Paper 2 — Commerce · Shift 1

100 questions with the answer key and explanations.

Question 1
Which one of the following is not the guiding principle of World Bank regarding its lending operation?
1. AProper assessment of the repayment prospects of loans.
2. BLending should be only for specific projects which are economically and technically sound and of a high priority nature.
3. CThe lending should be to enable a country to meet foreign exchange content of the project cost.
4. DThe bank does expect the borrowing country to spend the loan in a particular country.
Answer: (D) The bank does expect the borrowing country to spend the loan in a particular country.
Explanation
The World Bank follows the principle of untied lending, meaning borrowers are free to procure goods and services through international competitive bidding across member nations rather than being tied to any specific country.

A. Proper assessment of repayment prospects — guiding principle. The Bank must ensure a borrower can service debt.

B. Lending for specific sound projects — guiding principle. Funds target high-priority, economically and technically sound projects.

C. Meeting foreign exchange content — guiding principle. Loans typically finance the direct foreign exchange component of project costs.

D. Spending loan in a particular country — not a guiding principle. Tying loans to purchases in a designated country violates World Bank charter guidelines.
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Question 2
Portfolio approach to investing is primarily focused on which of the following:
1. ADiversification
2. BValue protection
3. CReturn appreciation
4. DRisk optimisation
Answer: (D) Risk optimisation
Explanation
Modern Portfolio Theory establishes that the primary objective of a portfolio approach is risk optimisation — balancing expected return against risk across the efficient frontier rather than evaluating securities in isolation.

A. Diversification — an essential tool and strategy rather than the ultimate investment objective itself.

B. Value protection — primarily a capital preservation objective for conservative strategies.

C. Return appreciation — seeking returns without considering variance ignores portfolio trade-offs.

D. Risk optimisation — correct. Constructing portfolios aims to achieve the highest expected return for a targeted level of risk or minimize risk for a specified return.
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Question 3
SEBI's 'Skin in the game rule' is applicable to which of the following financial intermediaries?
1. AMerchant bankers
2. BFinancial Advisors
3. CMutual funds
4. DBrokerages
Answer: (C) Mutual funds
Explanation
SEBI introduced the skin in the game circular to align the interests of key employees of Asset Management Companies with mutual fund unit holders.

Under this regulation, designated employees of AMCs must invest a mandatory percentage of their compensation in the schemes they manage, subject to a minimum lock-in period.

A. Merchant bankers — governed by SEBI merchant banking regulations focused on issue management.

B. Financial Advisors — governed by SEBI Investment Advisers regulations.

C. Mutual funds — correct. Asset Management Companies and their key executives must hold mandatory scheme units.

D. Brokerages — governed by SEBI Stock Brokers regulations.
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Question 4
Concentration of all marketing efforts on a small but specific and well defined segment of the population is called:
1. ANiche marketing
2. BFranchising
3. CAmbush marketing
4. DViral marketing
Answer: (A) Niche marketing
Explanation
Niche marketing targets a narrowly defined customer group seeking a distinctive mix of benefits, allowing firms to dominate specialized market segments.

A. Niche marketing — correct. Focuses resources on a well-defined, tightly targeted customer group.

B. Franchising — a contractual business distribution format, not a market segmentation strategy.

C. Ambush marketing — associating an enterprise with an event without paying official sponsorship fees.

D. Viral marketing — promotional technique that encourages consumers to pass along marketing messages online.
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Question 5
A company does not include the value of skills gained by its employees from training programmes in its annual financial statements. Which one of the following accounting concepts is being applied in this case?
1. AGoing concern concept
2. BMoney measurement concept
3. CRevenue recognition concept
4. DBusiness entity concept
Answer: (B) Money measurement concept
Explanation
The money measurement concept dictates that only transactions and events capable of being expressed reliably in monetary terms can be recorded in financial statements.

Employee skills and training enhancements lack an objective monetary valuation standard, so accounting conventions exclude them from traditional balance sheets.

A. Going concern concept — assumes the business entity will continue operating indefinitely.

B. Money measurement concept — correct. Non-monetary attributes like employee skills are excluded.

C. Revenue recognition concept — determines the accounting timing of earning and realizing revenue.

D. Business entity concept — treats the business and its proprietors as separate distinct entities.
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Question 6
Which one among the following is the Interest Coverage Ratio for the company?

The information with respect to a company is:
EBIT = ₹35 lakhs
15% Term loan = ₹50 lakhs
Working capital term loan from bank @ 20% = ₹30 lakhs
10% Preference share capital = ₹10 lakhs
Public deposits accepted @ 14% = ₹15 lakhs
1. A0.45
2. B1.98
3. C2.24
4. D2.59
Answer: (C) 2.24
Explanation
Interest Coverage Ratio measures how easily a firm can pay its interest charges out of operating earnings:

Interest Coverage Ratio = EBIT / Total Interest Expense

Calculate the annual interest for each debt obligation:

Term loan interest = 15% of ₹50 lakhs = ₹7.50 lakhs

Working capital loan interest = 20% of ₹30 lakhs = ₹6.00 lakhs

Public deposits interest = 14% of ₹15 lakhs = ₹2.10 lakhs

Preference share dividend is an appropriation of profit after tax, not a debt interest expense.

Total Interest = ₹7.50 + ₹6.00 + ₹2.10 = ₹15.60 lakhs

Interest Coverage Ratio = 35 / 15.60 = 2.2436 ≈ 2.24
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Question 7
Which section of the Indian Companies Act, 2013 among the following provides for the appointment of first auditors by the Board of Directors within one month of the date of registration of the company?
1. A139(2)
2. B139(6)
3. C142(1)
4. D142(2)
Answer: (B) 139(6)
Explanation
Section 139(6) of the Companies Act, 2013 governs the appointment of the first auditor in non-government companies.

The Board of Directors must appoint the first auditor within 30 days from registration. If the Board fails, members appoint the auditor at an extraordinary general meeting within 90 days.

A. Section 139(2) — prescribes mandatory rotation of individual auditors and audit firms for specified classes of companies.

B. Section 139(6) — correct. Governs Board appointment of first auditors within 30 days of registration.

C. Section 142(1) — deals with fixing the remuneration of auditors by company members.

D. Section 142(2) — specifies reimbursement of auditor expenses incurred during company audit duties.
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Question 8
When the incoming partner cannot bring premium for goodwill, then the necessary adjustment for goodwill is done through which one of the following?
1. AGoodwill account of the partners
2. BCapital account of the new partners
3. CBalance sheet of the new partnership firm
4. DProfit & Loss Appropriation account
Answer: (B) Capital account of the new partners
Explanation
Accounting Standard 26 dictates that goodwill can be recognized only when consideration in money or money's worth has been paid, so unpurchased goodwill cannot be raised as a separate book asset.

When a new partner fails to contribute cash for goodwill, their share is adjusted directly by debiting the new partner's capital or current account and crediting the sacrificing partners in their sacrificing ratio.

A. Goodwill account of the partners — raising an unpurchased goodwill account is barred under AS-26.

B. Capital account of the new partners — correct. Debiting new partner capital/current account compensates sacrificing partners.

C. Balance sheet of the new partnership firm — direct balance sheet entries without ledger postings violate double-entry bookkeeping.

D. Profit & Loss Appropriation account — used for distribution of annual net earnings among existing partners.
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Question 9
Sweezy's kinked demand curve model to explain the price and output determination relates to which type of market structure?
1. APerfect Competition
2. BMonopolistic Competition
3. CMonopoly
4. DOligopoly
Answer: (D) Oligopoly
Explanation
Paul Sweezy formulated the kinked demand curve model in 1939 to explain price rigidity in non-collusive oligopoly markets.

The model assumes competitors will match a price decrease to protect market share, creating an inelastic demand curve below the prevailing price, but will ignore a price increase, producing an elastic demand curve above the kink.

A. Perfect Competition — firms face a horizontal, infinitely elastic demand curve at market price.

B. Monopolistic Competition — firms face downward-sloping, highly elastic demand curves without rigid kinks.

C. Monopoly — single seller faces the entire downward-sloping market demand curve.

D. Oligopoly — correct. Asymmetric rival reactions induce a discontinuous marginal revenue curve and rigid pricing.
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Question 10
Which one of the following is not the assumption for consumer behaviour based on the Ordinal Utility Theory?
1. ARationality of the consumer
2. BUtility only ordinally measurable
3. CSatiety of demand
4. DDiminishing marginal rate of substitution
Answer: (C) Satiety of demand
Explanation
Ordinal utility theory assumes non-satiety or monotonic preferences, meaning the consumer always prefers a bundle containing more of at least one good and no less of any other.

Satiety implies total saturation where extra consumption offers zero or negative utility, which contradicts the core downward slope and convexity of indifference curves.

A. Rationality of the consumer — standard assumption that consumers aim to maximize total satisfaction.

B. Utility only ordinally measurable — core premise of Hicks-Allen indifference analysis that consumers rank preferences.

C. Satiety of demand — not an assumption. Indifference analysis explicitly assumes non-satiety.

D. Diminishing marginal rate of substitution — fundamental assumption ensuring indifference curves are convex to the origin.
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Question 11
When the price increase of a commodity is followed by increased total revenue, which one of the following is the price elasticity coefficient?
1. AZero
2. BEqual to one
3. CMore than one
4. DLess than one
Answer: (D) Less than one
Explanation
Under Alfred Marshall's total outlay method, demand is inelastic when price and total revenue move in the same direction.

When price rises and total revenue also increases, the percentage drop in quantity demanded is smaller than the percentage rise in price, meaning the price elasticity coefficient is less than one.

A. Zero — perfectly inelastic demand implies quantity does not change at all.

B. Equal to one — unitary elasticity keeps total revenue constant regardless of price adjustments.

C. More than one — elastic demand causes price and total revenue to move in opposite directions.

D. Less than one — correct. Inelastic demand ensures price and total revenue move in the same direction.
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Question 12
Which one of the following production functions is a long-term production function?
1. AQ = a + bL - cL²
2. BQ = AKᵃLᵇ
3. CQ = a + bL + cL² - dL³
4. DQ = a + bL
Answer: (B) Q = AKᵃLᵇ
Explanation
A long-run production function allows all productive factors to vary simultaneously, studying returns to scale.

The Cobb-Douglas production function Q = AKᵃLᵇ treats both capital K and labour L as variable inputs, representing long-run production relationships.

A. Q = a + bL - cL² — single variable factor function describing the short-run law of diminishing returns.

B. Q = AKᵃLᵇ — correct. Multi-variable input function representing long-run returns to scale.

C. Q = a + bL + cL² - dL³ — cubic short-run production function demonstrating three classic stages of variable proportions.

D. Q = a + bL — linear short-run production function with only labour varying.
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Question 13
As per which one of the following approaches, a firm finances a part of its permanent working capital with short term financing?
1. AMatching Approach
2. BConservative Approach
3. CAggressive Approach
4. DTraditional Approach
Answer: (C) Aggressive Approach
Explanation
Working capital financing policies allocate short-term and long-term funds according to risk-profitability trade-offs.

An aggressive approach finances all seasonal current assets and a portion of permanent working capital with short-term funds, seeking lower borrowing costs despite higher refinancing risk.

A. Matching Approach — finances permanent assets with long-term sources and temporary assets with short-term sources.

B. Conservative Approach — finances all permanent assets and part of seasonal assets with long-term capital.

C. Aggressive Approach — correct. Permanent working capital requirements are partially funded via short-term debt.

D. Traditional Approach — broad general term, not a formal working capital financing classification.
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Question 14
Which one of the following approaches of capital structure pleads that debt financing initially increases the value of the firm; however excess debt financing beyond a particular point reduces the value of the firm?
1. ANet Income Approach
2. BNet Operating Income Approach
3. CTraditional Approach
4. DModigliani-Miller Approach
Answer: (C) Traditional Approach
Explanation
The traditional theory of capital structure balances the cost advantages of cheaper debt against escalating financial distress costs.

Initially, modest debt leverage lowers overall cost of capital and raises firm value. Beyond an optimal threshold, financial risk drives up the required return on equity and cost of debt, reducing firm value.

A. Net Income Approach — asserts higher debt leverage continuously lowers overall cost of capital and increases firm value.

B. Net Operating Income Approach — asserts total firm value and overall cost of capital remain independent of leverage.

C. Traditional Approach — correct. Firm value rises with initial leverage up to an optimum point before falling.

D. Modigliani-Miller Approach — proves capital structure irrelevance under perfect market assumptions.
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Question 15
Which of the following business would most likely use job order costing:
1. AA brewery
2. BAn oil refinery
3. CA company that makes frozen pizzas
4. DA print shop that specializes in wedding invitations
Answer: (D) A print shop that specializes in wedding invitations
Explanation
Job order costing tracks direct costs and allocates overhead to custom, non-standardized batches manufactured according to individual customer specifications.

A print shop crafting bespoke wedding invitations produces distinct batches with tailored paper stock, artwork, and typography.

A. A brewery — produces uniform batches in continuous flow using process costing.

B. An oil refinery — continuous processing of homogeneous crude output using process costing.

C. A company that makes frozen pizzas — mass manufacturing of identical packaged consumer food items using process costing.

D. A print shop specializing in wedding invitations — correct. Distinct custom customer orders require job order costing.
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Question 16
A company has 10% perpetual debt of $1,00,000. The tax rate is 35%. Which one of the following is the after-tax cost of capital assuming that the debt is issued at 10% premium?
1. A10%
2. B5.91%
3. C6.5%
4. D7.22%
Answer: (B) 5.91%
Explanation
Calculate after-tax cost of perpetual debt using annual interest, tax rate, and net proceeds:

Kd = [I * (1 - t)] / NP

Given values:

Annual coupon interest I = 10% of $1,00,000 = $10,000

Corporate tax rate t = 35% = 0.35

Issue price with 10% premium NP = $1,00,000 * 1.10 = $1,10,000

Substitute the values:
Kd = [10,000 * (1 - 0.35)] / 1,10,000
Kd = 6,500 / 1,10,000
Kd = 0.05909... ≈ 5.91%
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Question 17
While wandering in jungle, King Dushyant married Shankuntala as narrated in the "Abhigyan Shankuntalam". He gave her royal ring which could serve her identity when she would come to meet him, in future. However, she had lost the ring while going to meet him. When she arrived at Dushyant's palace, he failed to recognise her as she did not had the ring.

Which of the following statistical error King Dushyant had committed in this narrative?
1. AType I error
2. BType II error
3. CSampling error
4. DNon-Sampling error
Answer: (A) Type I error
Explanation
In hypothesis testing, a Type I error occurs when a true null hypothesis is mistakenly rejected.

Frame the narrative in statistical testing terms:

Null Hypothesis (H0): Shakuntala is the true royal wife.

Alternative Hypothesis (H1): Shakuntala is an imposter.

Ground reality: Shakuntala was genuinely his lawful wife, meaning the null hypothesis was true.

King Dushyant's decision: Because the identifying signet ring was missing, he rejected her genuine claim.

Rejecting the true null hypothesis constitutes a Type I error.

A. Type I error — correct. Rejection of a true null hypothesis.

B. Type II error — failing to reject a false null hypothesis.

C. Sampling error — difference between a sample statistic and the true population parameter.

D. Non-Sampling error — data collection, measurement, or processing mistakes.
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Question 18
Which one of the following statistical identities are useful in comparing the two regression equations based on different sample sizes?
1. ACoefficient of determination (r²)
2. BCoefficient of multiple determination (R²)
3. CAdjusted R²
4. DLogistic regression
Answer: (C) Adjusted R²
Explanation
Adjusted R² corrects the standard coefficient of determination for sample size and degrees of freedom, enabling fair comparisons across models.

While standard R² never decreases when extra predictors or sample differences exist, Adjusted R² penalizes model complexity:

Adjusted R² = 1 - [(1 - R²) * (n - 1) / (n - k - 1)]

A. Coefficient of determination (r²) — measures variance explained in simple bivariate regression, unadjusted for sample size.

B. Coefficient of multiple determination (R²) — automatically inflates as parameters grow and cannot compare different sample sizes.

C. Adjusted R² — correct. Incorporates sample size n and parameter count k to allow valid comparative model evaluation.

D. Logistic regression — regression method for categorical dependent variables, not a goodness-of-fit metric.
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Question 19
Which one of the following statements is false?
1. AArithmetic mean is used to measure the deviations in calculating standard deviation due to its least squares property
2. BZ-Score value of 'X' is the ratio between 'X' divided by mean X
3. CThe coefficient of variation is calculated as follows: X̄ / σ × 100
4. DStandard deviation can be equal to zero in some situations.
Accepted answers: (B) Z-Score value of 'X' is the ratio between 'X' divided by mean X, (C) The coefficient of variation is calculated as follows: X̄ / σ × 100
Explanation
Both statements B and C are mathematically false statistical definitions, so either option is accepted.

A. Arithmetic mean and standard deviation — true. Standard deviation measures deviations from the mean because the sum of squared deviations from the arithmetic mean is minimal.

B. Z-score definition — false. The Z-score measures how many standard deviations a value X lies away from the mean, calculated as Z = (X - μ) / σ rather than a ratio of X divided by the mean.

C. Coefficient of variation — false. Pearson's coefficient of variation is the standard deviation divided by the mean multiplied by 100, calculated as CV = (σ / X̄) * 100, which inverts the formula given in the statement.

D. Standard deviation equal to zero — true. When every observation in a series is identical, dispersion is zero and standard deviation equals zero.
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Question 20
Which one of the following expressions is not correct to calculate the coefficient of correlation between two variables?
1. AΣxy / (N·σx·σy)
2. B√(bᵧₓ · bₓᵧ)
3. CCov(x,y) / (σx²·σy²)
4. DCov(x,y) / (σx·σy)
Answer: (C) Cov(x,y) / (σx²·σy²)
Explanation
Karl Pearson's coefficient of correlation divides covariance by the product of individual standard deviations, not variances.

A. Σxy / (N·σx·σy) — correct Pearson formula using deviations from means x and y.

B. √(bᵧₓ · bₓᵧ) — correct geometric mean relationship between the two regression coefficients.

C. Cov(x,y) / (σx²·σy²) — incorrect expression. It divides by the product of variances rather than standard deviations, creating a dimensional error.

D. Cov(x,y) / (σx·σy) — standard correct definitional formula for Pearson's product-moment correlation.
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Question 21
Which one of the following is not true for Authority?
1. AIt is the legitimate right of a superior to command and compel his subordinates to perform a certain act.
2. BIt is mostly well-defined, conspicuous and finite.
3. CIt can be delegated.
4. DIt serves as a basis of both formal and informal organizations.
Answer: (D) It serves as a basis of both formal and informal organizations.
Explanation
Authority is formal institutional power vested in organizational roles, making it the foundation solely of formal organizations.

Informal organizations emerge spontaneously from social relations, personal affiliations, and interpersonal influence rather than official authority.

A. Legitimate right to command — true. Authority provides institutional legitimacy to give binding directions.

B. Well-defined, conspicuous and finite — true. Formal authority boundaries are specified in job descriptions and organizational charts.

C. It can be delegated — true. Managers can delegate legitimate authority downward to subordinates.

D. Basis of formal and informal organizations — not true. Informal structures rely on social rapport and informal influence rather than legitimate authority.
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Question 22
Which one of the tests measures the applicant's, level of knowledge and skill in a particular job in which one he will be appointed?
1. APersonality test
2. BAchievement test
3. CInterest test
4. DAptitude test
Answer: (B) Achievement test
Explanation
An achievement test, also referred to as a trade or proficiency test, evaluates an applicant's current acquired knowledge, proficiency, and applied technical skills for a specific post.

A. Personality test — measures behavioral tendencies, emotional balance, interpersonal styles, and values.

B. Achievement test — correct. Assesses demonstrated proficiency and mastery of skills required for the job.

C. Interest test — assesses an applicant's vocational inclinations and work preferences.

D. Aptitude test — measures latent potential to learn new skills rather than current job proficiency.
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Question 23
Which one of the following aims at the Task Dimension of organizational change?
1. ABroadening or narrowing span of control
2. BDiversifying into additional businesses
3. CImproving the efficiency of machines
4. DReallocating authority
Answer: (B) Diversifying into additional businesses
Explanation
Harold Leavitt's organizational systems model distinguishes four interconnected dimensions: tasks, structure, technology, and people.

The task dimension focuses on the fundamental work, missions, and business lines the enterprise engages in, such as diversifying into new commercial ventures.

A. Broadening or narrowing span of control — structural change altering managerial reporting relationships.

B. Diversifying into additional businesses — correct. Direct change in the nature and scope of organizational tasks.

C. Improving the efficiency of machines — technological change enhancing equipment and capital operations.

D. Reallocating authority — structural change modifying the distribution of power and formal responsibility.
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Question 24
Multicollinearity in the regression analysis is measured by:
1. ATolerance (1 - R²)
2. BHomoscedasticity
3. CPartial F-test
4. DDurbin-Whatson statistic
Answer: (A) Tolerance (1 - R²)
Explanation
Multicollinearity describes linear dependence among explanatory variables in multiple regression, commonly assessed using Tolerance and the Variance Inflation Factor.

Tolerance is calculated as 1 - Rj², where Rj² represents the coefficient of determination when predictor Xj is regressed on all remaining predictors. A lower tolerance indicates severe collinearity.

A. Tolerance (1 - R²) — correct. Directly measures collinearity among explanatory predictors.

B. Homoscedasticity — condition of constant variance in error terms, tested via Breusch-Pagan or White tests.

C. Partial F-test — tests the statistical contribution of adding a subset of predictors to a model.

D. Durbin-Whatson statistic — detects first-order autocorrelation in regression residuals.
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Question 25
Which one of the following distributions aptly describes the ownership of income and property in a capitalist economy?
1. ANormal distribution
2. BPoisson distribution
3. CF-distribution
4. DPareto distribution
Answer: (D) Pareto distribution
Explanation
Vilfredo Pareto developed the Pareto power-law distribution to describe empirical wealth and income concentration in economies, illustrating that a small fraction of owners hold the majority of wealth.

A. Normal distribution — bell-shaped symmetrical distribution typical of natural traits, inappropriate for highly skewed wealth distributions.

B. Poisson distribution — discrete distribution modeling rare independent events occurring across a fixed interval.

C. F-distribution — continuous distribution formed by the ratio of two independent chi-square variables, used for variance testing.

D. Pareto distribution — correct. Right-skewed heavy-tailed power law modeling income and property distributions.
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Question 26
The share capital of an RRB is subscribed by the Central Government, State Government and the Sponsoring Bank in which one of the following ratios?
1. A40:40:20
2. B50:15:35
3. C50:35:15
4. D60:30:10
Answer: (B) 50:15:35
Explanation
Under Section 6(2) of the Regional Rural Banks Act, 1976, the issued share capital of every Regional Rural Bank is subscribed in statutory proportions:

Central Government: 50%

State Government: 15%

Sponsoring Bank: 35%

This statutory ratio of 50:15:35 ensures central ownership, local state alignment, and operational mentorship by the commercial sponsor bank.
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Question 27
Which one of the following is used for international money transfer?
1. ARTGS
2. BNEFT
3. CSWIFT
4. DIMPS
Answer: (C) SWIFT
Explanation
SWIFT, the Society for Worldwide Interbank Financial Telecommunication, provides the secure global messaging network used by financial institutions worldwide to initiate international fund transfers.

A. RTGS — Real Time Gross Settlement handles large-value domestic interbank payments within India.

B. NEFT — National Electronic Funds Transfer is a nationwide batch-processed domestic electronic payment system in India.

C. SWIFT — correct. Operates the global standardized financial telecommunications protocol across borders.

D. IMPS — Immediate Payment Service is an instant 24x7 domestic retail interbank electronic fund transfer service managed by NPCI.
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Question 28
Pricing practice of setting a price target and then developing a product that would allow the firm to maximise total profit at that price is called:
1. APrice ceiling
2. BPrice matching
3. CPrice lining
4. DPricing power
Answer: (C) Price lining
Explanation
Price lining involves establishing predetermined price target points for a product line and engineering products to achieve targeted profits at each established price tier.

A. Price ceiling — a statutory maximum legal price set by government authorities.

B. Price matching — pricing strategy where a firm commits to match competitors' prices.

C. Price lining — correct. Selecting a price target point first and developing the product around that price point.

D. Pricing power — the capability of a firm to raise prices without substantially losing market demand.
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Question 29
Which one of the following pricing method is used in regulated industries?
1. AMark-up Pricing
2. BTarget-Rate-of-Return-Pricing
3. CEconomic-Value-to-Customer Pricing
4. DCompetitive Pricing
Answer: (B) Target-Rate-of-Return-Pricing
Explanation
Public regulatory authorities overseeing utilities such as power, telecom, and water apply target rate of return pricing to guarantee investors a fair return on invested capital while preventing monopoly exploitation.

A. Mark-up Pricing — traditional cost-plus method popular among retailers adding a standard percentage margin over unit costs.

B. Target-Rate-of-Return-Pricing — correct. Used by regulators to fix tariffs yielding a specified return on capital invested.

C. Economic-Value-to-Customer Pricing — value-based pricing linking price to customer cost savings and functional benefits.

D. Competitive Pricing — setting prices based on prevailing market rates, inapplicable in regulated natural monopolies.
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Question 30
Which one of the following categories of customers are opinion leaders who carefully search for new technologies that might give them a dramatic competitive advantage?
1. AEarly Adopters
2. BInnovators
3. CThe early majority
4. DThe late majority
Answer: (A) Early Adopters
Explanation
In diffusion theory, early adopters are visionary opinion leaders who actively seek breakthrough technologies to secure a substantial competitive edge.

A. Early Adopters — correct. Respected opinion leaders driven by dramatic competitive advantages.

B. Innovators — technology enthusiasts willing to experiment with unproven concepts despite high failure rates.

C. The early majority — pragmatic consumers adopting technology only after practical benefits are proven.

D. The late majority — skeptical conservatives adopting innovations only after they become universal industry standards.
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Question 31
Which one of the following is not coordinated in the Vertical Integration of Integrated Marketing Communications?
1. APricing
2. BSales
3. CProduct development
4. DCustomer service
Answer: (A) Pricing
Explanation
In Integrated Marketing Communications, vertical integration connects communication objectives with higher-level strategic missions, upstream product development, downstream sales forces, and ongoing customer service touchpoints.

Pricing belongs to horizontal integration, which coordinates elements across the marketing mix alongside packaging, promotion, and distribution.

A. Pricing — coordinated horizontally across marketing mix variables rather than vertically.

B. Sales — coordinated vertically to ensure frontline personnel deliver messages aligned with strategic objectives.

C. Product development — coordinated vertically to design product features matching communication promises.

D. Customer service — coordinated vertically to maintain post-purchase communication consistency.
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Question 32
Which one of the following is not a marketing tactic used for designing customer value?
1. AService
2. BCommunication
3. CBrand
4. DIncentives
Answer: (B) Communication
Explanation
In strategic marketing architecture, marketing tactics are categorized by their role in the value exchange:

Designing value: Product, Service, and Brand form the core value offering created for the target customer.

Communicating value: Communication informs, educates, and persuades the market regarding the value created.

Capturing and enhancing value: Price and Incentives monetize the offering and provide short-term purchase motivators.

Communication is utilized to convey and promote value rather than design the core offering itself.
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Question 33
Which one from among the following is not a generic strategy as per the generic strategies identified by Porter?
1. AMarket Penetration
2. BCost Leadership
3. CFocus
4. DDifferentiation
Answer: (A) Market Penetration
Explanation
Michael Porter defined three generic competitive strategies in strategic management: Cost Leadership, Differentiation, and Focus.

Market Penetration is a product-market growth vector in Igor Ansoff's Matrix, which focuses on expanding existing products into existing markets.

A. Market Penetration — an Ansoff growth strategy, not a Porter generic competitive strategy.

B. Cost Leadership — Porter's strategy of achieving lowest production and distribution costs industry-wide.

C. Focus — Porter's strategy of pursuing a narrow competitive scope with cost or differentiation advantage.

D. Differentiation — Porter's strategy of developing unique product attributes valued by customers.
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Question 34
Which is the single most important driver of innovation (Gerard. J. Tellis 2013) in a business firm?
1. ALabour
2. BCapital
3. CGovernment
4. DCulture
Answer: (D) Culture
Explanation
Gerard J. Tellis demonstrated through comprehensive cross-industry empirical research that an internal culture of innovation is the single most decisive driver of sustained breakthrough innovation.

While capital, labour, and public subsidies provide necessary infrastructure, a risk-tolerant culture that embraces creative destruction and empowers talent determines commercial success.

A. Labour — essential productive resource but incapable of driving radical innovation without supportive cultural incentives.

B. Capital — provides funding for research and development without guaranteeing innovative outcomes.

C. Government — provides public infrastructure and grants without driving internal firm-level innovation culture.

D. Culture — correct. Tellis identifies internal corporate culture as the paramount driver of commercial innovation.
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Question 35
Which one of the following rights is usually not available to a partner consequent to the dissolution of a firm?
1. ARight of equitable distribution of firm's property
2. BRight to return of premium on premature winding up
3. CRight to be consulted
4. DRight to restrain any partner or his representatives from the use of firm name or firm property
Answer: (C) Right to be consulted
Explanation
Under the Indian Partnership Act, 1932, dissolution terminates the ongoing business relationship between partners, restricting post-dissolution rights to liquidation, asset realization, and debt settlement.

The right to be consulted regarding ongoing business operations belongs to an active partner in a going concern, becoming obsolete once business operations cease upon dissolution.

A. Right of equitable distribution — provided under Section 46 to apply property toward firm liabilities and distribute surplus.

B. Right to return of premium — provided under Section 51 when a partnership formed for a fixed term dissolves prematurely.

C. Right to be consulted — not available post-dissolution. Operates only during ongoing business affairs.

D. Right to restrain misuse of firm name — provided under Section 53 to protect winding-up value.
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Question 36
Which one of the following duties is not a general duty of directors of a company?
1. ADuty of good faith in order to promote the object of the company
2. BDuty of due and reasonable care, skill and diligence and shall exercise independent judgment.
3. CDuty to attend Board Meetings
4. DDuty not to delegate or assign his office assignment.
Answer: (C) Duty to attend Board Meetings
Explanation
Section 166 of the Companies Act, 2013 codifies the general statutory duties of corporate directors.

While non-attendance at board meetings for twelve consecutive months can trigger vacation of office under Section 167(1)(b), attending every board meeting is an operational procedural requirement rather than one of the codified general duties in Section 166.

A. Duty of good faith — statutory duty under Section 166(2) to promote company objects for all stakeholders.

B. Duty of care, skill, and independent judgment — statutory duty under Section 166(3).

C. Duty to attend Board Meetings — not among the general statutory duties codified under Section 166.

D. Duty not to assign office — statutory duty under Section 166(6), which declares any assignment void.
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Question 37
A is entitled to children education allowance @ ₹ 80 p.m. per child, for three children, it amounts to ₹240 p.m. It will be exempted to the extent to which one of the following under the Indian Income Tax Act?
1. A₹200 p.m.
2. B₹160 p.m.
3. C₹240 p.m.
4. D₹300 p.m.
Answer: (B) ₹160 p.m.
Explanation
Under Section 10(14) read with Rule 2BB of the Income Tax Rules, Children Education Allowance is exempt up to ₹100 per month per child, subject to a statutory cap of two children.

The assessee receives ₹80 per month per child. Because the actual allowance of ₹80 is below the statutory ceiling of ₹100, the exemption is restricted to the actual allowance received for a maximum of two children:

Exempt amount = ₹80 * 2 children = ₹160 per month

The allowance received for the third child (₹80) is fully taxable.
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Question 38
Which one of the following represents empirical generalisations relating to GDP growth and changes in unemployment?
1. APhillips curve
2. BMisery index
3. CPareto distribution
4. DOkun's law
Answer: (D) Okun's law
Explanation
Arthur Okun observed an empirical macroeconomic relationship showing that each percentage point decline in unemployment corresponds to approximately two percentage points of output growth above potential GDP.

A. Phillips curve — examines the inverse empirical trade-off between inflation and unemployment.

B. Misery index — economic indicator summing the unemployment rate and the annual inflation rate.

C. Pareto distribution — statistical power law modeling skewed income and wealth distributions.

D. Okun's law — correct. Macroeconomic generalization relating output growth to changes in unemployment rates.
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Question 39
If the assessee is engaged in the business of growing and manufacturing tea in India, the agriculture income in that case shall be:
1. A25% of the income of such business
2. B40% of the income of such business
3. C60% of the income of such business
4. D75% of the income of such business
Answer: (C) 60% of the income of such business
Explanation
Rule 8 of the Income Tax Rules, 1962 governs the composite income derived from the cultivation and manufacture of tea in India.

The composite income is apportioned between exempt agricultural earnings and taxable business profits:

60% is deemed agricultural income and exempt from tax.

40% is treated as commercial business income and subject to regular tax assessment.
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Question 40
Amount unutilised in the capital gain scheme for which exemption was claimed under section 54 shall be treated as long-term capital in the previous year?
1. AIn which period of 2 years has expired from the date of deposit
2. BIn which period of 2 years has expired from the date of transfer
3. CIn which period of 3 years has expired from date of deposit
4. DIn which period of 3 years has expired from the date of transfer
Answer: (D) In which period of 3 years has expired from the date of transfer
Explanation
Under Section 54 of the Income Tax Act, a taxpayer claiming capital gains exemption on residential property must utilize deposited funds within three years from the date of transfer of the original asset.

If the deposited balance remains unutilized after three years have expired from the date of transfer, the unutilized sum is taxed as long-term capital gains in the previous year in which that three-year statutory window ends.
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Question 41
Currency depreciation in the Indian Rupee in recent times has largely been attributed to:

A. Declining domestic savings
B. Increasing FDI flows
C. Portfolio outflows
D. Higher currency circulation
E. Higher imports and debt servicing

Choose the correct answer from the options given below:
1. AA, B and C only
2. BB, C and D only
3. CA and D only
4. DC and E only
Answer: (D) C and E only
Explanation
Currency depreciation occurs when foreign exchange demand exceeds market supply, lowering the external purchasing power of the rupee.

A. Declining domestic savings — structural macroeconomic factor, not an immediate driver of foreign exchange volatility.

B. Increasing FDI flows — supplies foreign currency into India, which supports or appreciates the rupee.

C. Portfolio outflows — heavy institutional equity and debt liquidations raise dollar demand, driving rapid rupee depreciation.

D. Higher currency circulation — domestic monetary expansion that does not directly trigger exchange-rate depreciation.

E. Higher imports and debt servicing — elevated import bills and foreign debt repayment commitments intensify foreign currency outflows.
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Question 42
Which of the following factors restrain Globalization?

A. International economic integration
B. Nationalism
C. Emerging trade barriers
D. Regulatory controls
E. Move towards free marketing systems

Choose the correct answer from the options given below:
1. AA and E only
2. BC, D and E only
3. CB, C and D only
4. DA, B and D only
Answer: (C) B, C and D only
Explanation
Forces that restrain globalization restrict the cross-border movement of capital, goods, labour, and technology.

A. International economic integration — accelerates globalization by removing border frictions.

B. Nationalism — political emphasis on domestic protectionism that restricts cross-border trade.

C. Emerging trade barriers — tariff hikes, import quotas, and non-tariff regulations impede global merchandise flow.

D. Regulatory controls — foreign exchange restrictions and capital controls restrain international investments.

E. Move towards free marketing systems — market liberalization policy that promotes global economic integration.
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Question 43
The purpose (aim) of stock split is to

A. Increase the number of shares
B. Reduce market price per share
C. Arrest share price decline
D. Encourage wider public ownership
E. Reduce impact cost

Choose the correct answer from the options given below:
1. AA, B and C only
2. BB and D only
3. CB, C and E only
4. DA, D and E only
Answer: (B) B and D only
Explanation
A stock split subdivides a company's shares into multiple units without altering total equity capitalization.

The strategic aims are to lower the trading price per share into a popular retail range and expand the investor base:

A. Increase number of shares — mechanical arithmetic consequence of the division, not the underlying corporate objective.

B. Reduce market price per share — strategic objective that makes individual shares affordable to everyday retail investors.

C. Arrest share price decline — incorrect. Stock splits reduce per-share prices proportionately and cannot stop fundamental valuation drops.

D. Encourage wider public ownership — strategic objective that broadens distribution and enhances secondary market liquidity.

E. Reduce impact cost — trading execution outcome rather than the core corporate motivation.
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Question 44
The contribution margin can be increased by which of the following?

A. Increasing the selling price per unit
B. Changing the sales mixture and selling more profitable products for which the P/N ratio is higher
C. Keeping the marginal cost unchanged
D. Increase the amount of fixed assets
E. Decreasing the selling price per unit

Choose the correct answer from the options given below:
1. AB, C and E only
2. BA, C and D only
3. CA and B only
4. DD and E only
Answer: (C) A and B only
Explanation
Contribution margin equals sales revenue minus variable costs (Selling Price - Marginal Cost per unit).

A. Increasing the selling price per unit — widens the spread over variable cost, directly increasing contribution margin.

B. Changing the sales mixture towards higher P/V products — raises aggregate profitability and average contribution per sales unit.

C. Keeping marginal cost unchanged — neutral condition that preserves current margins rather than increasing them.

D. Increase fixed assets — fixed overhead investments do not affect the unit contribution margin calculation.

E. Decreasing selling price per unit — narrows the unit margin, reducing total contribution.
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Question 45
Which among the following information shall be disclosed for all public issues of shares irrespective of their issue price?

A. Earning per share
B. Dividend payout ratio
C. Pre-issue P/E ratio
D. Average return on net worth in last 3 years
E. Net asset value per share based on last balance sheet

Choose the correct answer from the options given below:
1. AA, B, D and E only
2. BA, C, D and E only
3. CB, C, D and E only
4. DA, B, C and D only
Answer: (B) A, C, D and E only
Explanation
SEBI Issue of Capital and Disclosure Requirements regulations mandate specific accounting ratios under the Basis for Issue Price section across all public issues:

Basic and diluted Earnings Per Share (A)

Pre-issue Price to Earnings ratio relative to issue price (C)

Average return on net worth across the prior three fiscal years (D)

Net asset value per share derived from the latest balance sheet (E)

Dividend payout ratios vary at board discretion and are omitted from the mandatory basis for issue price valuation formula.
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Question 46
Which of the following statements are true regarding price and output determination under perfect competition?

A. A firm is a price taker
B. In the long run, a firm is in equilibrium when its AR = MR = LAC = LMC
C. A firm is in equilibrium in the short run only when its AC = AR = MR = MC
D. A firm reaches its shut-down point when price goes below its AC
E. A firm fixes the price of its products when AR = MR

Choose the correct answer from the options given below:
1. AC and E only
2. BA and B only
3. CA, C and E only
4. DB, C and D only
Answer: (B) A and B only
Explanation
A competitive firm is an individual price taker that faces a perfectly elastic horizontal demand curve determined by market forces.

A. Firm is a price taker — true. Individual firms cannot influence prevailing market equilibrium price.

B. Long-run equilibrium — true. Free entry and exit drive normal profit equilibrium where Price = AR = MR = LAC = LMC at minimum LAC.

C. Short-run equilibrium condition — false. Short-run equilibrium requires MR = MC with rising MC, allowing supernormal profit or short-run loss.

D. Shut-down point — false. A firm halts production when price drops below Average Variable Cost, not Average Total Cost.

E. Setting product price — false. Competitive firms cannot fix prices.
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Question 47
Which of the following statements regarding the short-term theory of production and cost analysis are false?

A. Economic rent is the same as economic profit
B. Imputed cost is the rent of a hired building
C. When AC = MC, AC is minimum
D. When MC is rising, AC > MC
E. Output is optimum when AC = MC

Choose the correct answer from the options given below:
1. AA and E only
2. BB and D only
3. CA, B and C only
4. DC, D and E only
Answer: (B) B and D only
Explanation
Evaluate the short-term cost statements to identify the false assertions:

A. Economic rent and profit — distinct concepts, though both represent surplus earnings above transfer thresholds.

B. Imputed cost of hired building — false. Rent on a hired building is an explicit accounting cost, whereas imputed costs represent implicit opportunity costs of self-owned assets.

C. AC = MC at minimum AC — true. The marginal cost curve intersects the average cost curve at its lowest point.

D. When MC is rising, AC > MC — false. Once MC rises past the minimum point of AC, MC exceeds AC (MC > AC) while both continue upward.

E. Optimum output when AC = MC — true. Unit production costs are minimized where AC equals MC.
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Question 48
Which of the following statements regarding price and output determination under monopoly are correct?

A. A monopoly firm can fix its price anywhere along its demand curve
B. Even during short run when a monopoly firm earns normal profit, it produces less than its optimum capacity
C. The slope of monopoly's MR curve is twice the slope of its AR curve
D. Price discrimination is possible only when demand curves are identical in two markets
E. Equilibrium price of a monopolist is always higher than that of a perfectly competitive firm

Choose the correct answer from the options given below:
1. AA, D and E only
2. BA, B and E only
3. CB, C and D only
4. DB, C and E only
Answer: (D) B, C and E only
Explanation
Analyze price and output behavior for a profit-maximizing monopolist:

A. Fixing price anywhere on demand curve — incorrect. The firm is constrained by demand and chooses the price-output pair maximizing profits where MR = MC in the elastic segment.

B. Producing below optimum capacity — correct. Downward-sloping demand ensures equilibrium occurs where AC is still falling, yielding excess capacity.

C. Slope of MR relative to AR — correct. For a linear demand curve P = a - bQ, MR = a - 2bQ, so MR has twice the slope of AR.

D. Price discrimination condition — incorrect. Price discrimination requires differing price elasticities across sub-markets rather than identical curves.

E. Monopolist price compared to competition — correct. Monopolies produce less output and charge higher markups over marginal cost than competitive markets.
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Question 49
Which of the following are the components of Mc Kinsey's 7-S framework?

A. Shared values
B. Procurement
C. Strategy
D. Technology Development
E. System

Choose the correct answer from the options given below:
1. AA, C and E only
2. BB, C and E only
3. CA, B and E only
4. DB, D and E only
Answer: (A) A, C and E only
Explanation
The McKinsey 7-S model developed by Waterman, Peters, and Phillips specifies seven interdependent organizational dimensions:

Hard elements: Strategy, Structure, and Systems

Soft elements: Shared Values, Style, Staff, and Skills

Procurement and Technology Development are secondary support activities from Michael Porter's Value Chain framework rather than elements of McKinsey's 7-S model.
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Question 50
The MM hypothesis of the irrelevance of dividends is based on which of the following critical assumptions?

A. Investors are able to forecast future prices and dividends with certainty
B. The firm has a given investment policy which does not change
C. All financing is done through retained earnings
D. There are no taxes
E. Perfect capital markets in which all investors are rational

Choose the correct answer from the options given below:
1. AA, B and C only
2. BC, D and E only
3. CA, B, D and E only
4. DB, C, D and E only
Answer: (C) A, B, D and E only
Explanation
Modigliani and Miller's dividend irrelevance proposition relies on perfect market assumptions:

A. Perfect certainty — investors predict future security prices and distributions with certainty.

B. Given investment policy — firm investment outlays are fixed independently of dividend choices.

C. All financing via retained earnings — incorrect. That assumption belongs to Walter and Gordon's models. MM explicitly permits external equity issuance to fund investments.

D. Zero taxes — tax neutrality eliminates preferential rates on dividends versus capital gains.

E. Perfect capital markets — rational investors operate with zero transaction costs and symmetric information.
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Question 51
Which of the following are the properties of Binomial distribution?

A. May be symmetrical or skewed
B. Uni-modal, bell-shaped and symmetrical
C. Asymptotic to the x-axis
D. n and p are the two parameters
E. μ and σ are the two parameters

Choose the correct answer from the options given below:
1. AB and E only
2. BA and D only
3. CC and E only
4. DB, C and D only
Answer: (B) A and D only
Explanation
The Binomial distribution is a discrete probability distribution governed by sample size n and single-trial success probability p.

A. Symmetrical or skewed — true. Symmetrical when p = 0.5, positively skewed when p < 0.5, and negatively skewed when p > 0.5.

B. Bell-shaped and symmetrical — describes the continuous normal distribution.

C. Asymptotic to the x-axis — characteristic of continuous curves extending to infinity, such as the normal distribution.

D. n and p parameters — true. Completely specified by trial count n and Bernoulli probability p.

E. μ and σ parameters — true for the continuous normal distribution.
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Question 52
Which of the following are the parameters in the Financial Inclusion Index in India?

A. Affordability
B. Availability and usage
C. Ease of access
D. Transparency and disclosure
E. Quality of financial inclusion

Choose the correct answer from the options given below:
1. AA, B and C only
2. BC, D and E only
3. CA, B and D only
4. DB, C and E only
Answer: (D) B, C and E only
Explanation
The Reserve Bank of India Financial Inclusion Index tracks financial deepening across three weighted dimensions:

Access (35% weight) captures banking touchpoints and ease of physical and digital onboarding (C).

Usage (45% weight) captures the volume, frequency, and active utilization of formal deposit, credit, and remittance services (B).

Quality (20% weight) captures consumer protection, grievance redressal, and financial literacy (E).

Affordability and Transparency are sub-metrics rather than primary index dimensions.
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Question 53
Which of the following forces push up the productivity of employees in an organisation?

A. Difficulty of work
B. Fear of working self out of job
C. Egoistic drive to accomplish
D. Desire for promotion
E. Motive towards doing work

Choose the correct answer from the options given below:
1. AA and B only
2. BB, C and D only
3. CA, D and E only
4. DC, D and E only
Answer: (D) C, D and E only
Explanation
Productivity-enhancing drivers represent positive motivational forces that encourage discretionary work effort:

A. Difficulty of work — creates fatigue and cognitive strain that depresses efficiency.

B. Fear of working out of job — classic cause of deliberate output restriction and systematic soldiering.

C. Egoistic drive to accomplish — intrinsic achievement motivation that elevates individual output.

D. Desire for promotion — career incentive that drives sustained performance.

E. Motive towards doing work — engagement and job involvement that enhance daily task productivity.
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Question 54
According to the Contingency Approach, the factors governing the Span of Management are:

A. Type of work
B. Ability of the manager
C. Ability of the employees
D. Level of management
E. Geographic location

Choose the correct answer from the options given below:
1. AB and C only
2. BB, C and D only
3. CA, D and E only
4. DA, B, C, D and E
Answer: (D) A, B, C, D and E
Explanation
The contingency model of organizing maintains that optimal supervisory span depends on situational variables:

A. Type of work — routine standardized jobs permit wider spans than complex interdependent tasks.

B. Ability of manager — superior leadership and communication skills support larger spans.

C. Ability of employees — highly trained, self-directed subordinates reduce supervisory burden.

D. Level of management — executive levels require narrow spans due to strategic unstructured decisions.

E. Geographic location — dispersed teams necessitate narrower spans than co-located teams.
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Question 55
RBI financial inclusion index (FI - Index) quality parameter captures information on which of the following:

A. Financial literacy
B. Consumer protection
C. Ease of access
D. Availability and usage
E. Inequality and deficiency in service

Choose the correct answer from the options given below:
1. AA, B and C only
2. BC, D and E only
3. CA, D and E only
4. DA, B and E only
Answer: (D) A, B and E only
Explanation
The Quality dimension of the RBI Financial Inclusion Index reflects the experiential and protective value delivered to end users:

Financial literacy (A) tracks financial education and awareness programs.

Consumer protection (B) assesses dispute resolution and grievance redressal systems.

Inequality and deficiency in services (E) evaluates service gaps, transaction failures, and geographical disparities.

Ease of access is captured under the Access dimension, while availability and usage belong to the Usage dimension.
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Question 56
Properties of a good point estimator includes which of the following?

A. Stationarity
B. Efficiency
C. Consistency
D. Neutrality
E. Unbiasedness

Choose the correct answer from the options given below:
1. AA, B and C only
2. BC, D and E only
3. CA, D and E only
4. DB, C and E only
Answer: (D) B, C and E only
Explanation
Statistical estimation theory establishes four classical criteria for evaluating point estimators:

Efficiency (B) requires an estimator to have minimal sampling variance among comparable estimators.

Consistency (C) ensures the estimator converges stochastically to the true parameter as sample size increases.

Unbiasedness (E) requires the mathematical expectation of the estimator to equal the true population parameter.

Sufficiency requires the estimator to utilize all information contained in the sample.

Stationarity applies to stochastic time series, while neutrality is an unrelated economic concept.
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Question 57
Which of the following are the essential elements for defining a business?

A. Dealers
B. Products
C. Markets
D. Competitors
E. Functions

Choose the correct answer from the options given below:
1. AB, C and E only
2. BA, B and E only
3. CB, C and D only
4. DB and D only
Answer: (A) B, C and E only
Explanation
Derek Abell's three-dimensional business definition framework identifies the core pillars for establishing business scope:

Customer groups or target markets served (Markets, C)

Customer needs and activities performed for customers (Functions, E)

Alternative product technologies employed to satisfy those needs (Products, B)

Dealers and competitors represent external intermediaries and competitive forces rather than definitional components of business scope.
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Question 58
On which of the following bases buyers are divided in psychographic segmentation?

A. Loyalty status
B. Life style
C. Buyer-readiness stage
D. Values
E. User status

Choose the correct answer from the options given below:
1. AB and D only
2. BA, B and D only
3. CB, C and E only
4. DA, C, D and E only
Answer: (A) B and D only
Explanation
Psychographic segmentation segments markets according to psychological traits, lifestyle choices, and personal values:

Lifestyle (B) categorizes consumers by interests, activities, and daily social patterns.

Values (D) groups buyers according to core belief systems and moral principles.

Loyalty status (A), buyer-readiness stage (C), and user status (E) represent behavioural segmentation variables linked to purchase actions and brand interaction.
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Question 59
Which of the following issues are covered in Social Marketing?

A. Tobacco
B. Family planning
C. Public health
D. Financial well-being
E. Social good

Choose the correct answer from the options given below:
1. AA and B only
2. BA, B and C only
3. CC, D and E only
4. DA, B, C, D and E
Answer: (D) A, B, C, D and E
Explanation
Social marketing adapts commercial marketing concepts to induce voluntary behavioral change for collective societal welfare:

Anti-tobacco and substance abuse reduction programs (A)

Family planning and reproductive health campaigns (B)

Sanitation, hygiene, and public immunization initiatives (C)

Financial well-being, savings awareness, and debt management education (D)

Overarching civic welfare, environmental preservation, and social good initiatives (E)

All five areas represent established domains of social marketing practice.
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Question 60
Out of the following statements, which are not true in respect of a Limited Liability Partnership?

A. There must be at least one 'Designated member' at all times.
B. Designated members do not have the same rights and duties as any other member.
C. There is no specific requirement to have any non-designated members.
D. A Limited Liability Partnership may be established such that all members are considered to be designated members

Choose the correct answer from the options given below:
1. AA, C and D only
2. BA and B only
3. CB and D only
4. DB, C and D only
Answer: (B) A and B only
Explanation
Identify the inaccurate assertions concerning Limited Liability Partnerships:

A. One designated member required — not true. Section 7(1) of the Limited Liability Partnership Act mandates a minimum of two designated partners at all times.

B. Rights and duties distinct from members — not true. Designated partners hold the same general partnership rights and commercial duties as ordinary members, carrying added administrative filing responsibilities.

C. No requirement for non-designated members — true. An LLP can operate with solely designated members without appointing ordinary members.

D. All members can be designated — true. An LLP incorporation document may specify that all partners are designated members.
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Question 61
Which of the following companies cannot be a 'Small Company?

A. A holding company or a subsidiary company
B. A company registered under Section 8
C. A company or body corporate governed by any Special Act
D. One Person Company (OPC)

Choose the correct answer from the options given below:
1. AB and C only
2. BA, B and C only
3. CB, C and D only
4. DA and D only
Answer: (B) A, B and C only
Explanation
Section 2(85) of the Companies Act, 2013 sets turnover and capital limits for small companies while explicitly excluding certain corporate forms:

Holding companies and subsidiary companies (A)

Non-profit charitable companies incorporated under Section 8 (B)

Entities and statutory corporations governed by special Acts of Parliament (C)

A One Person Company (OPC) is a private limited company that can qualify for small company privileges when adhering to prescribed thresholds.
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Question 62
Who are not eligible to get information under the RTI Act from the following?

A. Corporations
B. Associations
C. Companies
D. Citizens
E. Legal entities

Choose the correct answer from the options given below:
1. AA, B, D and E only
2. BA, B, C and E only
3. CB and D only
4. DA, D and E only
Answer: (B) A, B, C and E only
Explanation
Section 3 of the Right to Information Act, 2005 establishes that the right to information belongs exclusively to Indian citizens.

Corporate bodies, incorporated companies, trade associations, and artificial legal persons are juristic entities rather than natural citizens, making them ineligible to seek information in a corporate capacity.

Corporations (A), Associations (B), Companies (C), and Legal entities (E) cannot file RTI requests.

Natural citizens of India (D) hold the statutory right to request and receive public records.
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Question 63
Which of the following cannot use ITR-1 form to file return under the Indian Income Tax Act?

A. An individual who is a director in a company.
B. An individual who has any asset located outside India.
C. An individual whose total income does not exceed Rs. 50,00,000
D. An individual who has income from any source outside India
E. An individual who has any unlisted equity shares at any time during the previous year

Choose the correct answer from the options given below:
1. AA, B, C and D only
2. BA, B, D and E only
3. CA, C and E only
4. DB, C and E only
Answer: (B) A, B, D and E only
Explanation
ITR-1 (Sahaj) is restricted to resident individuals with income up to Rs. 50 lakhs derived from salaries, one house property, and other sources.

Taxpayers are disqualified from filing ITR-1 if they meet any statutory exclusion:

Serving as a company director (A)

Holding assets located outside India or signing authority in foreign accounts (B)

Earning income from any foreign source (D)

Holding unlisted equity shares during the previous tax year (E)

Earning total income up to Rs. 50 lakhs (C) is a qualifying criterion rather than a disqualifying ground.
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Question 64
Which of the following are included in Salary as per Section 17(1) of the Income Tax Act?

A. Wages
B. Any pension or annuity
C. Any interest from Government securities
D. Any gratuity
E. Any advance of salary

Choose the correct answer from the options given below:
1. AA, B, C and D only
2. BA, B, C, D and E
3. CA, B, D and E only
4. DC and E only
Answer: (C) A, B, D and E only
Explanation
Section 17(1) of the Income Tax Act defines salary inclusively to encompass employment-related remuneration:

Wages earned under an employment contract (A)

Any pension or annuity paid by a current or past employer (B)

Gratuity payments received on service retirement or termination (D)

Advance salary payments drawn prior to accrual (E)

Interest on Government securities (C) constitutes investment income taxable under Income from Other Sources or Business Income rather than Salaries.
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Question 65
Which of the following are correctly needed to claim exemptions in respect of HRA?

A. Salary
B. Place of residence
C. Standard rent
D. Rent paid
E. HRA received

Choose the correct answer from the options given below:
1. AB, C, D and E only
2. BA, C, D and E only
3. CA, B, D and E only
4. DA, B and C only
Answer: (C) A, B, D and E only
Explanation
Under Section 10(13A) read with Rule 2A, the House Rent Allowance tax exemption equals the least of three calculations:

Actual HRA received from employer (E)

Rent paid minus 10% of defined salary (D and A)

50% of salary for metro locations or 40% for non-metro towns (determined by Place of residence, B)

Standard rent applies exclusively to calculating Annual Value of property under Income from House Property rather than HRA salary exemptions.
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Question 66

Match List I with List II.

List I (Tariff/Subsidy)	List II (Explanation)
A. Tariffication	I. They have demonstrably adverse effects on other member countries.
B. Prohibited subsidies	II. They act on goods which are contingent upon export performance.
C. Actionable subsidies	III. Replacement of existing non-tariff restrictions.
D. Non-actionable subsidies	IV. For industrial research in disadvantaged regions.

AA-II, B-III, C-I, D-IV
BA-IV, B-I, C-II, D-III
CA-III, B-II, C-I, D-IV
DA-II, B-IV, C-III, D-I

Answer: (C) A-III, B-II, C-I, D-IV

Explanation

Match WTO trade concepts with their definitions under the Agreement on Subsidies and Countervailing Measures:

A-III, B-II, C-I, D-IV

A. Tariffication — converts quantitative restrictions into equivalent border tariffs (III).
B. Prohibited subsidies — red-box subsidies conditioned upon export performance or domestic input mandates (II).
C. Actionable subsidies — amber-box subsidies permitted unless they cause proven adverse injury to another member (I).
D. Non-actionable subsidies — green-box subsidies for basic industrial research and regional development (IV).

Question 67

Match List I with List II.

List I (Type of Costing)	List II (Description)
A. Marginal Costing	I. Integrated approach to determine product features, product price, product costs and product design that helps ensure a company to earn reasonable profit on new products.
B. ABC Costing	II. The amount of any given volume of output by which the aggregate costs are changed if the volume of output is increased by one unit.
C. Target Costing	III. Used when identical units are produced through an on-going series of production steps.
D. Process Costing	IV. Costing system in which costs being with tracing of activities and then to producing the product.

AA-II, B-IV, C-I, D-III
BA-I, B-IV, C-III, D-II
CA-II, B-III, C-IV, D-I
DA-I, B-III, C-II, D-IV

Answer: (A) A-II, B-IV, C-I, D-III

Explanation

Match management accounting systems with their operational definitions:

A-II, B-IV, C-I, D-III

A. Marginal Costing — measures incremental change in aggregate cost when output increases by one unit (II).
B. ABC Costing — traces overheads first to cost pools and activities before allocating to final products (IV).
C. Target Costing — works backward from market price to engineer design and features ensuring target margin (I).
D. Process Costing — averages manufacturing costs across continuous mass production of identical units (III).

Question 68

Match List I with List II.

List I (Objectives of business firms)	List II (Suggested by)
A. Sales Revenue maximization	I. K.W. Rothschild
B. Maximization of Firm's growth rate	II. Cyert and March
C. Long-term survival	III. W.J. Baumol
D. Satisfying behaviour	IV. Robin Marris

AA-III, B-IV, C-I, D-II
BA-IV, B-III, C-II, D-I
CA-II, B-I, C-IV, D-III
DA-I, B-II, C-III, D-IV

Answer: (A) A-III, B-IV, C-I, D-II

Explanation

Match managerial and behavioral business theories with their formulating economists:

A-III, B-IV, C-I, D-II

A. Sales Revenue maximization — William Baumol formulated revenue maximization subject to minimum profit constraints (III).
B. Maximization of Firm's growth rate — Robin Marris developed dynamic growth maximization balancing managerial security (IV).
C. Long-term survival — K. W. Rothschild stressed firm security and long-run survival motives under oligopoly (I).
D. Satisfying behaviour — Richard Cyert and James March formalized behavioral satisficing and coalition bargaining (II).

Question 69

Match List I with List II.

List I (Economic framework)	List II (Description)
A. Stackelberg model	I. The situation in which each player in an oligopolistic markets adopts its dominant strategy but could do by cooperating
B. Nash equilibrium	II. Conceptualisation for identifying the structural determinants of the intensity of competition and the probability of firms in oligopolistic industries
C. Peter's strategic framework	III. If firms are disproportionately powerful the market leader makes the first move and captures two thirds of market share, while follower firm gets only a third of the market share
D. Prisoner's delima	IV. A situation in which each player has chosen his/her optional strategy given the strategy chosen by the other player

AA-II, B-IV, C-I, D-III
BA-III, B-IV, C-II, D-I
CA-III, B-I, C-IV, D-II
DA-II, B-III, C-I, D-IV

Answer: (B) A-III, B-IV, C-II, D-I

Explanation

Match strategic economic frameworks with their descriptive characteristics:

A-III, B-IV, C-II, D-I

A. Stackelberg model — sequential market leadership where the first mover captures two-thirds of the duopoly market (III).
B. Nash equilibrium — non-cooperative game outcome where each player chooses an optimal response given rival choices (IV).
C. Peter's strategic framework — structural industry analysis evaluating competitive intensity and firm profitability (II).
D. Prisoner's delima — classic dilemma where pursuit of individual dominant strategies yields suboptimal non-cooperative outcomes (I).

Question 70

Match List I with List II.

List I (Formula for test statistic)	List II (Test)
A. Σ (O-E)² / E	I. Z-test
B. [12 / n(n+1)] Σ(Rf²/nf) - 3(n+1)	II. H-test (Kruskal-Wallis test)
C. (X̄-μ) / SE	III. F-test (ANOVA)
D. SS between / SS within	IV. Chi-square test

AA-I, B-II, C-III, D-IV
BA-III, B-IV, C-II, D-I
CA-IV, B-II, C-I, D-III
DA-IV, B-II, C-III, D-I

Answer: (C) A-IV, B-II, C-I, D-III

Explanation

Match statistical test formulas with their corresponding hypothesis tests:

A-IV, B-II, C-I, D-III

A. Σ (O-E)² / E — Pearson Chi-square test of goodness of fit and independence (IV).
B. [12 / n(n+1)] Σ(Rf²/nf) - 3(n+1) — Kruskal-Wallis H-test for comparing multiple independent ranked samples (II).
C. (X̄ - μ) / SE — standard score for normal distribution tests of means (Z-test) (I).
D. SS between / SS within — variance ratio used in Analysis of Variance (F-test) (III).

Question 71

Match List I with List II.

List I (MBTI Framework - Jungian Aspects)	List II (Characteristics)
A. Sensing	I. Relies more on personal values than on impersonal analysis and logic
B. Thinking	II. Would work with known facts than look for possibilities and relationships
C. Feeling	III. Likes a flexible, spontaneous way rather than a planned and orderly way of life
D. Perceiving	IV. Relies more on interpersonal analysis and logic than on personal values

AA-II, B-I, C-IV, D-III
BA-II, B-IV, C-I, D-III
CA-III, B-IV, C-I, D-II
DA-II, B-I, C-III, D-IV

Answer: (B) A-II, B-IV, C-I, D-III

Explanation

Match Myers-Briggs personality dimensions with their behavioral characteristics:

A-II, B-IV, C-I, D-III

A. Sensing — focuses on concrete reality, present details, and known facts (II).
B. Thinking — evaluates information using objective logic and analytical principles (IV).
C. Feeling — bases judgments on human relationships, empathy, and personal core values (I).
D. Perceiving — prefers an open, spontaneous, and adaptable lifestyle approach (III).

Question 72

Match List I with List II.

List I (Entrepreneurial Theory)	List II (Description)
A. Thomas Cochran's Theory	I. Highlight the self-confidence of a person and the dependency on fortune and external environment for becoming an entrepreneur
B. Rotter's Locus of Control Theory	II. Religious beliefs are the driving or restraining forces for entrepreneurial activity
C. McLelland's Theory	III. The environment in which an individual is brought up determines his entrepreneurial urge
D. Max Webber's Theory	IV. The need for achievement (nAch) drives and stimulate entrepreneurship

AA-III, B-I, C-IV, D-II
BA-II, B-III, C-IV, D-I
CA-I, B-IV, C-II, D-III
DA-II, B-I, C-III, D-IV

Answer: (A) A-III, B-I, C-IV, D-II

Explanation

Match classic entrepreneurship theories with their explanatory premises:

A-III, B-I, C-IV, D-II

A. Thomas Cochran's Theory — cultural and social developmental environment shapes entrepreneurial supply (III).
B. Rotter's Locus of Control Theory — highlights personal self-confidence versus perceived reliance on external chance (I).
C. McLelland's Theory — high Need for Achievement (nAch) serves as the primary psychological spark (IV).
D. Max Webber's Theory — ethical and religious belief systems drive or restrain entrepreneurial initiative (II).

Question 73

Match List I with List II.

List I (PLC Stage)	List II (Pricing Strategy)
A. Decline	I. Price to match or beat competitors price
B. Maturity	II. Charge cost-plus price
C. Growth	III. Price reduction
D. Introduction	IV. Price to penetrate market

AA-III, B-IV, C-I, D-II
BA-III, B-II, C-I, D-IV
CA-III, B-I, C-IV, D-II
DA-II, B-I, C-III, D-IV

Answer: (C) A-III, B-I, C-IV, D-II

Explanation

Match stages of the Product Life Cycle with Kotler's strategic pricing tactics:

A-III, B-I, C-IV, D-II

A. Decline — cut prices to liquidate inventory and protect margin on diminishing sales (III).
B. Maturity — match or undercut competitor pricing to defend established market share (I).
C. Growth — set aggressive market-penetration prices to capture expanding customer volume (IV).
D. Introduction — establish cost-plus pricing to recover initial development outlays (II).

Question 74

Match List I with List II.

List I (Characterstic Business)	List II (Desription)
A. Cash Cows	I. The most valuable segments of a company; the parts most wanted by an acquirer
B. Crown Jewels	II. A third party friendly to management who helps a company avoid an unwanted takeover with taking over the company on its own
C. Fallen Angels	III. A BCG term for business segment which have a high market share in low growth markets
D. White Squire	IV. A bond issued at investment grade whose rating is subsequently dropped to below the investment grade

AA-II, B-IV, C-I, D-III
BA-I, B-IV, C-III, D-II
CA-IV, B-III, C-II, D-I
DA-III, B-I, C-IV, D-II

Answer: (D) A-III, B-I, C-IV, D-II

Explanation

Match corporate finance and strategic terms with their definitions:

A-III, B-I, C-IV, D-II

A. Cash Cows — BCG matrix units generating steady surplus cash with high market share in low-growth sectors (III).
B. Crown Jewels — the most profitable or strategically desirable business segments targeted by hostile acquirers (I).
C. Fallen Angels — corporate debt originally issued as investment grade that suffers downgrade to junk status (IV).
D. White Squire — friendly investor purchasing a strategic minority stake to deter a hostile takeover (II).

Question 75

Match List I with List II.

List I (Marketing Concept)	List II (Description)
A. Brand Equity	I. The maximum possible demand for a product when marketing expenditure in the industry is infinite
B. Brand Identity	II. The mental perception and associations of consumers related to a brand
C. Brand Image	III. The peculiar distinguishing color, design, label of a brand which distinguish brand of a firm
D. Market Potential	IV. A pool of goodwill consumers have related to a brand

AA-IV, B-III, C-II, D-I
BA-I, B-II, C-IV, D-III
CA-III, B-I, C-IV, D-II
DA-II, B-III, C-I, D-IV

Answer: (A) A-IV, B-III, C-II, D-I

Explanation

Match brand and market concepts with their definitions:

A-IV, B-III, C-II, D-I

A. Brand Equity — commercial value derived from consumer goodwill, brand awareness, and loyalty (IV).
B. Brand Identity — visual and communicative elements crafted by the firm to identify and distinguish its product (III).
C. Brand Image — customer perceptions and associations formed in consumer memory (II).
D. Market Potential — upper limit of industry demand under infinite marketing expenditure (I).

Question 76
Arrange the procedure followed for disbursement of export credit in a sequence from the first to the last:

A. The bank releases the funds debiting to the packing credit amount and credit to the exporter's account
B. The bank calculates the amount of packing credit to be granted
C. The exporter would be required to send the goods through approved transport and forwarding agency
D. The exporter is required to take adequate insurance
E. Submit an evidence of export

Choose the correct answer from the options given below:
1. AB, A, E, D, C
2. BA, C, B, D, E
3. CA, B, C, D, E
4. DE, B, A, C, D
Answer: (D) E, B, A, C, D
Explanation
Order the stages of pre-shipment packing credit disbursement chronologically:

E, B, A, C, D

1. Submit evidence of export (E) — the exporter submits an export order or confirmed irrevocable letter of credit to establish eligibility.

2. Calculate packing credit amount (B) — the financing bank evaluates order value and calculates permissible borrowing limits based on FOB value.

3. Release of funds (A) — the bank sanctions loan funds, debiting the packing credit account and crediting the exporter's operational account.

4. Despatch through approved transport (C) — goods are manufactured and consigned through authorized shipping agents.

5. Obtain insurance coverage (D) — marine and transit insurance is secured to safeguard cargo value.
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Question 77
Arrange the following steps in a logical sequence of the process of management audit:

A. Identification of responsibility centres
B. Review of organisational structure
C. Reporting
D. Identifying and segregating the objectives of business
E. Review of performance of each responsibility centre

Choose the correct answer from the options given below:
1. AA, D, E, C, B
2. BA, E, D, B, C
3. CA, B, E, D, C
4. DD, B, A, E, C
Answer: (D) D, B, A, E, C
Explanation
Arrange the management audit workflow in proper managerial sequence:

D, B, A, E, C

1. Identify business objectives (D) — ascertain corporate mission, strategic goals, and executive targets.

2. Review organisational structure (B) — examine lines of authority, division of labor, and reporting channels.

3. Identify responsibility centres (A) — map distinct cost, revenue, profit, and investment centers.

4. Review centre performance (E) — appraise operational and financial accomplishments against planned targets.

5. Reporting (C) — compile audit findings and submit recommendations to the Board of Directors.
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Question 78

Match List I with List II.

List I (Statistical identity)	List II (Description)
A. Power of test	I. Maximum level of significance at which the null hypothesis would be accepted
B. Standard error	II. Test for significance of regression equation
C. P-value	III. Standard deviation of an estimate from a sample
D. F-test	IV. The probability that test will lead to rejection of null hypothesis when it is false

AA-III, B-II, C-IV, D-I
BA-IV, B-III, C-I, D-II
CA-II, B-IV, C-I, D-III
DA-I, B-IV, C-II, D-III

Answer: (B) A-IV, B-III, C-I, D-II

Explanation

Match core statistical testing concepts with their technical definitions:

A-IV, B-III, C-I, D-II

A. Power of test — probability of rejecting a false null hypothesis, represented as 1 - β (IV).
B. Standard error — standard deviation of a sample statistic's sampling distribution (III).
C. P-value — lowest significance level at which the null hypothesis would be rejected (I).
D. F-test — tests the overall explanatory significance of multiple regression equations (II).

Question 79
Arrange the following steps in the design thinking process for an innovative solution to a problem:

A. Ideate
B. Test
C. Empathize
D. Define
E. Prototype

Choose the correct answer from the options given below:
1. AA, D, C, B, E
2. BB, C, A, D, E
3. CC, D, A, E, B
4. DC, B, A, E, D
Answer: (C) C, D, A, E, B
Explanation
Follow the standard five-phase Stanford d.school design thinking methodology:

C, D, A, E, B

1. Empathize (C) — research and observe user needs, emotional context, and latent challenges.

2. Define (D) — synthesize insights to construct a clear, human-centered problem statement.

3. Ideate (A) — brainstorm a broad range of creative potential solutions.

4. Prototype (E) — develop tangible, scaled-down physical or digital models.

5. Test (B) — validate prototypes through user interaction and iterative feedback.
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Question 80
What is the correct sequence in "Hierarchy of Effects" model in a communication situation:

A. Preference
B. Purchase
C. Awareness and Knowledge
D. Conviction
E. Liking

Choose the correct answer from the options given below:
1. AA, D, B, C, E
2. BD, B, E, C, A
3. CB, A, D, C, E
4. DC, E, A, D, B
Answer: (D) C, E, A, D, B
Explanation
Robert Lavidge and Gary Steiner's Hierarchy of Effects model tracks customer decision steps through cognitive, affective, and conative stages:

C, E, A, D, B

1. Awareness and Knowledge (C) — cognitive phase where the buyer learns about the brand and product features.

2. Liking (E) — affective phase where the buyer develops positive emotional sentiment.

3. Preference (A) — affective evaluation where the buyer rates the brand above rival options.

4. Conviction (D) — affective certainty where preference transforms into strong purchase intent.

5. Purchase (B) — conative behavioral commitment resulting in transaction execution.
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Question 81
Logically sequence the following stages in the organisational life cycle of a business firm:

A. Expansion
B. Survival
C. Consolidation
D. Start-up
E. Decline

Choose the correct answer from the options given below:
1. AD, A, C, B, E
2. BB, C, A, D, E
3. CD, B, C, A, E
4. DD, B, A, C, E
Answer: (D) D, B, A, C, E
Explanation
Arrange corporate developmental progression through its classic evolutionary phases:

D, B, A, C, E

1. Start-up (D) — firm creation, initial capital outlay, and market entry.

2. Survival (B) — establishing positive operating cash flow and proving basic commercial viability.

3. Expansion (A) — rapid customer acquisition, capacity scaling, and revenue growth.

4. Consolidation (C) — managerial formalization, organizational maturity, and market share defense.

5. Decline (E) — stagnation, loss of competitive edge, or liquidation.
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Question 82
Arrange the following ratios in the increasing order of their significance in the prediction of industrial sickness (Altman, 1966):

A. Working capital / Total Assets
B. Retained Earnings / Total Assets
C. Earnings Before Interest and Taxes / Total Assets
D. Market Value of Equity / Book Value of Total Debt
E. Sales / Total Assets

Choose the correct answer from the options given below:
1. AD, E, A, B, C
2. BC, E, B, D, A
3. CB, D, C, A, E
4. DE, B, D, C, A
Answer: (A) D, E, A, B, C
Explanation
Edward Altman's original multiple discriminant analysis Z-score model weights five financial ratios according to statistical predictive power:

Z = 1.2 * X1 + 1.4 * X2 + 3.3 * X3 + 0.6 * X4 + 0.999 * X5

Identify the discriminant coefficient for each ratio:

D. Market Value of Equity / Book Value of Debt (X4): coefficient = 0.6

E. Sales / Total Assets (X5): coefficient = 0.999

A. Working capital / Total Assets (X1): coefficient = 1.2

B. Retained Earnings / Total Assets (X2): coefficient = 1.4

C. EBIT / Total Assets (X3): coefficient = 3.3

Arranged in ascending order of coefficient weight:
D, E, A, B, C
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Question 83
Arrange the following stages in the marketing process of an enterprise:

A. Marketing Mix
B. Marketing program implementation
C. Marketing planning
D. Market research
E. Control and evaluation of marketing programs

Choose the correct answer from the options given below:
1. AD, C, A, B, E
2. BC, B, A, E, D
3. CB, A, D, C, E
4. DC, A, D, B, E
Answer: (A) D, C, A, B, E
Explanation
Order the phases of the strategic marketing management process from start to finish:

D, C, A, B, E

1. Market research (D) — assess market trends, competitor positioning, and customer demand profiles.

2. Marketing planning (C) — establish segmentation, targeting, positioning, and quantitative marketing goals.

3. Marketing Mix (A) — design the integrated 4Ps product, price, place, and promotion strategy.

4. Marketing program implementation (B) — execute marketing campaigns and deploy commercial field budgets.

5. Control and evaluation (E) — track KPIs, assess sales variance, and implement corrective measures.
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Question 84
Arrange the following process of making of a contract in the chronological sequence from the first to the last:

A. Agreement
B. Promise
C. Offer or proposal
D. Contract
E. Acceptance

Choose the correct answer from the options given below:
1. AC, E, B, A, D
2. BA, D, E, C, B
3. CB, D, C, A, E
4. DE, B, A, C, D
Answer: (A) C, E, B, A, D
Explanation
Section 2 of the Indian Contract Act, 1872 outlines the legal formation of an enforceable contract:

C, E, B, A, D

1. Offer or proposal (Section 2a) (C) — one party signifies willingness to do or abstain from doing something.

2. Acceptance (Section 2b) (E) — the offeree signifies assent to the proposal.

3. Promise (Section 2b) (B) — an accepted proposal matures into a legally binding promise.

4. Agreement (Section 2e) (A) — promises accompanied by lawful reciprocal consideration form an agreement.

5. Contract (Section 2h) (D) — an agreement enforceable by law becomes a contract.
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Question 85
Sequence the procedure for e-filing of ITR-1 and ITR-2:

A. Login
B. Register
C. Verification
D. Downloading utility and preparing the Return
E. e-Filing Income Tax Return

Choose the correct answer from the options given below:
1. AA, B, E, D, C
2. BB, A, D, E, C
3. CB, A, C, D, E
4. DA, B, C, D, E
Answer: (B) B, A, D, E, C
Explanation
Sequence the taxpayer compliance procedure for electronic return submission:

B, A, D, E, C

1. Register (B) — create an account on the e-filing portal using taxpayer PAN.

2. Login (A) — authenticate via registered credentials, PAN, and secure password.

3. Download utility and prepare return (D) — input income details into the statutory offline JSON/Excel utility.

4. e-Filing Income Tax Return (E) — upload the completed return file to the tax department server.

5. Verification (C) — complete legal verification via Aadhaar OTP, net banking, or physical ITR-V submission.
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Question 86
Assertion (A): An export processing zone is different from free trade zone as it promotes units primarily devoted to exports.

Reason (R): Goods imported to a free trade zone may be re-exported without any processing, in the same form. But goods exported by units in an EPZ are expected to have undergone some value addition by manufacturing.

In light of the above statements, choose the most appropriate answer from the options given below:
1. ABoth A and R are correct and R is the correct explanation of A
2. BBoth A and R are correct but R is NOT the correct explanation of A
3. CA is correct but R is not correct
4. DA is not correct but R is correct
Answer: (A) Both A and R are correct and R is the correct explanation of A
Explanation
Evaluate the functional distinction between Export Processing Zones and Free Trade Zones:

Assertion (A) is correct. EPZs are specialized industrial enclaves developed to attract export-oriented manufacturing operations.

Reason (R) is correct. In Free Trade Zones, goods undergo warehousing, repacking, and re-export without mandatory physical transformation, whereas EPZs require domestic manufacturing and value addition prior to outbound shipment.

Because differing manufacturing value-addition requirements explain why EPZs focus exclusively on productive export units, Reason (R) correctly explains Assertion (A).
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Question 87
Assertion (A): By switching to long-term government bonds, the investor acquires an asset whose price fluctuates as interest rates vary.

Reason (R): Bond prices fall when interest rates rise and rise when interest rates fall.

In light of the above statements, choose the correct answer from the options given below:
1. ABoth A and R are true and R is the correct explanation of A
2. BBoth A and R are true but R is NOT the correct explanation of A
3. CA is true but R is false
4. DA is false but R is true
Answer: (A) Both A and R are true and R is the correct explanation of A
Explanation
Fixed-income securities exhibit interest rate sensitivity directly linked to bond maturity and duration:

Assertion (A) is true. Long-term sovereign bonds carry substantial duration, causing market market prices to fluctuate whenever benchmark yield curves shift.

Reason (R) is true. Fixed coupon payments create an inverse relationship between market yields and secondary bond prices: as interest rates rise, discount rates increase, causing market prices to fall.

Because the inverse pricing mechanism stated in Reason (R) directly explains why long-term bond values fluctuate with interest rate movements, Reason (R) is the correct explanation of Assertion (A).
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Question 88
Statement I: The probable error (P.E.) of the coefficient of correlation (r) is defined as: P.E. = (1-r²)/√n.

Statement II: When a null hypothesis is true but the test statistic rejects it, this is known as Type-I error in hypothesis testing.

In 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
Evaluate the accuracy of both statistical propositions:

Statement I is incorrect. The Probable Error of Pearson's correlation coefficient includes a scaling factor of 0.6745:

P.E. = 0.6745 * (1 - r²) / √n

The unscaled formula (1 - r²) / √n defines the Standard Error rather than the Probable Error.

Statement II is correct. In hypothesis testing, mistakenly rejecting a true null hypothesis constitutes a Type-I error (alpha error).
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Question 89
Assertion (A): R² tends to be smaller for cross sectional data than for the time series data.

Reason (R): Wider fluctuations in the cross sectional data cause smaller value of R².

In light of the above statements, choose the correct answer from the options given below:
1. ABoth A and R are true and R is the correct explanation of A.
2. BBoth A and R are true but R is NOT the correct explanation of A.
3. CA is true but R is false.
4. DA is false but R is true.
Answer: (A) Both A and R are true and R is the correct explanation of A.
Explanation
In econometric modeling, goodness-of-fit differs systematically between data structures:

Assertion (A) is true. Cross-sectional regressions typically exhibit lower coefficients of determination (R²) than time-series regressions.

Reason (R) is true. Cross-sectional samples observe diverse individual entities with high idiosyncratic heterogeneity, creating substantial unexplained disturbance variance that reduces R².

Because the higher unobserved variation in cross-sectional observations directly causes lower R² values, Reason (R) is the correct explanation of Assertion (A).
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Question 90
Statement I: In the case of Life Insurance, the insurable interest must be present in the person insured at the time when the event happened.

Statement II: In the case of Fire Insurance, the insurable interest must be present in the object insured at the time when the policy is taken and the event has happened.

In light of the above statements, choose the most appropriate 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: (D) Statement I is false but Statement II is true
Explanation
In insurance contracts, the required timing of insurable interest depends on the branch of insurance:

Statement I is false. In life insurance, insurable interest must exist at policy inception. It does not need to exist at maturity or when death occurs.

Statement II is true. In fire insurance contracts, the insured must hold an insurable pecuniary interest both when the policy is taken and at the time the loss occurs.
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Question 91
Which one of the following is most desirable to consolidate growth?
The Monetary Policy Committee of the RBI should neither raise policy rates nor wind up its accommodative policy stance. Yes, inflation has been on the rise, and growth has been setting in. This is the time to consolidate growth, not to be spooked by transient, supply-constrained inflation.

Choking off supply-side price shocks is self-defeating. Higher prices will curb demand and stimulate additional supplies, if the prices are allowed to work their way through the system, instead of being choked off through demand suppression. It is only the second-order effect of price shocks in energy, logistics and labour that call for curtailment of demand via higher interest rates.

Far from there being any sign of excess demand, the latest available national income figures suggest squeezed consumption and constrained investment. GDP this fiscal would struggle to recover the size attained at the end of 2019-20. The policy response appropriate for inflation caused by excess demand would be wholly unsuited for inflation caused by supply disruptions and a spike in energy prices. The right way to combat elevated inflation right now is to reduce the burden of taxes that energy bears in India. Both the Centre and the states should share the tax cuts. They should take this action, even as they strive to find common ground on bringing energy under the goods and services tax. The government also has the cushion of relatively high import duties that can be pared, to lower prices.

Stepping up production to increase supplies is another part of supply-constrained inflation. There are measures the RBI can take to increase access to credit by micro, small and medium enterprises, other than enhancing liquidity in general in the hope that some would find its way to the small sector. The RBI can do its bit to realise the government mandate for all large companies to purchase their inputs from the Trade Receivables Discounting System (TREDS), for example, if that improves trade finance significantly, some reduction in liquidity would not matter.
1. AReduce interest rate
2. BIncrease interest rate
3. CSuppression of demand
4. DStimulate additional supply
Answer: (D) Stimulate additional supply
Explanation
The passage argues that policy responses should focus on resolving supply bottlenecks rather than suppressing domestic demand:

The author warns that choking off supply-side shocks through demand suppression is self-defeating.

Allowing higher prices to stimulate additional supplies and stepping up production is emphasized as the appropriate remedy to consolidate economic growth.

Rate hikes and demand compression would undermine economic recovery.
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Question 92
Which one of the following statements is not true?
The Monetary Policy Committee of the RBI should neither raise policy rates nor wind up its accommodative policy stance. Yes, inflation has been on the rise, and growth has been setting in. This is the time to consolidate growth, not to be spooked by transient, supply-constrained inflation.

Choking off supply-side price shocks is self-defeating. Higher prices will curb demand and stimulate additional supplies, if the prices are allowed to work their way through the system, instead of being choked off through demand suppression. It is only the second-order effect of price shocks in energy, logistics and labour that call for curtailment of demand via higher interest rates.

Far from there being any sign of excess demand, the latest available national income figures suggest squeezed consumption and constrained investment. GDP this fiscal would struggle to recover the size attained at the end of 2019-20. The policy response appropriate for inflation caused by excess demand would be wholly unsuited for inflation caused by supply disruptions and a spike in energy prices. The right way to combat elevated inflation right now is to reduce the burden of taxes that energy bears in India. Both the Centre and the states should share the tax cuts. They should take this action, even as they strive to find common ground on bringing energy under the goods and services tax. The government also has the cushion of relatively high import duties that can be pared, to lower prices.

Stepping up production to increase supplies is another part of supply-constrained inflation. There are measures the RBI can take to increase access to credit by micro, small and medium enterprises, other than enhancing liquidity in general in the hope that some would find its way to the small sector. The RBI can do its bit to realise the government mandate for all large companies to purchase their inputs from the Trade Receivables Discounting System (TREDS), for example, if that improves trade finance significantly, some reduction in liquidity would not matter.
1. ABoth the Centre and the States should share the tax cuts equally
2. BGDP this fiscal would find it difficult to recover the size attained at the end of 2019-20
3. CCurtailment of demand via higher interest rates can be used in a limited way
4. DChoking off supply-side price shocks will affect growth adversely
Answer: (A) Both the Centre and the States should share the tax cuts equally
Explanation
Identify the claim that is not supported by the passage:

A. Sharing tax cuts equally — not true. The passage states both the Centre and the states should share tax cuts on energy, but never specifies equal fifty-fifty apportionment.

B. GDP recovery struggle — supported by the passage text noting GDP would struggle to reach 2019-20 levels.

C. Limited interest rate use — supported by the text restricting interest rate hikes only to second-order effects.

D. Adverse impact of choking shocks — supported by the passage identifying demand suppression as self-defeating.
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Question 93
Which of the following measures the RBI can take to consolidate growth?
The Monetary Policy Committee of the RBI should neither raise policy rates nor wind up its accommodative policy stance. Yes, inflation has been on the rise, and growth has been setting in. This is the time to consolidate growth, not to be spooked by transient, supply-constrained inflation.

Choking off supply-side price shocks is self-defeating. Higher prices will curb demand and stimulate additional supplies, if the prices are allowed to work their way through the system, instead of being choked off through demand suppression. It is only the second-order effect of price shocks in energy, logistics and labour that call for curtailment of demand via higher interest rates.

Far from there being any sign of excess demand, the latest available national income figures suggest squeezed consumption and constrained investment. GDP this fiscal would struggle to recover the size attained at the end of 2019-20. The policy response appropriate for inflation caused by excess demand would be wholly unsuited for inflation caused by supply disruptions and a spike in energy prices. The right way to combat elevated inflation right now is to reduce the burden of taxes that energy bears in India. Both the Centre and the states should share the tax cuts. They should take this action, even as they strive to find common ground on bringing energy under the goods and services tax. The government also has the cushion of relatively high import duties that can be pared, to lower prices.

Stepping up production to increase supplies is another part of supply-constrained inflation. There are measures the RBI can take to increase access to credit by micro, small and medium enterprises, other than enhancing liquidity in general in the hope that some would find its way to the small sector. The RBI can do its bit to realise the government mandate for all large companies to purchase their inputs from the Trade Receivables Discounting System (TREDS), for example, if that improves trade finance significantly, some reduction in liquidity would not matter.
1. AReduce tax on fuel price
2. BReduce import duty
3. CIncrease access to credit by MSMEs
4. DAbsorb price increase by providing subsidies
Answer: (C) Increase access to credit by MSMEs
Explanation
The passage details specific monetary and financial mechanisms available to the Reserve Bank of India:

The author explicitly recommends that the RBI take targeted steps to enhance access to credit for micro, small, and medium enterprises.

Fuel tax cuts, import duty reductions, and budgetary subsidies are fiscal actions administered by central and state governments, not the central bank.
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Question 94
Which one of the following is the cause of inflation as per the passage?
The Monetary Policy Committee of the RBI should neither raise policy rates nor wind up its accommodative policy stance. Yes, inflation has been on the rise, and growth has been setting in. This is the time to consolidate growth, not to be spooked by transient, supply-constrained inflation.

Choking off supply-side price shocks is self-defeating. Higher prices will curb demand and stimulate additional supplies, if the prices are allowed to work their way through the system, instead of being choked off through demand suppression. It is only the second-order effect of price shocks in energy, logistics and labour that call for curtailment of demand via higher interest rates.

Far from there being any sign of excess demand, the latest available national income figures suggest squeezed consumption and constrained investment. GDP this fiscal would struggle to recover the size attained at the end of 2019-20. The policy response appropriate for inflation caused by excess demand would be wholly unsuited for inflation caused by supply disruptions and a spike in energy prices. The right way to combat elevated inflation right now is to reduce the burden of taxes that energy bears in India. Both the Centre and the states should share the tax cuts. They should take this action, even as they strive to find common ground on bringing energy under the goods and services tax. The government also has the cushion of relatively high import duties that can be pared, to lower prices.

Stepping up production to increase supplies is another part of supply-constrained inflation. There are measures the RBI can take to increase access to credit by micro, small and medium enterprises, other than enhancing liquidity in general in the hope that some would find its way to the small sector. The RBI can do its bit to realise the government mandate for all large companies to purchase their inputs from the Trade Receivables Discounting System (TREDS), for example, if that improves trade finance significantly, some reduction in liquidity would not matter.
1. AReduction in interest rate
2. BIncrease in cost
3. CSupply disruptions
4. DIncrease in demand
Answer: (C) Supply disruptions
Explanation
The passage analyzes the root driver of ongoing inflationary pressures:

The author characterizes price rises as supply-constrained inflation stemming from global supply disruptions and energy price spikes.

The text explicitly notes that there is no sign of excess demand, as consumption and investment remain constrained.
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Question 95
Assertion (A): The policy response appropriate for inflation caused by excess demand would be wholly suited for inflation caused by a spike in energy prices.

Reason (R): The right way to combat elevated inflation right now is to reduce the burden of taxes that energy bears in India.

In light of these statements, choose the most appropriate answer:
The Monetary Policy Committee of the RBI should neither raise policy rates nor wind up its accommodative policy stance. Yes, inflation has been on the rise, and growth has been setting in. This is the time to consolidate growth, not to be spooked by transient, supply-constrained inflation.

Choking off supply-side price shocks is self-defeating. Higher prices will curb demand and stimulate additional supplies, if the prices are allowed to work their way through the system, instead of being choked off through demand suppression. It is only the second-order effect of price shocks in energy, logistics and labour that call for curtailment of demand via higher interest rates.

Far from there being any sign of excess demand, the latest available national income figures suggest squeezed consumption and constrained investment. GDP this fiscal would struggle to recover the size attained at the end of 2019-20. The policy response appropriate for inflation caused by excess demand would be wholly unsuited for inflation caused by supply disruptions and a spike in energy prices. The right way to combat elevated inflation right now is to reduce the burden of taxes that energy bears in India. Both the Centre and the states should share the tax cuts. They should take this action, even as they strive to find common ground on bringing energy under the goods and services tax. The government also has the cushion of relatively high import duties that can be pared, to lower prices.

Stepping up production to increase supplies is another part of supply-constrained inflation. There are measures the RBI can take to increase access to credit by micro, small and medium enterprises, other than enhancing liquidity in general in the hope that some would find its way to the small sector. The RBI can do its bit to realise the government mandate for all large companies to purchase their inputs from the Trade Receivables Discounting System (TREDS), for example, if that improves trade finance significantly, some reduction in liquidity would not matter.
1. ABoth A and R are correct and R is the correct explanation of A
2. BBoth A and R are correct but R is NOT the correct explanation of A
3. CA is correct but R is not correct
4. DA is not correct but R is correct
Answer: (D) A is not correct but R is correct
Explanation
Evaluate the assertions directly against the argument in the passage:

Assertion (A) is incorrect. The text explicitly states that policies suited for demand-pull inflation would be wholly unsuited for inflation caused by supply bottlenecks and energy spikes.

Reason (R) is correct. The passage identifies lowering energy taxes as the most effective immediate measure to alleviate supply-driven inflation.
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Question 96

Which one of the following is PV ratio for the company?

The following information is available with respect to a company manufacturing a particular product:

Particulars	Amount
Sale price (per unit)	₹20
Variable manufacturing cost per unit	₹11
Variable selling cost per unit	₹3
Fixed factory overheads (per year)	₹5,40,000
Fixed selling costs (per year)	₹2,52,000

A1.82%
B1.43%
C30%
D33%

Answer: (C) 30%

Explanation

Calculate Profit-Volume ratio using selling price and total variable costs:

PV Ratio = [(Selling Price - Variable Cost per unit) / Selling Price] * 100

Given data:

Selling price per unit = ₹20
Variable manufacturing cost per unit = ₹11
Variable selling cost per unit = ₹3
Total variable cost per unit = ₹11 + ₹3 = ₹14

Contribution per unit = ₹20 - ₹14 = ₹6

PV Ratio = (6 / 20) * 100 = 30%

Question 97

Which one of the following is the break-even point in units for the company?

The following information is available with respect to a company manufacturing a particular product:

Particulars	Amount
Sale price (per unit)	₹20
Variable manufacturing cost per unit	₹11
Variable selling cost per unit	₹3
Fixed factory overheads (per year)	₹5,40,000
Fixed selling costs (per year)	₹2,52,000

A1,32,000 units
B38,576 units
C84,000 units
D72,000 units

Answer: (A) 1,32,000 units

Explanation

Calculate break-even output using total fixed costs and unit contribution:

Break-Even Point (units) = Total Fixed Overheads / Contribution per unit

Compute total fixed costs:

Fixed factory overheads = ₹5,40,000
Fixed selling costs = ₹2,52,000
Total Fixed Overheads = ₹5,40,000 + ₹2,52,000 = ₹7,92,000

Unit contribution = ₹20 - (₹11 + ₹3) = ₹6

Break-Even Point (units) = 7,92,000 / 6 = 1,32,000 units

Question 98

Which one of the following is the break-even point in terms of rupees?

The following information is available with respect to a company manufacturing a particular product:

Particulars	Amount
Sale price (per unit)	₹20
Variable manufacturing cost per unit	₹11
Variable selling cost per unit	₹3
Fixed factory overheads (per year)	₹5,40,000
Fixed selling costs (per year)	₹2,52,000

A₹18,00,000
B₹26,40,000
C₹38,57,600
D₹13,20,000

Answer: (B) ₹26,40,000

Explanation

Question 99

Which one of the following is desired sales volume in units to earn a profit of ₹60,000?

The following information is available with respect to a company manufacturing a particular product:

Particulars	Amount
Sale price (per unit)	₹20
Variable manufacturing cost per unit	₹11
Variable selling cost per unit	₹3
Fixed factory overheads (per year)	₹5,40,000
Fixed selling costs (per year)	₹2,52,000

A93,667 units
B2,64,000 units
C1,32,000 units
D1,42,000 units

Answer: (D) 1,42,000 units

Explanation

Question 100

Which one of the following is desired sales (rupees) to earn a profit of ₹1,20,000?

The following information is available with respect to a company manufacturing a particular product:

Particulars	Amount
Sale price (per unit)	₹20
Variable manufacturing cost per unit	₹11
Variable selling cost per unit	₹3
Fixed factory overheads (per year)	₹5,40,000
Fixed selling costs (per year)	₹2,52,000

A₹26,40,000
B₹30,40,000
C₹15,20,000
D₹26,40,000

Answer: (B) ₹30,40,000

Explanation

Attempt Paper 2 — Commerce · Shift 1 as a timed test

Exam	UGC NET September 2022
Papers	Paper 2 (Commerce)
Exam date(s)	September 29, 2022
Shift(s)	Shift 1 · Shift 2
Paper 2 questions	200 questions · 120 minutes · 200 marks
Total	200 questions
Marking scheme	+2 per correct answer · No negative marking

List I - Legal Latin Phrase	List II - Description
(A) Consensus ad idem	(I) Something in return
(B) Quid pro quo	(II) As much as earned
(C) Quantum meruit	(III) Buyer beware
(D) Caveate emptor	(IV) Meeting of minds

List I - Type of Exposure	List II - Description
(A) Economic Exposure	(I) Potential changes in all future cash flows of a firm that result from unanticipated changes in exchange rates.
(B) Translation Exposure	(II) It arises when items of financial statements that are stated in foreign currencies are restated in the home currency of an MNC.
(C) Transaction Exposure	(III) It arises when a firm's contract obligations are exposed to unanticipated changes in exchange rate.
(D) Operating Exposure	(IV) When a firm's real assets are exposed to unanticipated changes in exchange rates.

List I - Statistical Distribution	List II - Characteristical Expression
(A) Negatively Skewed Distribution	(I) Mean = Mode, P(x ≤ μ) = 0.50
(B) Positively Skewed Distribution	(II) x̄ > Median > Mode: P > 0.5
(C) Binomial Distribution	(III) x̄ < Median < Mode
(D) Normal Distribution	(IV) x̄ > Median > Mode

List I - Description	List II - Conceptualisation
(A) Net Stable Funding Ratio	(I) Asset Liability Management
(B) Innovative Perpetual Debt Instrument	(II) Tier-I capital
(C) Time Maturity Gap	(III) Tier - II capital
(D) Risk Weighted Assets	(IV) Basel - III norms

List I - International Trade Theories	List II - Expounders
(A) Absolute Advantage	(I) David Ricardo
(B) Factor Endowments	(II) Minhas, Leontief et. al.
(C) Factor-Intensity Reversal	(III) Adam Smith
(D) Comparative Advantage	(IV) Heckscher - Ohlin

List I - Ind AS	List II - Topic
(A) Ind AS 1	(I) Income Taxes
(B) Ind AS 12	(II) Related Party Disclosures
(C) Ind AS 24	(III) Intangible Assets
(D) Ind AS 38	(IV) Presentation of Financial Statements

List I - Promotional Campaign	List II - Company
(A) #StayStrongMoms	(I) Pepsico India
(B) #JeetKiOre	(II) Hindustan Unilever (HUL)
(C) #Lets unstereotypeIndia	(III) Indian Tobacco Company (ITC)
(D) #Freedomtolove	(IV) Brooke Bond India

List I - Personality Factor	List II - Bipolar Dimension
(A) Warmth	(I) Imaginative vs practical
(B) Abstractedness	(II) Controlled vs casual
(C) Openness to change	(III) Outgoing vs reserved
(D) Perfectionism	(IV) Experimental vs conservative

List I - Income Tax Disposition	List II - Particular/Section
(A) Donation to National Defence Fund	(I) Section 140(A)
(B) Hedging of Tax	(II) Tax Management
(C) Compliance with Legal Formalities	(III) Tax Avoidance
(D) Permanent Account Number (PAN)	(IV) 100% Deduction

List I - Nature of goods	List II - Income Elasticity (Ei) of demand
(A) Normal goods	(I) Ei is greater than one
(B) Inferior goods	(II) Ei is greater than zero
(C) Luxury goods	(III) Ei is between zero and one
(D) Necessities	(IV) Ei is less than zero

UGC NET Commerce September 2022 Question PaperPaper 2 with Answer Key

UGC NET September 2022 at a glance

Commerce

Commerce

Paper 2 — Commerce · Shift 1

Question 1

Question 2

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Question 12

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Question 75