structure.
    • (c) External business risk matches (ii): Operating shocks from external environment forces beyond management control.
    • (d) Internal business risk matches (i): Inefficiencies in internal operations, resource utilization, and management execution.

    Sign in to read the full explanation

    Login / Signup

70. Question 70

    Logically sequence the following in the process of entering international markets outlined in the uppasala model.

    1. Sporadic (Ad hoc) exports
    2. Foreign production and manufacturing
    3. Establishing a foreign sales subsidiary
    4. Domestic operations and production
    5. Exporting via independent representative

    Choose the correct answer from the options given below.

    1. A1, 2, 3, 4 and 5
    2. B3, 2, 4, 1 and 5
    3. C4, 1, 5, 3 and 2
    4. D5, 2, 4, 3 and 1

    Answer: (C) 4, 1, 5, 3 and 2

    Explanation

    The Uppsala Model (Johanson and Vahlne, 1977) models internationalization as progressive experiential learning across four sequential establishment stages.

    Resolved sequence: 4, 1, 5, 3 and 2

    • Stage 0: Domestic operations and production (4)
    • Stage 1: Sporadic or ad hoc export activities (1)
    • Stage 2: Exporting through independent foreign agents or representatives (5)
    • Stage 3: Establishing an overseas sales subsidiary (3)
    • Stage 4: Establishing foreign manufacturing and production facilities (2)

    Sign in to read the full explanation

    Login / Signup

71. Question 71

    Match the items in List-I with List-II.

    List I (Personality Dimensions)	List II (Individual Traits)
    (a) Extroversion	(i) Calm, happy and secure
    (b) Conscientiousness	(ii) Talkative, assertive, sociable and outgoing
    (c) Emotional Stability	(iii) Creative, curious, intellectual, imaginative and artistically sensitive
    (d) Openness to experience	(iv) Self-disciplined, hardworking, organized, dependable and persistent.

    1. A(a)-(ii), (b)-(iv), (c)-(iii), (d)-(i)
    2. B(a)-(ii), (b)-(iv), (c)-(i), (d)-(iii)
    3. C(a)-(iii), (b)-(ii), (c)-(i), (d)-(iv)
    4. D(a)-(iv), (b)-(i), (c)-(ii), (d)-(iii)

    Answer: (B) (a)-(ii), (b)-(iv), (c)-(i), (d)-(iii)

    Explanation

    Match the Big Five personality traits with their defining behavioral descriptors.

    Resolved mapping: (a)-(ii), (b)-(iv), (c)-(i), (d)-(iii)

    • (a) Extroversion matches (ii): Talkative, assertive, sociable, and outgoing.
    • (b) Conscientiousness matches (iv): Self-disciplined, hardworking, organized, dependable, and persistent.
    • (c) Emotional Stability matches (i): Calm, happy, and secure.
    • (d) Openness to experience matches (iii): Creative, curious, intellectual, imaginative, and artistically sensitive.

    Sign in to read the full explanation

    Login / Signup

72. Question 72

    Match List-I with List-II.

    List I	List II
    (a) Insurance Act	(i) 1988
    (b) Life Insurance Act	(ii) 1963
    (c) Motor Vehicle Act	(iii) 1938
    (d) Marine Insurance Act	(iv) 1956

    1. A(a)-(iv), (b)-(iii), (c)-(i), (d)-(ii)
    2. B(a)-(i), (b)-(ii), (c)-(iii), (d)-(iv)
    3. C(a)-(iii), (b)-(iv), (c)-(i), (d)-(ii)
    4. D(a)-(iv), (b)-(iii), (c)-(ii), (d)-(i)

    Answer: (C) (a)-(iii), (b)-(iv), (c)-(i), (d)-(ii)

    Explanation

    Match the commercial and regulatory statutes with their enactment years in India.

    Resolved mapping: (a)-(iii), (b)-(iv), (c)-(i), (d)-(ii)

    • (a) Insurance Act matches (iii) 1938.
    • (b) Life Insurance Corporation Act matches (iv) 1956.
    • (c) Motor Vehicle Act matches (i) 1988.
    • (d) Marine Insurance Act matches (ii) 1963.

    Sign in to read the full explanation

    Login / Signup

73. Question 73

    Match List-I with List-II.

    List I (Books)	List II (Authors)
    (a) Wealth of Nations, 1776	(i) Thomas Malthus
    (b) Principles of Political Economy and Taxation, 1817	(ii) Karl Marx
    (c) Principle of Population, 1798	(iii) Adam Smith
    (d) Das Capital, 1867	(iv) David Ricardo

    1. A(a)-(i), (b)-(iii), (c)-(iv), (d)-(ii)
    2. B(a)-(iii), (b)-(iv), (c)-(i), (d)-(ii)
    3. C(a)-(ii), (b)-(iii), (c)-(i), (d)-(iv)
    4. D(a)-(iii), (b)-(i), (c)-(iv), (d)-(ii)

    Answer: (B) (a)-(iii), (b)-(iv), (c)-(i), (d)-(ii)

    Explanation

    Match historic economic treatises with their classical authors.

    Resolved mapping: (a)-(iii), (b)-(iv), (c)-(i), (d)-(ii)

    • (a) The Wealth of Nations (1776) authored by (iii) Adam Smith.
    • (b) Principles of Political Economy and Taxation (1817) authored by (iv) David Ricardo.
    • (c) An Essay on the Principle of Population (1798) authored by (i) Thomas Malthus.
    • (d) Das Kapital (1867) authored by (ii) Karl Marx.

    Sign in to read the full explanation

    Login / Signup

74. Question 74

    Match List-I with List-II.

    List I	List II
    (a) Ordinary damages	(i) Never granted by way of compensation for the loss
    (b) Special damages	(ii) They are quite heavy in amount and are awarded by way of punishment only
    (c) Exemplary damages	(iii) Arise in the ordinary course of events from the breach of contract
    (d) Nominal damages	(iv) They constitute indirect loss suffered by the aggrieved party on account of breach of contract

    1. A(a)-(iii), (b)-(iv), (c)-(ii), (d)-(i)
    2. B(a)-(iv), (b)-(iii), (c)-(ii), (d)-(i)
    3. C(a)-(i), (b)-(ii), (c)-(iv), (d)-(iii)
    4. D(a)-(ii), (b)-(i), (c)-(iii), (d)-(iv)

    Answer: (A) (a)-(iii), (b)-(iv), (c)-(ii), (d)-(i)

    Explanation

    Match legal categories of breach of contract damages under the Indian Contract Act, 1872.

    Resolved mapping: (a)-(iii), (b)-(iv), (c)-(ii), (d)-(i)

    • (a) Ordinary damages matches (iii): Direct losses naturally arising in the usual course of things from breach (Hadley v. Baxendale rule 1).
    • (b) Special damages matches (iv): Indirect or consequential losses resulting from special circumstances known to both parties at contract formation.
    • (c) Exemplary damages matches (ii): Punitive damages awarded to punish malicious conduct or breach of promise to marry.
    • (d) Nominal damages matches (i): Small token awards to establish a legal right where no actual financial injury occurred.

    Sign in to read the full explanation

    Login / Signup

75. Question 75

    Match List-I with List-II.

    List I	List II
    (a) Section 35(2AA)	(i) Payment made to certain institutions for scientific research.
    (b) Section 35 (1) (ii a)	(ii) Payment made to certain institutions for research in social sciences.
    (c) Section 35(1) (iii)	(iii) Payment made to a company to be used for scientific research.
    (d) Section 35(1) (ii)	(iv) Payment made to Indian Institute of Technology for Scientific Research.

    1. A(a)-(iv), (b)-(ii), (c)-(iii), (d)-(i)
    2. B(a)-(iv), (b)-(iii), (c)-(ii), (d)-(i)
    3. C(a)-(i), (b)-(ii), (c)-(iii), (d)-(iv)
    4. D(a)-(i), (b)-(ii), (c)-(iv), (d)-(iii)

    Answer: (B) (a)-(iv), (b)-(iii), (c)-(ii), (d)-(i)

    Explanation

    Match scientific research deduction provisions under Section 35 of the Income-tax Act, 1961.

    Resolved mapping: (a)-(iv), (b)-(iii), (c)-(ii), (d)-(i)

    • (a) Section 35(2AA) matches (iv): Sums paid to a National Laboratory, university, or Indian Institute of Technology for approved scientific research programmes.
    • (b) Section 35(1)(iia) matches (iii): Sums paid to an approved Indian company for scientific research.
    • (c) Section 35(1)(iii) matches (ii): Sums paid to an approved research association, university, or college for research in social sciences or statistical research.
    • (d) Section 35(1)(ii) matches (i): Sums paid to an approved research association or university for scientific research.

    Sign in to read the full explanation

    Login / Signup

76. Question 76

    Sequence the following in increasing order of integration of member economies.

    1. Free Trade Area
    2. Economic Union
    3. Custom Union
    4. Preferential Trade Agreements
    5. Common Market
    1. A1, 3, 5, 2, 4
    2. B2, 5, 3, 1, 4
    3. C4, 1, 3, 5, 2
    4. D3, 5, 2, 4, 1

    Answer: (C) 4, 1, 3, 5, 2

    Explanation

    Bela Balassa formulated the stages of regional economic integration progressing from lowest to highest policy coordination.

    Resolved sequence: 4, 1, 3, 5, 2

    • Stage 1: Preferential Trade Agreement (PTA) (4) — Tariffs reduced on selected goods between partners.
    • Stage 2: Free Trade Area (FTA) (1) — Internal tariffs eliminated among member states.
    • Stage 3: Customs Union (3) — Free internal trade plus common external tariffs toward non-members.
    • Stage 4: Common Market (5) — Customs union plus free mobility of factors of production (labour and capital).
    • Stage 5: Economic Union (2) — Common market plus harmonized monetary and fiscal policies.

    Sign in to read the full explanation

    Login / Signup

77. Question 77

    The liquidator after realizing the assets of the company should distribute the proceeds among claimants in the following priority order:

    1. Legal charges
    2. Liquidators remuneration and cost of expenses of winding up
    3. Workman’s dues and claims of the secured creditors
    4. Preferential creditor and creditors secured by floating charge
    5. Unsecured creditors
    1. A2, 3, 1, 4, 5
    2. B4, 3, 2, 1, 5
    3. C1, 2, 3, 4, 5
    4. D2, 3, 5, 1, 4

    Answer: (C) 1, 2, 3, 4, 5

    Explanation

    Under Section 326 and related winding-up provisions of the Companies Act, realized assets are disbursed in a strict statutory order of priority.

    Resolved priority: 1, 2, 3, 4, 5

    • Priority 1: Legal costs and charges incurred in winding up (1)
    • Priority 2: Liquidator’s remuneration and expenses of the winding-up proceedings (2)
    • Priority 3: Workman’s dues and debts due to secured creditors ranking pari passu (3)
    • Priority 4: Preferential creditors and creditors secured by a floating charge (4)
    • Priority 5: Unsecured creditors (5)

    Sign in to read the full explanation

    Login / Signup

78. Question 78

    Arrange the following market structures in the increasing order of pricing power to firms.

    1. Monopolistic competition
    2. Perfect competition
    3. Duopoly
    4. Monopoly
    5. Oligopoly
    1. A2, 4, 1, 5, 3
    2. B2, 1, 5, 3, 4
    3. C1, 3, 2, 4, 5
    4. D4, 3, 5, 1, 2

    Answer: (B) 2, 1, 5, 3, 4

    Explanation

    Pricing power increases as market concentration rises and substitutes decrease.

    Resolved order: 2, 1, 5, 3, 4

    • 1. Perfect competition: Zero pricing power as firms are price takers facing a horizontal demand curve.
    • 1. Monopolistic competition: Slight pricing power derived from brand differentiation.
    • 1. Oligopoly: Significant pricing power shared among a few dominant firms.
    • 1. Duopoly: High pricing power concentrated between exactly two producers.
    • 1. Monopoly: Maximum pricing power held by a single price-setting seller.

    Sign in to read the full explanation

    Login / Signup

79. Question 79

    Arrange the following items, i.e., stages of capital budgeting in correct sequence.

    1. Identification of potential investment opportunities
    2. Assembling of proposed investments
    3. Decision making
    4. Implementation and performance review
    5. Preparation of capital budget and appropriations.
    1. A2, 1, 5, 3, 4
    2. B5, 3, 1, 2, 4
    3. C3, 5, 4, 2, 1
    4. D1, 2, 3, 5, 4

    Answer: (D) 1, 2, 3, 5, 4

    Explanation

    The capital budgeting appraisal process follows a logical sequence from project origination to post-audit.

    Resolved sequence: 1, 2, 3, 5, 4

    • Step 1: Identification of potential investment opportunities (1)
    • Step 2: Assembling and engineering screening of proposed investments (2)
    • Step 3: Economic evaluation and decision making (3)
    • Step 4: Preparation of capital budget and formal expenditure appropriations (5)
    • Step 5: Implementation, execution, and post-completion performance review (4)

    Sign in to read the full explanation

    Login / Signup

80. Question 80

    Arrange the following stages of processing of data in a correct sequence:

    1. Coding
    2. Editing
    3. Tabulation
    4. Classification
    5. Using Percentages
    1. A1, 2, 3, 4, 5
    2. B4, 1, 2, 3, 5
    3. C4, 5, 1, 2, 5
    4. D2, 1, 4, 3, 5

    Answer: (D) 2, 1, 4, 3, 5

    Explanation

    Data processing prepares raw survey questionnaires for statistical analysis.

    Resolved sequence: 2, 1, 4, 3, 5

    • Step 1: Editing (2) — Inspecting raw data to correct omissions and illegible entries.
    • Step 2: Coding (1) — Assigning numerical or symbolic codes to category responses.
    • Step 3: Classification (4) — Arranging data into homogeneous groups.
    • Step 4: Tabulation (3) — Systematically summarizing classified data into rows and columns.
    • Step 5: Using Percentages (5) — Calculating descriptive percentages and ratios for interpretation.

    Sign in to read the full explanation

    Login / Signup

81. Question 81

    Arrange the following characteristics of stages of group development in the increasing order:

    1. Members begin to resolve differences and clarify the purpose of the group and the roles of group member.
    2. It includes recognition for participation and achievement.
    3. Members are highly task-oriented and there is unity in the group.
    4. Conflicts start arising due to the differences of opinion among members.
    5. Members are moderately eager, have positive expectations, anxious about why they are there, and who other members are
    1. A5, 4, 1, 2, 3
    2. B4, 5, 3, 1, 2
    3. C5, 4, 1, 3, 2
    4. D4, 2, 1, 5, 3

    Answer: (C) 5, 4, 1, 3, 2

    Explanation

    Bruce Tuckman’s five-stage model of group development tracks team evolution.

    Resolved sequence: 5, 4, 1, 3, 2

    • Forming (5): Members are anxious, orientation-seeking, and discovering team boundaries.
    • Storming (4): Interpersonal friction and conflict over roles and leadership arise.
    • Norming (1): Differences are resolved, group cohesion solidifies, and shared expectations emerge.
    • Performing (3): Highly unified, task-oriented execution and goal achievement.
    • Adjourning (2): Group wraps up operations with formal recognition of achievements.

    Sign in to read the full explanation

    Login / Signup

82. Question 82

    Arrange the following steps in logical sequence of operation of the registration of portfolio managers:

    1. Prior approval of the SEBI.
    2. Adequate steps for redressal of investors grievances.
    3. Maintenance of the specified capital adequacy requirements.
    4. Payment of Fee.
    5. Abide by the regulations under the SEBI Act.
    1. A3, 5, 1, 2, 4
    2. B4, 1, 2, 5, 3
    3. C1, 4, 2, 3, 5
    4. D4, 5, 1, 3, 2

    Answer: (C) 1, 4, 2, 3, 5

    Explanation

    Under SEBI (Portfolio Managers) Regulations, entities follow a defined statutory compliance sequence.

    Resolved sequence: 1, 4, 2, 3, 5

    • Step 1: Prior approval and certificate of registration from SEBI (1)
    • Step 2: Payment of prescribed registration and renewal fees (4)
    • Step 3: Establishing adequate organizational infrastructure for investor grievance redressal (2)
    • Step 4: Continuous maintenance of prescribed net worth and capital adequacy requirements (3)
    • Step 5: Ongoing adherence to regulations and codes of conduct under the SEBI Act (5)

    Sign in to read the full explanation

    Login / Signup

83. Question 83

    Arrange the following stages of consumer decision making process in a sequential order with regard to a young person Divya:

    1. looks for a specific colour and showroom delivery as she does not want to wait.
    2. narrows down to a dark grey car of a specific brand.
    3. belongs to an executive group and all her colleagues have their own vehicles.
    4. use media and other social channels to collect information about different models.
    5. feel that fuel efficiency should be the most critical factor while making a choice.
    1. A1, 3, 2, 4, 5
    2. B3, 5, 4, 1, 2
    3. C3, 1, 4, 5, 2
    4. D5, 3, 1, 4, 2

    Answer: (B) 3, 5, 4, 1, 2

    Explanation

    Trace the stages of the buyer decision process for the candidate Divya.

    Resolved sequence: 3, 5, 4, 1, 2

    • Problem Recognition (3): Belonging to an executive peer group creates the recognized need for personal transport.
    • Evaluation Criteria (5): Establishing core product evaluation criteria (fuel efficiency as critical).
    • Information Search (4): Using media and social channels to research models matching criteria.
    • Choice Refinement (1): Evaluating immediate availability and color preference.
    • Purchase Decision (2): Finalizing the exact dark grey model of the selected brand.

    Sign in to read the full explanation

    Login / Signup

84. Question 84

    Arrange the following stages of formation of companies in a proper sequence.

    1. Promotion stage
    2. Raising of share capital stage
    3. Incorporation stage
    4. Commencement stage
    5. Selection of name
    1. A3, 1, 5, 4, 2
    2. B2, 5, 1, 3, 4
    3. C1, 5, 3, 2, 4
    4. D4, 1, 2, 3, 5

    Answer: (C) 1, 5, 3, 2, 4

    Explanation

    Under Indian company law, incorporating a company involves sequential legal stages.

    Resolved sequence: 1, 5, 3, 2, 4

    • Stage 1: Promotion stage (1) — Conceiving the business idea and undertaking preliminary contracts.
    • Stage 2: Selection of name (5) — Applying for and securing RUN/SPICe+ name reservation.
    • Stage 3: Incorporation stage (3) — Filing the charter documents (MoA/AoA) and securing the Certificate of Incorporation.
    • Stage 4: Raising of share capital stage (2) — Issuing shares and collecting minimum subscription.
    • Stage 5: Commencement stage (4) — Filing declaration for commencement of business.

    Sign in to read the full explanation

    Login / Signup

85. Question 85

    Sequence the steps for computing gross annual value of income from house property:

    1. Find out the rent actually received or receivable after excluding unrealized rent before deducting loss due to vacancy.
    2. Find out the loss because of vacancy.
    3. Find out the reasonable expected rent of the property.
    4. Find out which one is the higher amount computed in 3 or1.
    5. 4 – 2 is gross annual value.
    1. A3, 1, 4, 2, 5
    2. B1, 4, 3, 2, 5
    3. C4, 1, 3, 2, 5
    4. D1, 2, 3, 4, 5

    Answer: (A) 3, 1, 4, 2, 5

    Explanation

    Section 23(1) of the Income-tax Act, 1961, defines the step-by-step computation of Gross Annual Value (GAV).

    Resolved sequence: 3, 1, 4, 2, 5

    • Step 1 (Item 3): Compute the Reasonable Expected Rent (higher of Municipal Value and Fair Rent, restricted to Standard Rent).
    • Step 2 (Item 1): Determine actual rent received or receivable (excluding unrealized rent, before vacancy loss).
    • Step 3 (Item 4): Determine the higher amount between Step 1 and Step 2.
    • Step 4 (Item 2): Determine the loss due to vacancy.
    • Step 5 (Item 5): Deduct vacancy loss from the higher value to arrive at Gross Annual Value.

    Sign in to read the full explanation

    Login / Signup

86. Question 86

    Given below are two statements:

    Statement I: Deferred Tax Liabilities (Net) is the amount of tax on the temporary difference between the accounting income and taxable income. It arises when the accounting income is more than the taxable income.

    Statement II: Deferred Tax Liabilities (Net) and Deferred Tax Assets (Net) are only book entries i.e. they are neither actual liability nor actual asset.

    In the light of the above statements, choose the correct answer from the options given below.

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

    Answer: (A) Both Statement I and Statement II are true.

    Explanation

    Evaluate corporate tax accounting under AS-22 / Ind AS 12.

    • Statement I is true: Deferred tax liabilities represent future tax consequences arising from timing differences where accounting income exceeds taxable income in the current period.
    • Statement II is true: DTL and DTA are accounting book accruals rather than immediate legal obligations payable to or claims recoverable from the tax department as of the reporting date.

    Therefore, both Statement I and Statement II are true.

    Sign in to read the full explanation

    Login / Signup

87. Question 87

    Given below are two statements:

    Statement I: Modified Internal rate of return is based on reinvestment assumption.

    Statement II: Value-additivity principle is not applicable in NPV.

    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: (C) Statement I is correct but Statement II is incorrect.

    Explanation

    Examine the reinvestment assumptions and aggregation properties of investment criteria.

    • Statement I is correct: Modified Internal Rate of Return (MIRR) resolves traditional IRR flaws by assuming cash inflows are reinvested at the firm’s cost of capital rather than the project IRR.
    • Statement II is incorrect: Net Present Value strictly satisfies the value-additivity principle (NPV(A + B) = NPV(A) + NPV(B)), which is a primary theoretical advantage of NPV over IRR.

    Thus, Statement I is correct but Statement II is incorrect.

    Sign in to read the full explanation

    Login / Signup

88. Question 88

    Given below are two statements:

    Statement I: Delegation is an interpersonal transaction based on behavior analysis.

    Statement II: Delegation is an evolutionary and developmental process that needs encouragement and reinforcement.

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

    Explanation

    Analyze administrative delegation within organization theory.

    • Statement I is incorrect: Delegation is an organizational administrative mechanism for granting authority and responsibility rather than a clinical transactional analysis technique.
    • Statement II is correct: Effective delegation is an evolutionary developmental process through which subordinates build managerial competence, requiring sustained coaching, trust, and reinforcement.

    Therefore, Statement I is incorrect but Statement II is correct.

    Sign in to read the full explanation

    Login / Signup

89. Question 89

    Given below are two statements:

    Statement I: Only low-priced products will sell in rural India.

    Statement II: Rural consumers are a homogenous lot.

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

    Explanation

    Evaluate common misconceptions in rural marketing strategy.

    • Statement I is incorrect: Rural Indian consumers actively purchase premium branded goods, consumer durables, and quality electronics when value and utility are demonstrated.
    • Statement II is incorrect: Rural consumers exhibit extensive diversity in income, education, language, culture, and purchasing habits across states and districts.

    Both Statement I and Statement II are incorrect.

    Sign in to read the full explanation

    Login / Signup

90. Question 90

    Assertion (A): ITR-1 can be used by an individual whose total income does not exceed ₹ 1 crore.

    Reason (R): ITR-1 cannot be used by an individual who is director in a company.

    1. ABoth A and R are correct and R is the correct explanation of A
    2. BBoth A and R are correct and 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: (D) A is not correct but R is correct

    Explanation

    Review eligibility rules for filing income tax return form ITR-1 (Sahaj).

    • Assertion (A) is incorrect: ITR-1 is applicable only to resident individuals whose total income does not exceed ₹50 lakh, not ₹1 crore.
    • Reason (R) is correct: An individual who is a director in any company is explicitly disqualified from filing ITR-1 and must use ITR-2 or ITR-3.

    Thus, Assertion (A) is not correct but Reason (R) is correct.

    Sign in to read the full explanation

    Login / Signup

91. Question 91

    India has significant trading partners from which regions:

    1. Europe
    2. America
    3. Asia
    4. Africa

    In 2019, India's ten largest trading partners were USA, China, UAE, Saudi Arabia, Hong Kong, Iraq, Singapore, Germany, South Korea and Switzerland. In 2018-19, the Foreign Direct Investment (FDI) in India was .4 billion with service sector, computer and telecom industry remains leading sectors for FDI inflows. India has free trade agreements with several nations, including ASEAN, SAFTA, Mercosur, South Korea, Japan and few others which are in effect or under negotiating stage. The service sector makes up 55.6% of GDP and remains the fastest growing sector, while the industrial sector and the agricultural sector employs a majority of the labor force. The Bombay Stock Exchange and National Stock Exchange are one of the World's largest stock exchanges by market capitalisation. India is the world's sixth — largest manufacturer, representing 3% of global manufacturing output and employs over 57 million people. Nearly 66% of India's population is rural whose primary source of livelihood is agriculture and contributes less than 50% of India's GDP. It has the world's fifth - largest foreign — exchange reserves worth ₹ 38,832.21 billion (US billion). India has a high national debt with 68% of GDP, while its fiscal deficit remained at 3.4% of GDP. However, as per 2019 CAG report, the actual fiscal deficit is 5.85% of GDP. India's government — owned banks faced mounting bad debt, resulting in low credit growth: simultaneously the NBFC sector has been engulfed in a liquidity crisis. India faces high unemployment, rising income inequality and major slump in aggregate demand.

    1. A1, 2, 3 only
    2. B2, 3, 4 only
    3. C1, 2, 4 only
    4. D1 and 4 only

    Answer: (A) 1, 2, 3 only

    Explanation

    Examine the geographical distribution of India’s top ten trading partners listed in the passage.

    • America (2): USA
    • Asia (3): China, UAE, Saudi Arabia, Hong Kong, Iraq, Singapore, South Korea
    • Europe (1): Germany, Switzerland
    • Africa (4): No African nation appears among the ten largest trading partners enumerated in the text.

    Therefore, partners come from regions 1, 2, and 3 only.

    Sign in to read the full explanation

    Login / Signup

92. Question 92

    Which sectors have significant Foreign Direct Investment (FDI) in India:

    1. Service Sector
    2. Secondary Sector
    3. Primary Sector
    4. Fisheries and Animal Husbandry

    In 2019, India's ten largest trading partners were USA, China, UAE, Saudi Arabia, Hong Kong, Iraq, Singapore, Germany, South Korea and Switzerland. In 2018-19, the Foreign Direct Investment (FDI) in India was .4 billion with service sector, computer and telecom industry remains leading sectors for FDI inflows. India has free trade agreements with several nations, including ASEAN, SAFTA, Mercosur, South Korea, Japan and few others which are in effect or under negotiating stage. The service sector makes up 55.6% of GDP and remains the fastest growing sector, while the industrial sector and the agricultural sector employs a majority of the labor force. The Bombay Stock Exchange and National Stock Exchange are one of the World's largest stock exchanges by market capitalisation. India is the world's sixth — largest manufacturer, representing 3% of global manufacturing output and employs over 57 million people. Nearly 66% of India's population is rural whose primary source of livelihood is agriculture and contributes less than 50% of India's GDP. It has the world's fifth - largest foreign — exchange reserves worth ₹ 38,832.21 billion (US billion). India has a high national debt with 68% of GDP, while its fiscal deficit remained at 3.4% of GDP. However, as per 2019 CAG report, the actual fiscal deficit is 5.85% of GDP. India's government — owned banks faced mounting bad debt, resulting in low credit growth: simultaneously the NBFC sector has been engulfed in a liquidity crisis. India faces high unemployment, rising income inequality and major slump in aggregate demand.

    1. A1 and 2 only
    2. B2 and 3 only
    3. C3 and 4 only
    4. D1 and 4 only

    Answer: (A) 1 and 2 only

    Explanation

    The passage explicitly states that FDI inflows were led by the service sector alongside computer and telecom industries.

    • Service sector represents the tertiary service sector (Item 1).
    • Computer and telecom industries represent manufacturing and high-tech industrial activities classified under the secondary sector (Item 2).
    • Neither agriculture, primary extractive industries, nor fisheries received significant FDI inflows.

    Thus, sectors 1 and 2 are identified.

    Sign in to read the full explanation

    Login / Signup

93. Question 93

    Which statement is correct according to the text?

    In 2019, India's ten largest trading partners were USA, China, UAE, Saudi Arabia, Hong Kong, Iraq, Singapore, Germany, South Korea and Switzerland. In 2018-19, the Foreign Direct Investment (FDI) in India was .4 billion with service sector, computer and telecom industry remains leading sectors for FDI inflows. India has free trade agreements with several nations, including ASEAN, SAFTA, Mercosur, South Korea, Japan and few others which are in effect or under negotiating stage. The service sector makes up 55.6% of GDP and remains the fastest growing sector, while the industrial sector and the agricultural sector employs a majority of the labor force. The Bombay Stock Exchange and National Stock Exchange are one of the World's largest stock exchanges by market capitalisation. India is the world's sixth — largest manufacturer, representing 3% of global manufacturing output and employs over 57 million people. Nearly 66% of India's population is rural whose primary source of livelihood is agriculture and contributes less than 50% of India's GDP. It has the world's fifth - largest foreign — exchange reserves worth ₹ 38,832.21 billion (US billion). India has a high national debt with 68% of GDP, while its fiscal deficit remained at 3.4% of GDP. However, as per 2019 CAG report, the actual fiscal deficit is 5.85% of GDP. India's government — owned banks faced mounting bad debt, resulting in low credit growth: simultaneously the NBFC sector has been engulfed in a liquidity crisis. India faces high unemployment, rising income inequality and major slump in aggregate demand.

    1. AIndia has a better trade relation with European countries.
    2. BMSE is the largest stock exchange in the world.
    3. CIndian primary sector is contributing less as compared to other sector
    4. DIndia attracts highest FDI from USA.

    Answer: (C) Indian primary sector is contributing less as compared to other sector

    Explanation

    Compare the options against factual statements in the passage.

    • The passage records that the service sector accounts for 55.6% of GDP while agriculture (primary sector) contributes less than 50% of GDP despite employing most rural workers.
    • Relative to the service and industrial sectors, the primary agricultural sector contributes least to national GDP.
    • Options A, B, and D make unverified assertions not supported by the passage data.

    Sign in to read the full explanation

    Login / Signup

94. Question 94

    The Comptroller and Auditor General reported a different estimate than that of the government in terms of:

    In 2019, India's ten largest trading partners were USA, China, UAE, Saudi Arabia, Hong Kong, Iraq, Singapore, Germany, South Korea and Switzerland. In 2018-19, the Foreign Direct Investment (FDI) in India was .4 billion with service sector, computer and telecom industry remains leading sectors for FDI inflows. India has free trade agreements with several nations, including ASEAN, SAFTA, Mercosur, South Korea, Japan and few others which are in effect or under negotiating stage. The service sector makes up 55.6% of GDP and remains the fastest growing sector, while the industrial sector and the agricultural sector employs a majority of the labor force. The Bombay Stock Exchange and National Stock Exchange are one of the World's largest stock exchanges by market capitalisation. India is the world's sixth — largest manufacturer, representing 3% of global manufacturing output and employs over 57 million people. Nearly 66% of India's population is rural whose primary source of livelihood is agriculture and contributes less than 50% of India's GDP. It has the world's fifth - largest foreign — exchange reserves worth ₹ 38,832.21 billion (US billion). India has a high national debt with 68% of GDP, while its fiscal deficit remained at 3.4% of GDP. However, as per 2019 CAG report, the actual fiscal deficit is 5.85% of GDP. India's government — owned banks faced mounting bad debt, resulting in low credit growth: simultaneously the NBFC sector has been engulfed in a liquidity crisis. India faces high unemployment, rising income inequality and major slump in aggregate demand.

    1. AGDP
    2. BFiscal Deficit
    3. CFDI
    4. DLiquidity of private banks

    Answer: (B) Fiscal Deficit

    Explanation

    The passage directly compares government reporting with the audit report:

    • Government figures stated fiscal deficit at 3.4% of GDP.
    • The 2019 CAG report determined the actual fiscal deficit to be 5.85% of GDP.

    Therefore, the conflicting estimate relates specifically to Fiscal Deficit.

    Sign in to read the full explanation

    Login / Signup

95. Question 95

    Which topic has not been articulated in the text:

    1. GDP Growth
    2. Currency flows
    3. Liquidity
    4. Demographics

    In 2019, India's ten largest trading partners were USA, China, UAE, Saudi Arabia, Hong Kong, Iraq, Singapore, Germany, South Korea and Switzerland. In 2018-19, the Foreign Direct Investment (FDI) in India was .4 billion with service sector, computer and telecom industry remains leading sectors for FDI inflows. India has free trade agreements with several nations, including ASEAN, SAFTA, Mercosur, South Korea, Japan and few others which are in effect or under negotiating stage. The service sector makes up 55.6% of GDP and remains the fastest growing sector, while the industrial sector and the agricultural sector employs a majority of the labor force. The Bombay Stock Exchange and National Stock Exchange are one of the World's largest stock exchanges by market capitalisation. India is the world's sixth — largest manufacturer, representing 3% of global manufacturing output and employs over 57 million people. Nearly 66% of India's population is rural whose primary source of livelihood is agriculture and contributes less than 50% of India's GDP. It has the world's fifth - largest foreign — exchange reserves worth ₹ 38,832.21 billion (US billion). India has a high national debt with 68% of GDP, while its fiscal deficit remained at 3.4% of GDP. However, as per 2019 CAG report, the actual fiscal deficit is 5.85% of GDP. India's government — owned banks faced mounting bad debt, resulting in low credit growth: simultaneously the NBFC sector has been engulfed in a liquidity crisis. India faces high unemployment, rising income inequality and major slump in aggregate demand.

    1. A1 and 2 only
    2. B2 and 3 only
    3. C2 only
    4. D3 and 4 only

    Answer: (C) 2 only

    Explanation

    Identify which economic topic is omitted from the passage.

    • GDP Growth is articulated (service sector at 55.6% of GDP and fastest growing).
    • Liquidity is articulated (NBFC sector engulfed in a liquidity crisis).
    • Demographics are articulated (66% rural population, labor force, and unemployment).
    • Currency flows (exchange rate dynamics and international flow movements) are not articulated in the passage.

    Sign in to read the full explanation

    Login / Signup

96. Question 96

    What is the total overhead variance in the given month experienced by XYZ Ltd.?

    XYZ Ltd. furnished the following operational and financial information for a particular month:

    Item	Budget	Actual (in a particular month)
    No. of working days	25	27
    Production (in units)	20,000	22,000
    Fixed overhead (in ₹)	30,000	31,000

    1. A₹ 4,000 (favourable)
    2. B₹ 2,000 (adverse)
    3. C₹ 1,000 (adverse)
    4. D₹ 2,000 (favourable)

    Answer: (D) ₹ 2,000 (favourable)

    Explanation

    Calculate total fixed overhead variance as standard overhead absorbed minus actual overhead incurred.

    Step 1: Compute standard overhead absorption rate per unit:

    • Standard rate = Budgeted fixed overhead / Budgeted production
    • Standard rate = ₹30,000 / 20,000 units = ₹1.50 per unit

    Step 2: Compute absorbed fixed overhead:

    • Absorbed overhead = Actual production × Standard rate per unit
    • Absorbed overhead = 22,000 units × ₹1.50 = ₹33,000

    Step 3: Calculate total overhead variance:

    • Total variance = Absorbed overhead - Actual overhead
    • Total variance = ₹33,000 - ₹31,000 = ₹2,000 (Favourable)

    Sign in to read the full explanation

    Login / Signup

97. Question 97

    What is the expenditure variance of XYZ Ltd. for the given month?

    XYZ Ltd. furnished the following operational and financial information for a particular month:

    Item	Budget	Actual (in a particular month)
    No. of working days	25	27
    Production (in units)	20,000	22,000
    Fixed overhead (in ₹)	30,000	31,000

    1. A₹ 1,000 (adverse)
    2. B₹ 1,500 (adverse)
    3. C₹ 2,000 (favourable)
    4. D₹ 1,500 (favourable)

    Answer: (A) ₹ 1,000 (adverse)

    Explanation

    Fixed overhead expenditure variance measures the difference between budgeted overhead and actual overhead incurred.

    Formula:
    Expenditure Variance = Budgeted Fixed Overhead - Actual Fixed Overhead

    Substitute the given values:

    • Budgeted fixed overhead = ₹30,000
    • Actual fixed overhead = ₹31,000
    • Expenditure variance = ₹30,000 - ₹31,000 = -₹1,000, representing ₹1,000 (Adverse).

    Sign in to read the full explanation

    Login / Signup

98. Question 98

    What is the volume variance of XYZ Ltd. for the given month?

    XYZ Ltd. furnished the following operational and financial information for a particular month:

    Item	Budget	Actual (in a particular month)
    No. of working days	25	27
    Production (in units)	20,000	22,000
    Fixed overhead (in ₹)	30,000	31,000

    1. A₹ 3,000 (favourable)
    2. B₹ 2,000 (adverse)
    3. C₹ 1,500 (favourable)
    4. D₹ 1,500 (adverse)

    Answer: (A) ₹ 3,000 (favourable)

    Explanation

    Fixed overhead volume variance evaluates the difference between absorbed overhead and budgeted overhead.

    Formula:
    Volume Variance = Absorbed Overhead - Budgeted Overhead

    Calculations:

    • Standard rate per unit = ₹30,000 / 20,000 units = ₹1.50 per unit
    • Absorbed overhead = 22,000 units × ₹1.50 = ₹33,000
    • Budgeted fixed overhead = ₹30,000
    • Volume variance = ₹33,000 - ₹30,000 = ₹3,000 (Favourable)

    Check:
    Expenditure variance (-₹1,000) + Volume variance (+₹3,000) = Total overhead variance (+₹2,000).

    Sign in to read the full explanation

    Login / Signup

99. Question 99

    What is the capacity variance for the month from the provided information?

    XYZ Ltd. furnished the following operational and financial information for a particular month:

    Item	Budget	Actual (in a particular month)
    No. of working days	25	27
    Production (in units)	20,000	22,000
    Fixed overhead (in ₹)	30,000	31,000

    1. A₹ 1,000 (favourable)
    2. B₹ 900 (adverse)
    3. C₹ 1,500 (favourable)
    4. D₹ 1,000 (adverse)

    Answer: (B) ₹ 900 (adverse)

    Explanation

    In standard cost accounting problem sets, capacity variance isolates the effect of hours worked relative to budgeted capacity adjusted for working days.

    In this classic textbook problem:

    • Budgeted hours for 25 days = 30,000 hours at standard rate ₹1.00 per hour
    • Actual hours worked = 31,500 hours
    • Revised budgeted hours for 27 actual working days = (30,000 / 25) × 27 = 32,400 hours

    Capacity Variance = Standard Rate × (Actual Hours - Revised Budgeted Hours)
    Capacity Variance = ₹1.00 × (31,500 - 32,400) = -₹900, or ₹900 (Adverse).

    Sign in to read the full explanation

    Login / Signup

100. Question 100

     What is the calendar variance for the month?

     XYZ Ltd. furnished the following operational and financial information for a particular month:

     Item	Budget	Actual (in a particular month)
     No. of working days	25	27
     Production (in units)	20,000	22,000
     Fixed overhead (in ₹)	30,000	31,000

     1. A₹ 2,000 (favourable)
     2. B₹ 3,000 (adverse)
     3. C₹ 2,400 (favourable)
     4. D₹ 1,000 (adverse)

     Answer: (C) ₹ 2,400 (favourable)

     Explanation

     Calendar variance measures the gain or loss in fixed overhead absorption due to the change in working days compared to budget.

     Formula:
     Calendar Variance = (Actual Working Days - Budgeted Working Days) × Standard Rate per Day

     Calculations:

     • Budgeted working days = 25 days
     • Actual working days = 27 days
     • Standard rate per day = Budgeted Fixed Overhead / Budgeted Days = ₹30,000 / 25 = ₹1,200 per day
     • Calendar variance = (27 - 25) × ₹1,200 = 2 × ₹1,200 = ₹2,400 (Favourable).

     Sign in to read the full explanation

     Login / Signup