Paper 2 — Commerce · Shift 1

100 questions with the answer key and explanations.

Question 1
A letter of acceptance sufficiently stamped and duly addressed is put into course of transmission. There is a:
1. AContract voidable at the option of acceptor
2. BContract voidable at the option of offeror
3. CNo contract at all
4. DValid contract
Answer: (D) Valid contract
Explanation
Under Section 4 of the Indian Contract Act, 1872, the communication of an acceptance is complete as against the proposer when it is put in a course of transmission to him so as to be out of the power of the acceptor. Once this requirement is satisfied, a valid and binding contract is formed immediately.

A. Contract voidable at the option of acceptor — incorrect. The contract is fully formed and binding rather than voidable.

B. Contract voidable at the option of offeror — incorrect. The proposer cannot treat a validly transmitted acceptance as voidable.

C. No contract at all — incorrect. Completing the transmission establishes legal privity and creates an enforceable contract.

D. Valid contract — correct. Posting a properly stamped and addressed letter of acceptance concludes a valid contract against the proposer.
Sign in to read the full explanation
Question 2
From the following information you are required to compute Return on Total Capital employed:

Net Profit: Rs. 100,000
Provision for tax: Rs. 100,000
Income from Investment: Rs. 10,000
Fixed Assets: Rs. 450,000
Current assets: Rs. 1,50,000
Interest on debenture: Rs. 10,000
Reserves: Rs. 100,000
1. A30%
2. B50%
3. C60%
4. D40%
Answer: (A) 30%
Explanation
Return on Capital Employed evaluates how effectively a firm generates operating returns from its asset base.

Operating Profit before Interest and Tax:
Net Profit before Tax = Rs. 100,000 + Rs. 100,000 = Rs. 200,000
Less Non-Operating Investment Income = Rs. 10,000
Less Debenture Adjustment factor gives Adjusted Profit = Rs. 180,000

Total Capital Employed:
Fixed Assets + Current Assets = Rs. 450,000 + Rs. 150,000 = Rs. 600,000

Return on Capital Employed:
ROCE = (Rs. 180,000 / Rs. 600,000) * 100 = 30%

The computed return on total capital employed is 30%.
Sign in to read the full explanation
Question 3
In which of the following segmentation criteria, the predictability of consumer choice behavior is the highest?
1. APsychological
2. BDemographic
3. CBehavioral
4. DGeodemographic
Answer: (C) Behavioral
Explanation
Behavioral segmentation divides buyers into groups based on their actual knowledge, attitude, usage rate, decision roles, and brand loyalty. Because it observes direct purchase actions rather than indirect demographic or geographic proxies, it provides the most accurate and reliable prediction of future brand choice behavior.

A. Psychological — examines inner personality traits and lifestyle values, which correlate less directly with immediate brand choice.

B. Demographic — categorizes consumers by age, gender, or income, but individuals within identical demographic brackets frequently display sharply contrasting brand choices.

C. Behavioral — correct. Past purchases, usage occasions, and brand loyalty directly predict future customer decisions.

D. Geodemographic — combines geographic location with demographic characteristics, serving as an indirect proxy rather than direct behavioral observation.
Sign in to read the full explanation
Question 4
Which of the following are the tools of consumer promotions?

a) Price off
b) Refunds
c) Coupons
d) Event-sponsorships
e) Off-invoice

Choose the correct answer from the options given below:
1. Aa, b and c only
2. Bb, c, d and e
3. Ca, d and e only
4. Db, c and d only
Answer: (A) a, b and c only
Explanation
Consumer sales promotions are short-term tactical incentives targeted directly at end users to stimulate immediate trial or repeat purchases.

Price off (a) — directly lowers the retail sticker price for the individual shopper.

Refunds (b) — provide a cash rebate returned to the consumer upon proof of purchase.

Coupons (c) — grant a specific price discount at the checkout counter.

Event-sponsorships (d) — are brand-building and public relations tools rather than consumer price promotions.

Off-invoice (e) — is a trade promotional discount deducted directly from a dealer or wholesaler invoice, not a consumer promotion.

Therefore, only items a, b, and c are consumer sales promotion tools.
Sign in to read the full explanation
Question 5
Assertion (A): Usually manufacturing companies use sale and lease back arrangement to unlock investment in fixed assets.
Reason (R): In a sale of lease back arrangement, the companies sell the asset to a leasing company, and lease it back to enjoy the uninterrupted use of asset in their business.
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 not False
4. DA is false but R is true
Accepted answers: (A) Both A and R are true and R is the correct explanation of A, (B) Both A and R are true but R is not the correct explanation of A
Explanation
In a sale and leaseback arrangement, a manufacturing company sells an existing fixed asset to a financial institution or lessor for cash and immediately leases it back.

Assertion (A) is true because capital-intensive manufacturing companies use this structure to unlock illiquid funds tied up in plant and real estate without disrupting operations.

Reason (R) is true because the operational mechanism involves transferring asset title to the lessor while retaining uninterrupted operational possession under a long-term lease agreement.

Reason (R) explains how the firm releases locked-in capital while preserving uninterrupted production, supporting Option A, while evaluations treating R purely as an operational definition support Option B.
Sign in to read the full explanation
Question 6
Regional Economic Integration is an attempt to achieve economic gains from the free flow of trade and investment between countries. One such association is NAFTA. NAFTA comprises of the following countries:
1. AUSA, Canada, Mexico
2. BUSA, Canada, Brazil
3. CUSA, Mexico, Brazil
4. DCanada, Mexico, Panama
Answer: (A) USA, Canada, Mexico
Explanation
The North American Free Trade Agreement (NAFTA) was signed by the governments of Canada, Mexico, and the United States in 1992 and entered into force on January 1, 1994. It established a trilateral free trade zone across North America by eliminating tariffs and trade barriers among these three member countries.

A. USA, Canada, Mexico — correct. These three nations are the founding and sole signatory members of NAFTA.

B. USA, Canada, Brazil — incorrect. Brazil is located in South America and is a member of Mercosur, not NAFTA.

C. USA, Mexico, Brazil — incorrect. Brazil was never a party to NAFTA.

D. Canada, Mexico, Panama — incorrect. Panama is not a member of NAFTA.
Sign in to read the full explanation
Question 7
Which is the legal framework governing the Regional Rural Banks (RRBs)?

a) Regional Rural Banks Act, 1976
b) Regional Rural Banks Act, 1966
c) Small Industries Development Bank of India, 1989
d) Banking Regulation Act, 1949
e) Indian Partnership Act, 1932

Choose the correct answer from the options given below:
1. Aa and d only
2. Bb and d only
3. Ca and c only
4. Db and e only
Answer: (A) a and d only
Explanation
Regional Rural Banks (RRBs) operate under a dual statutory framework in India.

Regional Rural Banks Act, 1976 (a) — the primary statute enacted to establish, regulate, and capitalize RRBs across rural regions.

Banking Regulation Act, 1949 (d) — governs banking operations, capital adequacy, licensing, and Reserve Bank of India regulatory oversight for all commercial banking entities, including RRBs.

Regional Rural Banks Act, 1966 (b) — incorrect. No such act was passed in 1966 — RRBs were first initiated following the Narasimham Committee recommendations in 1975.

SIDBI Act, 1989 (c) — established SIDBI as a specialized development bank for small-scale industry, not an RRB governing statute.

Indian Partnership Act, 1932 (e) — governs general partnership firms, not statutory banking corporations.

Therefore, only statements a and d constitute the legal framework governing RRBs.
Sign in to read the full explanation
Question 8
To remove 'order bias' in a questionnaire, usually researcher use which of the following:

a) Pivot questions
b) Multiple grid questions
c) Funnel technique
d) Filter questions
e) Leading questions

Choose the most appropriate answer from the options given below:
1. Ab, e and a only
2. Bd, e and b only
3. Ce, b and c only
4. Dc, d and a only
Answer: (D) c, d and a only
Explanation
Order bias occurs when the sequence in which questions appear systematically influences respondent answers. Questionnaire design relies on targeted structural techniques to minimize this effect.

Funnel technique (c) — sequences questions from broad, general inquiries down to narrower, specific inquiries, preventing early questions from anchoring subsequent views.

Filter questions (d) — screen respondents before detailed batteries, ensuring only qualified participants answer specific inquiries and eliminating forced-response bias.

Pivot questions (a) — branch respondents into relevant contextual sections based on initial sorting answers, maintaining logical flow without order distortion.

Multiple grid questions (b) — often induce straight-lining or response fatigue rather than mitigating order effects.

Leading questions (e) — introduce deliberate directional bias and are strictly avoided.

Therefore, the funnel technique, filter questions, and pivot questions (c, d, and a) are the established tools to remove order bias.
Sign in to read the full explanation
Question 9
Mutual Funds in India are regulated by:
1. AUnit Trust of India
2. BDepartment for Promotion of Industries and Internal trade
3. CThe Securities and Exchange Board of India
4. DDepartment of financial Services
Answer: (C) The Securities and Exchange Board of India
Explanation
Mutual funds in India are registered, regulated, and supervised by the Securities and Exchange Board of India (SEBI) under the SEBI (Mutual Funds) Regulations, 1996.

A. Unit Trust of India — was the pioneer mutual fund organization set up under an Act of Parliament in 1963, not the statutory regulatory authority.

B. Department for Promotion of Industries and Internal trade — oversees industrial development, FDI policy, and internal commerce, not capital market collective investments.

C. The Securities and Exchange Board of India — correct. SEBI is the statutory regulator governing asset management companies, trustees, and mutual fund investment schemes.

D. Department of financial Services — is an administrative wing of the Ministry of Finance overseeing public sector banks and financial policy, but does not conduct direct market regulation of mutual funds.
Sign in to read the full explanation
Question 10
A and B are equal partners. When partnership is dissolved, their capital are Rs. 40,000 and Rs. 50,000 respectively. After all assets are sold and liabilities paid, there is a cash balance of Rs. 80,000. What is the amount of profit or loss on realization?
1. A10,000 (Profit)
2. B20,000 (Profit)
3. C30,000 (Profit)
4. D10,000 (loss)
Answer: (D) 10,000 (loss)
Explanation
Upon the dissolution of a partnership, any deficit between the partners' total capital claims and the remaining net cash proceeds constitutes a loss on realization.

Total Capital Claim of Partners:
Capital of A + Capital of B = Rs. 40,000 + Rs. 50,000 = Rs. 90,000

Net Cash Available after Paying Liabilities:
Available Cash = Rs. 80,000

Realization Loss Calculation:
Loss on Realization = Total Capital - Available Cash
Loss on Realization = Rs. 90,000 - Rs. 80,000 = Rs. 10,000 (loss)

This loss of Rs. 10,000 is apportioned equally between partners A and B (Rs. 5,000 each), leaving exactly Rs. 80,000 to settle their adjusted capital accounts.
Sign in to read the full explanation
Question 11
Section 61 to 64 of the Companies Act, 2013 states 'Alteration proper' which includes:

a) Cancellation of the unissued shares
b) Cancellation of issued shares
c) Increase in share capital by issue of new share
d) Decrease of share capital by redemption of shares
e) Conversion of fully paid shares into stock and vice versa

Choose the most appropriate answer from the options given below:
1. Ab, c and d only
2. Ba, c and e only
3. Cc, d and e only
4. Da, b and c only
Answer: (B) a, c and e only
Explanation
Under Section 61(1) of the Companies Act, 2013, a limited company having a share capital may alter its share capital clause in its memorandum by ordinary resolution through:

Increase of share capital (c) — increasing authorized capital by issuing new shares.

Conversion of shares (e) — converting all or any of its fully paid-up shares into stock and reconverting that stock into paid-up shares.

Cancellation of unissued shares (a) — cancelling shares which have not been taken or agreed to be taken by any person.

Cancellation of issued shares (b) and reduction/redemption (d) — require the stringent court or NCLT reduction process under Section 66, not alteration proper under Section 61.

Therefore, 'alteration proper' under Section 61 comprises items a, c, and e only.
Sign in to read the full explanation
Question 12
Arrange the steps of process costing from beginning and ending with the work in process inventory:

a) Summarize total costs to account for work-in-process inventory
b) Compute output in terms of equivalent unit
c) Compute cost per equivalent unit
d) Summarize the flow of physical units (of output)
e) Assign total cost to units completed and to units in ending work in process

Choose the correct answer from the options given below:
1. Ad, b, a, c, e
2. Bb, c, d, a, e
3. Cc, b, a, d, e
4. De, d, a, b, c
Answer: (A) d, b, a, c, e
Explanation
Process costing follows a standardized five-step sequence to determine unit costs and assign total production expenditures across completed units and ending inventory.

d, b, a, c, e

Step 1: Summarize the flow of physical units of output (d)

Step 2: Compute output in terms of equivalent units (b)

Step 3: Summarize total costs to account for (a)

Step 4: Compute cost per equivalent unit (c)

Step 5: Assign total costs to units completed and to units in ending work in process (e)
Sign in to read the full explanation
Question 13
An agent is personally liable to third parties in which of the following situations?

a) If an agent acts for an undisclosed Principal
b) Trade usage and customs makes agent personally liable
c) If an agent signs a contract in Principal's name
d) If an agent acts for the named Principal
e) If an agent works for a foreign Principal

Choose the correct answer from the options given below:
1. Aa, b and c only
2. Ba, b and e only
3. Cc, d and e only
4. Db, c and d only
Answer: (B) a, b and e only
Explanation
Under Section 230 of the Indian Contract Act, 1872, an agent cannot personally enforce or be bound by contracts entered into on behalf of a disclosed principal, unless a contract to the contrary exists. The law presumes personal liability in specific statutory exceptions:

Undisclosed principal (a) — where the agent does not disclose the existence or identity of the principal.

Trade usage and custom (b) — where prevailing commercial customs hold the agent personally liable.

Foreign principal (e) — where the contract is made for the sale or purchase of goods for a merchant residing abroad.

In contrast, signing in the principal's name (c) or acting for a named principal (d) binds only the principal, shielding the agent from personal liability.

Therefore, the agent is personally liable in situations a, b, and e.
Sign in to read the full explanation
Question 14
Which of the following form of market organization is the most prevalent in the manufacturing sector?
1. APerfect competition
2. BMonopolistic competition
3. COligopoly
4. DDuopoly
Answer: (C) Oligopoly
Explanation
Modern manufacturing industries, including automobiles, basic metals, consumer electronics, cement, and chemicals, are characterized by heavy capital investments, significant economies of scale, and strategic interdependence among a limited group of major corporations. This market structure represents an oligopoly.

A. Perfect competition — requires homogeneous goods and numerous small producers with free entry, which is rare in heavy manufacturing.

B. Monopolistic competition — dominates retail services and local light trades rather than capital-intensive heavy manufacturing.

C. Oligopoly — correct. A small number of large firms account for the vast majority of industrial output and compete through non-price strategic differentiation.

D. Duopoly — refers strictly to a two-firm market, which is a special restricted subset rather than the general manufacturing norm.
Sign in to read the full explanation

Question 15

Match List I with List II:

List I (Retail Store Format)	List II (Product Assortment)
A. Discount	I. Very narrow and deep
B. Specialty	II. Broad and shallow
C. Category Killer	III. Broad and deep
D. Super marketer	IV. Narrow and very deep

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

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

Explanation

Retail store formats are classified by the breadth and depth of their product assortments.

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

A. Discount store (II) — carries a broad variety of general product categories with shallow product lines at low margins.
B. Specialty store (I) — concentrates on a narrow merchandise category with substantial depth in styling and sizes.
C. Category Killer (IV) — represents an oversized specialty format offering an exceptionally narrow category with immense, exhaustive depth.
D. Super marketer / Supermarket (III) — stocks a broad assortment of groceries, food, and household lines with considerable depth.

Question 16
'A' sells a mobile phone to 'B', a minor, who pays for it by his cheque. 'A' endorses the cheque to 'C' who takes it in good faith and for value. The cheque is dishonored on presentation. Can 'C' enforce payment of the cheque?
1. AC can enforce the payment of cheque only against A
2. BC can enforce the payment of cheque either against A or B
3. CC can enforce payment of cheque both against A and B
4. DC can enforce the payment of cheque only against B
Answer: (A) C can enforce the payment of cheque only against A
Explanation
Under Section 26 of the Negotiable Instruments Act, 1881, a minor may draw, endorse, deliver, and negotiate a negotiable instrument so as to bind all parties except himself.

A minor's contract is void ab initio under Indian law, meaning minor B incurs zero personal liability on the cheque.

However, the endorsement and negotiation of the instrument by adult party A remains fully valid and legally binding on A.

Therefore, holder in due course C can enforce payment of the dishonored cheque exclusively against adult endorser A.
Sign in to read the full explanation
Question 17
Arrange the following advance payment of tax in ascending order (Section 207 to section 211) of the Income Tax Act, 1961:

a) Instalment of advance tax and due date
b) Liability for payment of Advance Tax
c) Payment of advance tax by the assesse on own record
d) Condition of liability to pay advance tax
e) Computation of advance tax

Choose the correct answer from the options given below:
1. Aa, b, c, d, e
2. Bb, d, e, c, a
3. Cb, d, e, a, c
4. Dc, d, e, a, b
Answer: (B) b, d, e, c, a
Explanation
The advance tax provisions in Chapter XVII-C of the Income Tax Act, 1961 are arranged sequentially by section numbers 207 through 211.

b, d, e, c, a

Section 207: Liability for payment of advance tax (b)

Section 208: Conditions of liability to pay advance tax (d)

Section 209: Computation of advance tax (e)

Section 210: Payment of advance tax by the assessee on own accord or on notice (c)

Section 211: Instalments of advance tax and due dates (a)
Sign in to read the full explanation
Question 18
Sequence the following steps in the operational functioning of the Asset reconstruction companies (as per SARFAESI Act, 2002):

a) Charge a 2 percent management fee
b) Issue security receipts to bank
c) Make payment to bank
d) Buys loans of bank at a discount
e) Carry out the recovery

Choose the correct answer from the options given below:
1. Ad, c, a, e, b
2. Bd, b, e, a, c
3. Cd, b, c, e, a
4. Dd, a, b, e, c
Answer: (C) d, b, c, e, a
Explanation
Asset Reconstruction Companies (ARCs) acquire and resolve non-performing assets under the SARFAESI Act, 2002 through a systematic operating process.

d, b, c, e, a

Step 1: Acquires or buys non-performing loans of banks at a negotiated discount (d)

Step 2: Issues security receipts (SRs) backed by the acquired financial assets to the selling bank (b)

Step 3: Makes upfront cash payment or initial tranche consideration to the selling bank (c)

Step 4: Carries out debt restructuring, settlement, or asset liquidation to recover proceeds (e)

Step 5: Charges an ongoing management fee (typically around 2 percent) for administering the trust assets (a)
Sign in to read the full explanation
Question 19
Which of the following are the reason for manufacturers and retailers to brand their offerings?

a) Helps to gauge the level of product quality
b) Enables premium pricing
c) Contributes to corporate identity programmes
d) Inform about the source of a product
e) Develops customer loyalty

Choose the most appropriate answer from the options given below:
1. Aa, b, c and e only
2. Bb, c and e only
3. Ca, b, c and d only
4. Da, d and e only
Answer: (A) a, b, c and e only
Explanation
Branding offers distinct strategic advantages to manufacturers and retailers by differentiating products and building competitive advantage.

Gauges product quality (a) — provides a quality benchmark that signals high standards to trade channels and buyers.

Enables premium pricing (b) — established brand equity allows sellers to command higher price points and superior margins.

Corporate identity programmes (c) — reinforces overarching corporate stature and marketing communications.

Develops customer loyalty (e) — creates emotional affinity and repeat purchase patterns among consumers.

Informing consumers about the source of a product (d) is primarily an identification function for buyers rather than a strategic business motive for sellers.

Therefore, reasons a, b, c, and e constitute the primary business objectives for branding.
Sign in to read the full explanation
Question 20
Empirical studies show that the long run average cost (LAC) curve is:
1. AL-shaped
2. BU-shaped
3. CS-shaped
4. DV-shaped
Answer: (A) L-shaped
Explanation
Extensive empirical research conducted by modern industrial economists (including Bain, Wiles, and Andrews) reveals that the long-run average cost curve is typically L-shaped rather than U-shaped.

In the initial production range, rapid technical, managerial, and purchasing economies of scale cause average costs to decline steeply until the minimum efficient scale is attained.

Beyond this scale, modern managerial decentralization and modular plant expansions allow production to expand over a wide output range at roughly constant unit costs without encountering sharp diseconomies.

Classical microeconomic theory assumed a U-shaped curve based on hypothetical managerial bottlenecks, which empirical evidence disproves.
Sign in to read the full explanation
Question 21
Which of the following are the disadvantage of straight salary sales compensation plan?

a) Sales volume is emphasized over profits
b) Sales representative may overstock the customer
c) Low motivational impact
d) Difficult to attract or retain top sales performers
e) Sales representative may focus on products that require least effort to sell

Choose the most appropriate answer from the options given below:
1. Ac, d and e only
2. Ba, b and c only
3. Cb, d and e only
4. Da, c and d only
Answer: (A) c, d and e only
Explanation
A straight salary compensation plan provides sales personnel with a fixed income irrespective of their individual sales volume.

Low motivational impact (c) — because compensation is decoupled from direct sales performance, aggressive selling effort is not financially incentivized.

Difficult to attract or retain top performers (d) — high-performing sales representatives who can earn higher commission elsewhere tend to leave.

Focus on low-effort products (e) — without commission incentives on difficult or new strategic lines, representatives gravitate toward products that require minimal selling effort.

In contrast, emphasizing volume over profits (a) and overstocking customers (b) are classic disadvantages of aggressive commission plans, not fixed salary plans.

Thus, statements c, d, and e represent the disadvantages of straight salary compensation.
Sign in to read the full explanation
Question 22
Given below are two statements:

Statement I: The only purpose of logistics management is to coordinate activities of moving products from the factory to customers.
Statement II: Logistics management is only the responsibility of marketing function.

In the light of the above statements, choose the most appropriate answer from the options given below:
1. ABoth Statement I and Statement II are correct
2. BBoth Statement I and Statement II are incorrect
3. CStatement I is correct but Statement II is incorrect
4. DStatement I is incorrect but Statement II is correct
Answer: (B) Both Statement I and Statement II are incorrect
Explanation
Logistics management encompasses the comprehensive planning and control of material, inventory, and information flows across the supply chain.

Statement I is incorrect because logistics coordinates inbound transportation from vendors, intra-plant handling, inventory storage, reverse logistics, and information systems, rather than exclusively moving finished products to end buyers.

Statement II is incorrect because logistics is an enterprise-wide supply chain function that integrates procurement, operations, manufacturing, and inventory management alongside marketing.

Therefore, both Statement I and Statement II are incorrect.
Sign in to read the full explanation
Question 23
Which one of the advertising planning strategies is suitable for cars and appliance?
1. AInformative strategy
2. BAffective strategy
3. CHabitual strategy
4. DSatisfaction strategy
Answer: (A) Informative strategy
Explanation
Under the Foote, Cone & Belding (FCB) advertising grid, consumer product categories are classified along two dimensions: involvement level and thinking versus feeling.

Informative strategy (A) — matches High Involvement / Thinking purchases. Major capital investments such as automobiles and consumer durables require factual performance data, warranty details, and technical specifications (Learn -> Feel -> Do).

Affective strategy (B) — suits High Involvement / Feeling purchases such as luxury jewelry or perfumes, where emotional imagery dominates.

Habitual strategy (C) — applies to Low Involvement / Thinking convenience commodities such as household detergents.

Satisfaction strategy (D) — targets Low Involvement / Feeling discretionary impulse items like snacks and beverages.
Sign in to read the full explanation
Question 24
Which of the following are skills and capabilities related competencies?

a) Analysis
b) Intellectual curiosity
c) Organization
d) Problem solving
e) Ownership of assignments

Choose the most appropriate answer from the options given below:
1. Aa, c and d only
2. Ba, b and c only
3. Cb, c and d only
4. Da, d and e only
Answer: (A) a, c and d only
Explanation
In human resource competency modeling, competencies are distinguished into cognitive skills and capabilities versus personality traits and attitudes.

Analysis (a), Organization (c), and Problem solving (d) are functional and cognitive capabilities that represent learned operational proficiencies.

Intellectual curiosity (b) and Ownership of assignments (e) are personal traits, values, and motivational dispositions.

Therefore, items a, c, and d only are classified as skills and capabilities related competencies.
Sign in to read the full explanation
Question 25
Experimental treatment in research design signifies which of the following?
1. ASelection of dependent variable
2. BManipulating independent variable
3. CSelection of independent variable
4. DManipulating dependent variable
Answer: (B) Manipulating independent variable
Explanation
In experimental research methodology, an experimental treatment (or experimental manipulation) refers to the specific intervention or varying condition deliberately applied by the researcher to the independent variable to observe its subsequent causal effect on the dependent outcome.

A. Selection of dependent variable — is a measurement design decision rather than the experimental treatment itself.

B. Manipulating independent variable — correct. Introducing experimental levels to the independent variable constitutes the treatment.

C. Selection of independent variable — identifies the hypothetical causal factor prior to experimental manipulation.

D. Manipulating dependent variable — incorrect. The dependent variable is measured and observed, never directly manipulated by the experimenter.
Sign in to read the full explanation
Question 26
Which of the following are considered as supply factors affecting the flow of Foreign Direct Investment (FDI)?

a) Customer Access
b) Economic Priorities
c) Resource Availability
d) Avoidance of Trade Barrier
e) Logistics

Choose the most appropriate answer from the options given below:
1. Aa and b only
2. Bb and d only
3. Cc and e only
4. Da and e only
Answer: (C) c and e only
Explanation
In international trade and foreign investment theory, determinants of FDI are classified into demand factors, supply/cost factors, and regulatory/political factors.

Resource Availability (c) — supply-seeking FDI targets low-cost raw materials, specialized labor, and natural endowments in the host nation.

Logistics (e) — transport infrastructure and distribution efficiency govern input-handling and freight costs in global manufacturing.

Customer access (a) and avoidance of trade barriers (d) are demand-seeking motives aimed at capturing host market demand.

Therefore, only resource availability and logistics (c and e) represent supply factors.
Sign in to read the full explanation

Question 27

Match List I with List II:

List I	List II
A. Study all aspects of Electronic fund transfer (EFT)	I. Rashid Jilani Committee (1992)
B. Working group on NBFCs	II. Sodhani Committee (1995)
C. Suggest alternate methods of lending	III. Khanna Committee (1995)
D. Expert group on foreign exchange markets	IV. Shere Committee (1995)

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

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

Explanation

Reserve Bank of India advisory and working committees shaped Indian banking, payments, and foreign exchange reforms.

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

A. Electronic fund transfer (IV) — examined by the K.S. Shere Committee (1995) to create the regulatory architecture for EFT systems.
B. Working group on NBFCs (III) — assessed regulatory supervisory frameworks for non-banking financial companies (1995).
C. Alternate methods of lending (I) — evaluated by the Rashid Jilani Committee (1992) to reform the cash-credit system and bank lending methods.
D. Expert group on foreign exchange markets (II) — led by O.P. Sodhani (1995) to develop depth and liquidity in Indian forex markets.

Question 28
The application for information is rejected under the Right to Information Act, 2005. The CPIO/SPIO is obligated to furnish which of the following to the person seeking the information?

a) Power and functions of information commission
b) Reason for such rejection
c) Obligation of public authorities
d) The particulars of the appellate authority
e) The period within which an appeal against such rejection may be preferred

Choose the correct answer from the options given below:
1. Ab and c only
2. Bb, c and d only
3. Ca, c and e only
4. Db, d and e only
Answer: (D) b, d and e only
Explanation
Under Section 7(8) of the Right to Information Act, 2005, where a request for information is rejected, the Central Public Information Officer (CPIO) or State Public Information Officer (SPIO) must communicate specific statutory details to the applicant.

The specific reasons for such rejection (b)

The particulars of the designated appellate authority (d)

The period within which an appeal against the rejection order may be filed (e)

Neither the institutional obligations of public authorities under Section 4 (c) nor the broad statutory powers of Information Commissions (a) are mandated disclosures in a rejection notice.

Therefore, the CPIO/SPIO is obligated to communicate items b, d, and e only.
Sign in to read the full explanation
Question 29
X was appointed on 1 July 2022 as a lecturer in a University. He continued on 30 April 2023. What would be the duration of the previous year for the assessment year 2023-24 for computation of income under the head Salary?
1. A1 July 2022 to 30 April 2023
2. B1 April 2022 to 31 March 2023
3. C1 April 2022 to 30 April 2023
4. D1 July 2022 to 31 March 2023
Answer: (D) 1 July 2022 to 31 March 2023
Explanation
Under Section 3 of the Income Tax Act, 1961, the previous year is ordinarily the financial year immediately preceding the assessment year.

In the case of a new source of income coming into existence during the financial year, the previous year commences on the exact date on which the source arises and terminates on the immediately following 31st March.

Because X was appointed on 1 July 2022, his salary source originated on 1 July 2022.

For Assessment Year 2023-24, the previous year ends on 31 March 2023.

Consequently, the previous year spans from 1 July 2022 to 31 March 2023.
Sign in to read the full explanation
Question 30
In case of presence of outliers in a data set, which of the following can better measure the central tendency?

a) Mode
b) Trimmed Mean
c) Arithmetic Mean
d) Median
e) Harmonic Mean

Choose the correct answer from the options given below:
1. Aa and b only
2. Bb and c only
3. Cc and e only
4. Db and d only
Answer: (D) b and d only
Explanation
Extreme values or outliers heavily distort algebraic means including the arithmetic mean and harmonic mean.

Median (d) — is a positional average that depends solely on the middle value of ordered data, making it resistant to extreme tail outliers.

Trimmed Mean (b) — discards a fixed percentage of extreme observations from both ends of the distribution before averaging, producing a robust measure of location.

Arithmetic mean (c) and harmonic mean (e) change dramatically in the presence of extreme observations.

Therefore, the trimmed mean and median (b and d) best measure central tendency when outliers exist.
Sign in to read the full explanation
Question 31
The assumptions of Purchasing Power Parity theory include:

a) No costs for converting one currency to another
b) No restrictions on the movement of capital between countries
c) No restrictions on the movement of commodities between countries
d) No transaction costs for buying and selling financial security
e) No transportation costs for transporting a commodity from one country to another

Choose the most appropriate answer from the options given below:
1. Aa, b and c only
2. Bb, d and c only
3. Ce, a and c only
4. Dd, a and e only
Answer: (C) e, a and c only
Explanation
Purchasing Power Parity theory relies on the international Law of One Price governing physical merchandise trade.

No transportation costs (e) — goods can be shipped internationally without transport freight altering parity prices.

No conversion costs (a) — currencies can be exchanged without transaction fees or spreads.

No restrictions on commodity trade (c) — markets operate without tariffs, quotas, or trade embargoes.

Capital mobility (b) and financial security trading costs (d) are assumptions of Interest Rate Parity, not commodity-based PPP.

Thus, assumptions e, a, and c establish the foundation of Purchasing Power Parity theory.
Sign in to read the full explanation
Question 32
Arrange the following steps in a logical sequence in recourse to dishonoring a negotiable instrument:

a) Noting
b) Compensation
c) Protesting
d) Notice of dishonor
e) Penalties

Choose the correct answer from the options given below:
1. Ad, a, c, b, e
2. Bc, d, a, b, e
3. Cc, d, e, b, a
4. Da, c, d, b, e
Answer: (A) d, a, c, b, e
Explanation
Recourse upon the dishonor of a negotiable instrument follows the statutory procedure prescribed under the Negotiable Instruments Act, 1881.

d, a, c, b, e

Notice of dishonor (d) — served to prior liable parties to preserve recourse rights under Section 93

Noting (a) — recording of the dishonor on the instrument by a Notary Public under Section 99

Protesting (c) — issuance of a formal authenticated certificate of protest under Section 100

Compensation (b) — calculation and demand of the principal amount and accrued interest under Section 117

Penalties (e) — initiation of statutory penal proceedings under Section 138
Sign in to read the full explanation
Question 33
Arrange the following goods and services in the increasing order of the underlying income elasticity of demand:

a) Normal consumption goods
b) Necessities
c) Luxuries
d) Inferior goods
e) Services

Choose the correct answer from the options given below:
1. Ad, b, a, e, c
2. Bd, c, b, a, e
3. Cc, e, b, a, d
4. Db, a, d, c, e
Answer: (A) d, b, a, e, c
Explanation
Income elasticity of demand measures the responsiveness of quantity demanded to changes in consumer income.

d, b, a, e, c

Inferior goods (d) — have negative income elasticity as demand declines with rising income

Necessities (b) — have inelastic positive elasticity between 0 and 1

Normal consumption goods (a) — have unit-proximate positive elasticity around 1

Services (e) — exhibit income elasticity greater than 1 as households expand discretionary services

Luxuries (c) — possess the highest income elasticity well above 1
Sign in to read the full explanation

Question 34

Match List I with List II:

List I (A.T. Kearney Globalization Index)	List II (Variables)
A. Economic Integration	I. International Tourism and Travel
B. Personal Integration	II. Internet Users
C. Technological Integration	III. Foreign Direct Investment
D. Political Integration	IV. Ratification and multilateral treaties

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

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

Explanation

The A.T. Kearney Globalization Index tracks integration across nations using distinct operational dimensions.

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

A. Economic Integration (III) — measured by international trade and Foreign Direct Investment inflows and outflows.
B. Personal Integration (I) — captured by international travel, tourism, cross-border remittances, and telephone traffic.
C. Technological Integration (II) — quantified by internet users, hosts, and secure servers.
D. Political Integration (IV) — indicated by ratification of multilateral treaties and participation in international missions.

Question 35

Match List I with List II:

List I (Accounting Concept)	List II (Purpose / Applicability)
A. Going Concern Concept	I. The same accounting method used by a firm from one period to another
B. Consistency	II. Relate to the relative size or importance of an item or event
C. Cost Concept	III. An inappropriate assumption for firm undergoing bankruptcy
D. Materiality	IV. The normal basis used to account for assets

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

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

Explanation

Fundamental accounting concepts define financial reporting assumptions and measurement rules.

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

A. Going Concern Concept (III) — assumes indefinite operating life, making it an inappropriate assumption for a bankrupt firm in liquidation.
B. Consistency (I) — mandates applying identical accounting methods across successive reporting periods.
C. Cost Concept (IV) — establishes historical acquisition cost as the standard valuation basis for assets.
D. Materiality (II) — dictates disclosure based on the relative size, value, or financial significance of an item.

Question 36

Match List I with List II:

List I (Schedules under the Companies Act, 2013)	List II (Underlying themes)
A. Schedule I	I. Computation of Depreciation
B. Schedule II	II. Code for independent directors
C. Schedule III	III. Memorandum of Association
D. Schedule IV	IV. Preparation of balance sheet and statement of profit and loss

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

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

Explanation

Schedules attached to the Companies Act, 2013 prescribe statutory corporate documentation and disclosure formats.

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

A. Schedule I (III) — prescribes model forms for the Memorandum and Articles of Association (Tables A through J).
B. Schedule II (I) — defines useful lives of tangible assets for depreciation computation.
C. Schedule III (IV) — outlines general instructions for preparing the balance sheet and statement of profit and loss.
D. Schedule IV (II) — establishes the professional code of conduct for independent directors.

Question 37
On attaining the age of majority, a minor's agreement:
1. ACan be ratified by him
2. BCannot be ratified by him
3. CBecomes void
4. DBecomes valid
Answer: (B) Cannot be ratified by him
Explanation
Under Indian Contract law as settled in Mohori Bibee v. Dharmodas Ghose, an agreement entered into by a minor is void ab initio.

Because a minor's agreement is a nullity from the outset, it has no legal existence that can later be revived or validated.

Consequently, an individual cannot ratify an agreement entered into during minority upon attaining the age of majority, even with express consent.

Any valid transaction entered into after attaining majority requires fresh consideration and a completely new contractual agreement.
Sign in to read the full explanation
Question 38
From the operational point of view, which are part of an Environmental Audit?

a) Environment Management System Audit
b) Social Audit
c) Compliance Audit
d) Site Property Audit
e) Energy Audit

Choose the correct answer from the options given below:
1. Ac, d and e only
2. Ba, c and d only
3. Cb, c and d only
4. Da, d and e only
Answer: (B) a, c and d only
Explanation
Operational environmental audits evaluate industrial sites and facility systems to determine compliance and ecological risk.

Environment Management System Audit (a) — appraises the implementation of ISO 14001 policies and operational environmental controls.

Compliance Audit (c) — verifies strict conformance with statutory pollution and emission regulations.

Site Property Audit (d) — assesses soil contamination and historical liability on industrial facilities and commercial property.

Social audit (b) examines broader community impact, while energy audit (e) is a specialized technical efficiency study.

Therefore, components a, c, and d form the core operational environmental audit framework.
Sign in to read the full explanation
Question 39
A box-plot is a graphical summary measures of data that displays:

a) Mean
b) Q1
c) Median
d) Q3
e) Mode

Choose the correct answer from the options given below:
1. Ac and e only
2. Ba, c and e only
3. Cc, d and b only
4. Dd, b and a only
Answer: (C) c, d and b only
Explanation
A box-plot visually presents the Five-Number Summary of a continuous distribution.

The central components plotted are the lower quartile Q1 (b), the median (c), and the upper quartile Q3 (d).

The endpoints of the whiskers represent the minimum and maximum data values within range.

The arithmetic mean and mode are not standard structural elements of a box-plot visual display.

Therefore, the box-plot displays Q1, median, and Q3 (c, d, and b).
Sign in to read the full explanation
Question 40
Who was of the opinion that labor was 'the father of wealth' and it must be included in any estimate of national wealth?
1. AWilliam Far
2. BWilliam Petty
3. CWilliam C. Pyle
4. DFlamholtz
Answer: (B) William Petty
Explanation
Sir William Petty (1623–1687) formulated early concepts of human capital and national wealth accounting.

In his Treatise of Taxes and Contributions (1662), Petty declared that labor is the father and active principle of wealth, as lands are the mother.

Petty was the first classical thinker to capitalize human earning power to incorporate labor into estimates of national wealth.

William C. Pyle and Eric Flamholtz pioneered modern human resource accounting in the twentieth century, not the classical seventeenth-century maxim.
Sign in to read the full explanation
Question 41
In the process of perception, which one of the following is not an external factor influencing selection of stimuli?
1. AExperience
2. BFamiliarity
3. CRepetition
4. DNovelty
Answer: (A) Experience
Explanation
Perceptual selectivity is governed by external stimulus characteristics and internal perceiver factors.

Experience (A) — is an internal psychological factor rooted in an individual's personal memory, learning history, and cognitive background.

Familiarity (B), Repetition (C), and Novelty (D) — are external physical properties of the sensory stimulus that draw attention.

Therefore, past experience is an internal perceiver attribute rather than an external stimulus factor.
Sign in to read the full explanation
Question 42
As suggested by Collins, arrange the following leadership levels in sequentially higher order:

a) The leader is a competent manager
b) The leader is an executive
c) The leader is a highly capable individual
d) The leader is an effective leader
e) The leader is a contributing team member

Choose the correct answer from the options given below:
1. Ab, c, d, a, e
2. Bc, e, a, d, b
3. Cc, a, e, d, b
4. Dc, e, a, b, d
Answer: (B) c, e, a, d, b
Explanation
Jim Collins established the Level 5 Leadership hierarchy in Good to Great to illustrate the progressive stages of organizational leadership capability.

c, e, a, d, b

Level 1: Highly Capable Individual (c) — contributes productive talent and skills

Level 2: Contributing Team Member (e) — works effectively with others in group settings

Level 3: Competent Manager (a) — organizes people and resources toward predetermined objectives

Level 4: Effective Leader (d) — catalyzes commitment to a compelling vision and high standards

Level 5: Executive (b) — builds enduring greatness through a blend of personal humility and professional will
Sign in to read the full explanation
Question 43
Substitution effect is usually larger than the income effect in real world because:
1. AConsumer usually spends only a small proportion of income on any one commodity
2. BConsumer often consumes a small number of commodities
3. CConsumer only spends small portion of income on consumption
4. DConsumer income is relatively smaller in relation to the consumption
Answer: (A) Consumer usually spends only a small proportion of income on any one commodity
Explanation
The Slutsky and Hicks price decomposition separates the total price effect into substitution and income effects.

The substitution effect measures how consumers switch toward relatively cheaper alternatives when price changes.

The income effect reflects the change in real purchasing power caused by the price adjustment.

In realistic consumption bundles, households spend a very small fraction of their total budget on any individual product, rendering the real-income impact negligible relative to price substitution.
Sign in to read the full explanation
Question 44
Which one group of the following countries are members of ASEAN?
1. ALaos, Cambodia, Brunei
2. BMalaysia, Thailand, Taiwan
3. CMyanmar, Singapore, Hong Kong
4. DFiji, Laos, Cambodia
Answer: (A) Laos, Cambodia, Brunei
Explanation
The Association of Southeast Asian Nations (ASEAN) comprises ten sovereign Southeast Asian nations: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.

A. Laos, Cambodia, Brunei — correct. All three nations are full member states of ASEAN.

B. Malaysia, Thailand, Taiwan — incorrect. Taiwan is not an ASEAN member.

C. Myanmar, Singapore, Hong Kong — incorrect. Hong Kong is not a sovereign ASEAN member.

D. Fiji, Laos, Cambodia — incorrect. Fiji is an island nation in Melanesia, not Southeast Asia.
Sign in to read the full explanation
Question 45
Which one of the following values is not a part of OCTAPACE framework?
1. AOpenness
2. BExtension
3. CProactivity
4. DAutonomy
Answer: (B) Extension
Explanation
The OCTAPACE framework developed by Udai Pareek defines eight core organizational culture values essential for climate building.

O: Openness

C: Confrontation

T: Trust

A: Authenticity

P: Proaction or Proactivity

A: Autonomy

C: Collaboration

E: Experimentation

Extension is a dimension in motivational profile frameworks rather than an element of the OCTAPACE cultural values.
Sign in to read the full explanation
Question 46
When the income of a minor child is clubbed with the income of mother or father, how much deduction will be allowed to mother or father?
1. ARs. 1500
2. BRs. 2000
3. CActual income clubbed with the income of mother or father, whichever is less
4. DNo deduction
Answer: (A) Rs. 1500
Explanation
Under Section 10(32) of the Income Tax Act, 1961, when income of a minor child is clubbed in the hands of either parent under Section 64(1A), the parent receives statutory relief.

The parent is entitled to an exemption equal to the actual clubbed income or Rs. 1,500 per minor child, whichever is less.

If the clubbed income exceeds Rs. 1,500, the maximum allowable statutory deduction per child is capped at Rs. 1,500.
Sign in to read the full explanation
Question 47
For customers, which are the areas of ethical and social responsibility concerns?

a) Product safety
b) Fair Price
c) Fair Wages
d) TQM
e) Proper disclosures and information

Choose the correct answer from the options given below:
1. Ac and d only
2. Bc, d and e only
3. Ca and e only
4. Da, b and e only
Answer: (D) a, b and e only
Explanation
Corporate social responsibility defines distinct ethical obligations tailored to specific stakeholder groups.

Product safety (a) — ensures products do not cause physical harm or health hazards to buyers.

Fair Price (b) — prevents price exploitation, cartel markups, and gouging.

Proper disclosures and information (e) — guarantees truthful labeling, clear warnings, and transparent terms.

Fair wages (c) is an ethical duty owed to employees, and TQM (d) is an internal operations philosophy.

Thus, items a, b, and e represent the ethical responsibilities owed directly to customers.
Sign in to read the full explanation
Question 48
Under which of the following market structures, products are differentiated and close substitutes?

a) Perfect competition
b) Monopolistic competition
c) Oligopoly
d) Duopoly
e) Monopoly

Choose the correct answer from the options given below:
1. Aa, b and c only
2. Bb, c and d only
3. Cc, d and e only
4. Da, c and d only
Answer: (B) b, c and d only
Explanation
Product differentiation occurs when competing firms produce items that satisfy identical consumer needs but differ by branding, packaging, design, or perceived quality.

Monopolistic competition (b) — numerous sellers market branded, highly differentiated close substitutes.

Oligopoly (c) — dominant firms frequently engage in non-price product differentiation with close cross-elasticity.

Duopoly (d) — two market-dominating rivals offer differentiated substitute products.

In perfect competition (a), goods are perfectly homogeneous, and in pure monopoly (e), no close substitutes exist.

Therefore, market structures b, c, and d feature differentiated close substitutes.
Sign in to read the full explanation

Question 49

Match List I with List II:

List I (Motive of human behavior in organizations)	List II (Characteristic)
A. Achievement	I. Concern for others
B. Control	II. Concern for self-development
C. Extension	III. Concern for excellence
D. Dependency	IV. Concern for orderliness

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

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

Explanation

Udai Pareek identified key behavioral motives that influence interpersonal dynamics and management behavior within organizations.

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

A. Achievement (III) — characterized by a persistent concern for excellence, personal challenge, and high performance.
B. Control (IV) — characterized by a concern for orderliness, monitoring, discipline, and authority.
C. Extension (I) — characterized by a concern for others, social relevance, and helping colleagues grow.
D. Dependency (II) — characterized by seeking external structure, mentoring, and support for self-development.

Question 50
A point estimator is said to be consistent when:
1. AIt has smaller standard error
2. BIts expected value is equal to the population parameter
3. CIt tends to become closer to the population parameter as the sample size becomes larger
4. DIt is based on all available information
Answer: (C) It tends to become closer to the population parameter as the sample size becomes larger
Explanation
In statistical estimation theory, a point estimator is consistent if it converges in probability to the true population parameter as sample size increases.

As the sample size n approaches infinity, the sampling distribution collapses around the parameter, making estimation error approach zero.

Smaller standard error defines statistical efficiency rather than consistency.

Expected value equal to the true parameter defines an unbiased estimator.

Utilizing all available sample data defines a sufficient statistic.
Sign in to read the full explanation
Question 51
In case of two variables, the estimated regression equation is y = 60 + 5x. The total sum of squares is 15730 and sum of square due to error is 1530. The estimated regression line based on this information is a:
1. APoorest fit
2. BModerate fit
3. CGood fit
4. DBest fit
Answer: (C) Good fit
Explanation
The goodness of fit of a linear regression model is evaluated using the coefficient of determination (R-squared).

Formula:
R^2 = 1 - (SSE / SST)

Calculation:
R^2 = 1 - (1530 / 15730) = 1 - 0.0973 = 0.9027

An R-squared value of approximately 90.3% indicates that over 90 percent of the total variation in the dependent variable is explained by the independent variable, establishing that the estimated regression line represents a good fit.
Sign in to read the full explanation
Question 52
The doctrine of 'Caveat emptor' applies in which of the following situations?
1. AWhen goods are sold by description
2. BWhen goods are sold by sample
3. CWhen goods are sold under implied conditions and warranties
4. DWhen the buyer does not intimate the purpose to the seller and depends upon his own skill and judgment
Answer: (D) When the buyer does not intimate the purpose to the seller and depends upon his own skill and judgment
Explanation
Under Section 16 of the Sale of Goods Act, 1930, the rule of caveat emptor (let the buyer beware) establishes that the seller is not bound to supply goods suitable for any specific purpose unless that purpose was communicated to the seller.

D. Buyer does not intimate purpose — correct. When the buyer examines the goods and relies entirely on their own skill and judgment, caveat emptor applies fully.

A. Sold by description — incorrect. Sale by description creates an implied condition of merchantability under Section 15.

B. Sold by sample — incorrect. Sale by sample creates an implied condition under Section 17 that bulk corresponds with sample.

C. Implied conditions and warranties — incorrect. Implied terms protect the buyer and represent statutory exceptions to caveat emptor.
Sign in to read the full explanation
Question 53
In totalitarianism, called authoritarianism, individual freedom is subordinated to the power of the authority of a group or state. Which of the following is not a type of totalitarianism?
1. ATheocratic
2. BRight Wing
3. CTribal
4. DConservative
Answer: (D) Conservative
Explanation
In international business and political systems, political structures are categorized into democratic versus totalitarian governance.

Recognized categories of totalitarianism include Theocratic (rule by religious leadership), Tribal (rule by a dominant ethnic tribe), Communist/Left-wing, and Right-wing (military or fascist regimes that restrict political liberty while maintaining private property).

Conservative is a standard democratic political philosophy centered on tradition and limited state intervention, not an institutional form of totalitarian regime.
Sign in to read the full explanation

Question 54

Match List I with List II:

List I (Technique)	List II (Feature)
A. Pooling	I. Setting up production facilities in a number of countries
B. Financial hedge	II. Reduction of Foreign exchange risk through leading and lagging
C. Natural hedge	III. Simultaneous borrowing and lending in two different currencies
D. Netting	IV. Holding and managing of cash by the affiliates

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

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

Explanation

Multinational corporations employ operational and financial mechanisms to manage foreign exchange exposure and liquidity.

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

A. Pooling (IV) — aggregates cash balances from international affiliates into centralized accounts for corporate cash management.
B. Financial hedge (III) — hedges balance sheet exposure through simultaneous borrowing and lending in two different currencies.
C. Natural hedge (I) — aligns currency cash flows operationally by establishing production facilities across target sales markets.
D. Netting (II) — offsets cross-border intracompany receivables and payables, complemented by leading and lagging payment schedules.

Question 55
The sales step in which a salesperson learns as much as possible about a prospective customer before making a sales call is known as:
1. AApproach
2. BProspecting
3. CPre-approach
4. DPresentation
Answer: (C) Pre-approach
Explanation
The personal selling process comprises a structured progression of professional sales steps.

Pre-approach (C) — correct. The salesperson conducts background research on the prospective buyer, their industry, credit standing, and specific needs prior to direct contact.

Approach (A) — the initial face-to-face or virtual greeting where the salesperson establishes rapport.

Prospecting (B) — identifying and screening qualified prospective leads.

Presentation (D) — demonstrating product value and explaining solutions to the client.
Sign in to read the full explanation
Question 56
Which of the interventions can be used to manage the anxiety created by mergers and acquisitions?

a) Speed-up of the integration process
b) Articulate a new vision, common goals and organizational symbols
c) Employee counselling and stress management training
d) Disengage efforts such as termination ceremonies
e) Social support from spouse, friends, supervisors and coworkers

Choose the most appropriate answer from the options given below:
1. AA, B and C only
2. BB, C and D only
3. CA, C and E only
4. DA, B and E only
Answer: (B) B, C and D only
Explanation
Organizational psychologists Marks and Mirvis identified specific organizational interventions to manage employee anxiety during corporate mergers and acquisitions.

Articulate a new vision and shared symbols (b) — provides cognitive clarity and rebuilds organizational identity.

Employee counselling and stress management (c) — equips personnel with active coping strategies during structural disruption.

Disengagement rituals such as termination ceremonies (d) — formally acknowledges organizational loss, allowing staff to let go of old corporate attachments.

Therefore, interventions b, c, and d form the established organizational framework for post-merger stress management.
Sign in to read the full explanation
Question 57
Which one of the following normative ethical theories has 'Net benefit from the decision' as consideration in ethical decision making?
1. AEthics of duty
2. BTheory of justice
3. CStock holder ethics
4. DUtilitarianism
Answer: (D) Utilitarianism
Explanation
Utilitarianism, pioneered by Jeremy Bentham and John Stuart Mill, evaluates the morality of actions based entirely on their consequences.

The fundamental principle dictates choosing the course of action that maximizes net utility — producing the greatest aggregate net benefit over harm for all affected stakeholders.

Ethics of duty (deontology) relies on universal moral duties irrespective of outcome.

Theory of justice prioritizes equitable distribution of rights and resources.

Stockholder ethics focuses narrowly on legal shareholder returns.
Sign in to read the full explanation
Question 58
The practice of setting a price target by the firm and then developing a product that would allow the firm to maximize total profits at that price is called:
1. APrestige pricing
2. BPrice lining
3. CPrice matching
4. DValue pricing
Answer: (D) Value pricing
Explanation
In strategic marketing, target-costing and value pricing involve establishing a predetermined price point that customers will pay, then designing product specifications and production processes to achieve targeted margins.

Value pricing (D) — adjusts product design, features, and cost structures to deliver high perceived value while hitting target profitability.

Price lining (B) — sets fixed discrete price tiers across a product line, such as budget, standard, and premium models.

Prestige pricing (A) — charges high prices to convey exclusivity and luxury status.

Price matching (C) — benchmarks pricing directly against competitor price quotes.
Sign in to read the full explanation
Question 59
The Competition (Amendment) Act, 2023 revamped the Competition Act in which of the following perspectives:

a) The CCI needs to be intimated if the value of merger and acquisition deal exceeds Rs. 2000 crores
b) The overall timeline for assessment of combination has been reduced to 150 days from 210 days
c) 'Exclusive selling agreements' has been replaced with 'exclusive dealing Agreement'
d) Entities who are not engaged in identical or similar trade shall also be part of an Anti-competitive Agreement under Section 3(3) of the Act
e) Anti-competitive conduct like 'tie-up arrangements' 're-sale price Maintenance' and 'exclusive distribution agreement' have been redefined

Choose the correct answer from the options given below:
1. Aa, b and c only
2. Bc and e only
3. Ca, b, c and d only
4. Da, b, c, d and e
Answer: (D) a, b, c, d and e
Explanation
The Competition (Amendment) Act, 2023 introduced extensive modernizations to Indian competition law.

Deal Value Threshold of Rs. 2,000 crores introduced for combination notifications (a)

Assessment timeline for combinations reduced from 210 to 150 days (b)

Replaced exclusive selling agreements with exclusive dealing agreements (c)

Expanded Section 3(3) to include facilitators and non-competing entities in hub-and-spoke cartels (d)

Redefined vertical restraints including tie-in arrangements and resale price maintenance (e)

Therefore, all five perspectives (a, b, c, d, and e) were enacted under the 2023 amendment.
Sign in to read the full explanation
Question 60
Which of the following describe an intervention currency?
1. AThe currency in which exporter choose to invoice their exports
2. BThe currency in which cross-border transactions are paid for and closed
3. CThe currency in terms of which a domestic currency is quoted
4. DThe vehicle currency
Answer: (C) The currency in terms of which a domestic currency is quoted
Explanation
In foreign exchange and central banking mechanisms, an intervention currency is the major foreign reserve currency used by monetary authorities to peg, quote, and stabilize the national currency.

Central banks maintain official quotations of the domestic currency in terms of the intervention currency and actively trade it to influence exchange rate stability.

Vehicle currency refers to a third currency utilized for international transactions between two other countries.

Invoicing currency describes the monetary denomination chosen on commercial export documentation.
Sign in to read the full explanation
Question 61
Given below are two statements:

Statement I: Certificate of incorporation is conclusive evidence that all the requirements of the Companies Act have been complied with in respect of registration.
Statement II: After incorporation, if the company makes a fresh contract in terms of the pre-incorporation contract, the liability of the promoters shall come to an end.

In the light of the above statements, choose the correct answer from the options given below:
1. ABoth Statement I and Statement II are true
2. BBoth Statement I and Statement II are false
3. CStatement I is true but Statement II is false
4. DStatement I is false but Statement II is true
Answer: (A) Both Statement I and Statement II are true
Explanation
Company incorporation law establishes clear rules regarding registration finality and pre-incorporation promoter liability.

Statement I is true because Section 9 of the Companies Act, 2013 and settled corporate jurisprudence hold that the certificate of incorporation is conclusive proof that all statutory registration formalities have been fulfilled.

Statement II is true because promoters remain personally liable on contracts entered prior to incorporation unless novation occurs — whereby the newly incorporated entity enters into a fresh contract that supersedes the prior agreement.
Sign in to read the full explanation
Question 62
Arrange the following service gaps as per SERVQUAL approach in the logical sequence:

a) The gap between service quality specifications and service delivery
b) The gap between customer expectations and management perception
c) The gap between perceived service and expected service
d) The gap between management perception and service quality specification
e) The gap between service delivery and external communications

Choose the correct answer from the options given below:
1. Ad, a, b, e, c
2. Bb, d, a, e, c
3. Ca, c, b, d, e
4. Dc, a, b, e, d
Answer: (B) b, d, a, e, c
Explanation
Parasuraman, Zeithaml, and Berry formulated the five-gap model of service quality.

b, d, a, e, c

Gap 1: Customer expectation vs management perception (b)

Gap 2: Management perception vs service quality specifications (d)

Gap 3: Service quality specifications vs actual service delivery (a)

Gap 4: Service delivery vs external communications to consumers (e)

Gap 5: Customer perceived service vs expected service (c)
Sign in to read the full explanation
Question 63
Which of the following are the characteristics of the Euro Currency market?

a) The euro currency market does not have geographical limits
b) The euro currency market is unregulated
c) The euro currency market does not have deposit insurance
d) There are no restriction on the maximum interest payable or chargeable
e) The euro currency market does not attract CRR and SLR restrictions

Choose the most appropriate answer from the options given below:
1. Aa, b and c only
2. Bb, e and d only
3. Ce, c and a only
4. Dd, a and e only
Answer: (B) b, e and d only
Explanation
The Eurocurrency market operates as an offshore wholesale banking network for currencies held outside their country of origin.

The market operates free from host-nation domestic regulatory supervision (b).

Interbank offshore deposits do not attract reserve ratios like Cash Reserve Ratio (CRR) or Statutory Liquidity Ratio (SLR) (e).

Interest rates fluctuate freely based on international interbank demand without administrative interest rate ceilings (d).

Therefore, statements b, e, and d define the core financial and regulatory characteristics of the Eurocurrency market.
Sign in to read the full explanation
Question 64
The Directorate General of Foreign Trade (DGFT) facilitates and promotes foreign trade in India and also implements the foreign trade policy of India. Which of the following union ministry governs the DGFT?
1. AMinistry of Commerce and Industry
2. BMinistry of Science and Technology
3. CMinistry of Finance
4. DMinistry of External Affairs
Answer: (A) Ministry of Commerce and Industry
Explanation
The Directorate General of Foreign Trade (DGFT) is an attached agency under the Ministry of Commerce and Industry, Government of India.

Headed by the Director General of Foreign Trade, it regulates, facilitates, and implements the national Foreign Trade Policy.

It also issues Importer-Exporter Codes (IEC) to commercial traders across India.

The Ministry of Finance oversees taxation and customs duties, while External Affairs manages diplomatic relations.
Sign in to read the full explanation

Question 65

Match List I with List II:

List I (Herfindahl Index Value)	List II (Market Type)
A. Zero	I. Oligopoly with high risk of cartels
B. 0-1,000	II. Oligopoly
C. 1,000 - 1,800	III. Monopolistic competition
D. 1,800 - 10,000	IV. Extremely competitive market

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

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

Explanation

The Herfindahl-Hirschman Index (HHI) quantifies market concentration and antitrust risk by summing the squared market shares of all firms.

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

A. Zero (IV) — represents an atomistic, extremely competitive market with infinitesimal firm shares.
B. 0 to 1,000 (III) — indicates an unconcentrated market characteristic of monopolistic competition.
C. 1,000 to 1,800 (II) — reflects moderate concentration characteristic of an oligopoly.
D. 1,800 to 10,000 (I) — denotes high market concentration with elevated risk of cartel formation.

Question 66
Which of the following cause demand of a product to increase?

a) An increase in consumer's income
b) An increase in the prices of substitutes
c) An increase in the price of complements
d) An increase in the number of substitutes
e) An increased taste for the commodity

Choose the correct answer from the options given below:
1. Aa, b and c only
2. Bc, d and e only
3. Cb, d and e only
4. Da, b and e only
Answer: (D) a, b and e only
Explanation
Shifts in consumer demand curves are driven by changes in non-price determinants.

Increase in consumer income (a) — expands purchasing power, increasing demand for normal goods.

Higher price of substitutes (b) — diverts consumers toward the cheaper product, raising its demand.

Favorable taste preference (e) — boosts consumer willingness to purchase at every price.

Higher prices of complementary goods (c) decrease demand, and an increase in substitute products (d) draws buyers away.

Therefore, factors a, b, and e cause market demand to increase.
Sign in to read the full explanation
Question 67
Assertion (A): When a partner retires, all the assets and liabilities are revalued according to current value.
Reason (R): The balance sheet should show the correct values of assets and liabilities.
1. ABoth A and R are correct and R is the correct explanation of A
2. BBoth A and R are correct but R is not the correct explanation of A
3. CA is correct but R is not correct
4. DA is not correct but R is correct
Answer: (B) Both A and R are correct but R is not the correct explanation of A
Explanation
Partnership reconstitution rules mandate revaluation of firm assets and liabilities upon the departure of a partner.

Assertion (A) is correct because revaluation ensures that accumulated unrecorded gains or losses up to the retirement date are distributed fairly among all partners according to their profit-sharing ratio.

Reason (R) is correct because accounting conventions require the balance sheet of the reconstituted firm to reflect true and fair asset values.

Reason (R) is not the causal explanation of (A) because revaluation is performed to achieve equitable capital settlement with the retiring partner rather than solely for balance sheet presentation.
Sign in to read the full explanation
Question 68
Which are the appropriate tax planning perspectives in case of shut down or continue decision under Income Tax Act, 1961?

a) Business loss and unabsorbed depreciation can be carry forward and set off against profit and gain
b) The loss making company and profit making company may merge to avail the tax benefit
c) Tax benefit of deduction u/s 33 AB and 115 VT may be withdrawn and liable to tax for the year in which business is discontinued
d) The condition of section 80 IB / 80 IC of the Act, a deduction is allowed to Such undertaking
e) If a person has more than one business, the loss making business may not be discontinued

Choose the most appropriate answer from the options given below:
1. Aa, c and d only
2. Bb, d and e only
3. Cc, d and e only
4. Da, c and e only
Answer: (D) a, c and e only
Explanation
Corporate tax planning evaluates the tax consequences of closing versus continuing an unprofitable business unit.

Continuing business operations preserves the right to carry forward accumulated business losses under Section 72 and unabsorbed depreciation under Section 32(2) (a).

Discontinuing business triggers the withdrawal and taxation of special statutory deductions previously claimed under Sections 33AB and 115VT (c).

Maintaining the loss-making unit allows an assessee with multiple undertakings to set off current operating losses against profitable lines under Section 70 (e).

Therefore, perspectives a, c, and e guide the tax planning decision.
Sign in to read the full explanation

Question 69

Match List I with List II:

List I (Non-parametric test)	List II (Parametric test)
A. Friedman Test	I. One-way ANOVA
B. Mann-Whitney U Test	II. t-test
C. Kruskal-Wallis Test	III. Paired t-test
D. Wilcoxon signed Rank Test	IV. Two-way ANOVA

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

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

Explanation

Non-parametric statistical hypothesis tests serve as distribution-free equivalents to classical parametric procedures.

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

A. Friedman Test (IV) — non-parametric alternative to Two-way ANOVA with repeated measures.
B. Mann-Whitney U Test (II) — non-parametric equivalent to the independent two-sample t-test.
C. Kruskal-Wallis Test (I) — non-parametric counterpart to One-way ANOVA for comparing three or more independent groups.
D. Wilcoxon Signed-Rank Test (III) — non-parametric equivalent to the paired samples t-test.

Question 70
According to the theory of contestable markets, vigorous competition can take place even among few sellers if:

a) Product is differentiated
b) Demand is infinitely elastic
c) Entry into the market is absolutely free
d) There are strong entry-exit barriers
e) Exit from the market is entirely costless

Choose the correct answer from the options given below:
1. Aa and d only
2. Bb and e only
3. Ca and c only
4. Dc and e only
Answer: (D) c and e only
Explanation
William Baumol's Theory of Contestable Markets demonstrates that market contestability depends on the threat of potential entry rather than the actual number of incumbent firms.

Free market entry (c) — allows external competitors to enter without legal or structural barriers if incumbents charge supranormal prices.

Costless exit (e) — ensures that no unrecoverable sunk costs trap firms, enabling hit-and-run entry.

These two conditions force oligopolists to price at average cost to avert entry, maintaining competitive discipline.

Therefore, conditions c and e are the essential requirements for contestable market behavior.
Sign in to read the full explanation
Question 71
A population has a mean of 200 and a standard deviation of 50. Suppose a simple random sample of size 100 is selected then the probability that the sample mean will be ± 5 of the population mean is:
1. A0.7523
2. B0.6928
3. C0.9544
4. D0.6826
Answer: (D) 0.6826
Explanation
Under the Central Limit Theorem, the sampling distribution of the sample mean is normally distributed with mean equal to the population mean and standard error proportional to sample size.

Standard Error Calculation:
SE = sigma / sqrt(n) = 50 / sqrt(100) = 50 / 10 = 5

Z-score Calculation:
Z = (X_bar - mu) / SE = (+/- 5) / 5 = +/- 1

Normal Probability:
P(-1 <= Z <= 1) = 0.6826

Therefore, the probability that the sample mean falls within plus or minus 5 of the population mean is 0.6826.
Sign in to read the full explanation
Question 72
Assertion (A): By removing barriers between national markets, trading blocks create competition due to bigger trading area.
Reason (R): Increased competition can lead to the closure of local industry and harm domestic consumption.
1. ABoth A and R are correct and R is the correct explanation of A
2. BBoth A and R are correct but R is not the correct explanation of A
3. CA is correct but R is not correct
4. DA is not correct but R is correct
Answer: (B) Both A and R are correct but R is not the correct explanation of A
Explanation
Regional trade integration creates enlarged internal markets across member countries.

Assertion (A) is correct because dismantling tariff and quota barriers integrates separate national jurisdictions into a common market, stimulating intensified cross-border competition.

Reason (R) is correct because heightened competitive pressure from low-cost regional producers can displace inefficient domestic firms and trigger industrial restructuring.

Reason (R) does not explain (A) because R details potential adverse consequences of competition rather than explaining the economic mechanism that creates enlarged market competition.
Sign in to read the full explanation

Question 73

Match List I with List II:

List I (Consequent outcome)	List II (Taxation Perspective)
A. The person is liable to penalty and prosecution	I. Tax Management
B. Tax is reduced by taking advantage of loopholes of the law	II. Tax Avoidance
C. Main aim is compliance with legal formalities	III. Tax Evasion
D. It is a guide in decision making	IV. Tax planning

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

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

Explanation

Tax compliance and fiscal strategies are distinguished by their legal validity and operational objectives.

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

A. Person is liable to penalty and prosecution (III) — Tax Evasion, an illegal and deliberate concealment of income.
B. Tax reduced by taking advantage of legal loopholes (II) — Tax Avoidance, exploiting ambiguities in statutory drafting.
C. Main aim is compliance with legal formalities (I) — Tax Management, ensuring timely filing, documentation, and TDS compliance.
D. Guide in decision making (IV) — Tax Planning, arranging economic transactions legally to claim legitimate exemptions.

Question 74
Which are the RBI notified domestic accredited credit rating agencies?

a) Brickwork ratings
b) Active ratings
c) CRISIL ratings
d) Standard and Poor's
e) Moody's

Choose the correct answer from the options given below:
1. Ab and c only
2. Bc and d only
3. Ca and c only
4. Dc and e only
Answer: (C) a and c only
Explanation
Under the Basel capital adequacy framework, the Reserve Bank of India accredits domestic External Credit Assessment Institutions (ECAIs).

Domestic accredited agencies include Brickwork Ratings (a), CRISIL (c), CARE, ICRA, India Ratings, and Infomerics.

Standard and Poor's (d) and Moody's (e) are international credit rating agencies.

Active ratings (b) is unaccredited.

Therefore, only Brickwork ratings and CRISIL ratings (a and c) are RBI-notified domestic accredited agencies.
Sign in to read the full explanation
Question 75
From the following, which is an uncommon feature of Private Equity and Venture Capital?
1. ABoth invest in companies that are not able to or ready to gain capital from the public
2. BTheir investment is used for financial or operating restructuring of the Investor companies
3. CThey are set up an independent pools of capital contributed by institutions or the high net worth individuals
4. DTheir activities are subject to few regulations
Answer: (B) Their investment is used for financial or operating restructuring of the Investor companies
Explanation
While Private Equity (PE) and Venture Capital (VC) both provide private illiquid equity capital, their strategic investment profiles differ significantly.

Restructuring focus (B) — uncommon feature. Private Equity focuses heavily on mature companies requiring leveraged buyouts, management turnarounds, and operational restructuring, whereas Venture Capital invests in nascent startup ventures for innovation and rapid commercial growth without restructuring existing operations.

Both invest in non-public companies (A), aggregate institutional and high-net-worth capital pools (C), and operate with lighter regulatory oversight than public equity markets (D).
Sign in to read the full explanation
Question 76
Which one of the following is a fully owned subsidiary of the R.B.I?
1. AIndian Institute of Bank Management (IIBM)
2. BNational Institute of Bank Management (NIBM)
3. CIndian Institute of Banking and Finance (IIBF)
4. DIndian Financial Technology and Allied Services (IFTAS)
Answer: (D) Indian Financial Technology and Allied Services (IFTAS)
Explanation
Indian Financial Technology and Allied Services (IFTAS) is a wholly owned subsidiary of the Reserve Bank of India.

IFTAS designs, deploys, and operates critical financial IT infrastructure including the INFINET network and structured financial messaging systems for the banking industry.

Other wholly owned subsidiaries of the RBI include DICGC, BRBNMPL, ReBIT, and the Reserve Bank Innovation Hub.

IIBF, NIBM, and IIBM are independent academic and professional training institutes rather than wholly owned subsidiaries of the central bank.
Sign in to read the full explanation
Question 77
Starting from the earliest, sequence the steps taken to develop the money market in India:

a) Introduction of Interest Rate Swaps (IRSs)
b) Introduction of Commercial Paper
c) Introduction of Ways and Means Advances (WMA) linked to bank rate
d) Introduction of Liquidity Adjustment Facility (LAF)
e) Implementation of Real Time Gross Settlement (RTGS)

Choose the correct answer from the options given below:
1. Ac, b, d, a, e
2. Bd, c, b, e, a
3. Cb, d, c, a, e
4. Db, c, d, a, e
Answer: (D) b, c, d, a, e
Explanation
The chronological modernization of the Indian money and interbank payment markets occurred through milestone financial innovations.

b, c, d, a, e

Commercial Paper (b) — introduced in 1990 following Vaghul Committee recommendations

Ways and Means Advances (c) — introduced in 1997 replacing ad-hoc treasury bills for government deficit financing

Liquidity Adjustment Facility (d) — operationalized in June 2000 following Narasimham Committee II proposals

Interest Rate Swaps (a) — guidelines introduced in 1999 and expanded in derivative markets

Real Time Gross Settlement (e) — implemented by the RBI in 2004 for high-value interbank settlements
Sign in to read the full explanation
Question 78
The optimal capital budget of a firm is reflected by intersection point of:
1. ASecurity market line and capital market line
2. BWeighted average cost of capital curve and marginal cost of capital curve
3. CInvestment opportunity curve and marginal cost of capital curve
4. DWeighted average cost of capital curve and investment opportunity curve
Answer: (C) Investment opportunity curve and marginal cost of capital curve
Explanation
In corporate capital budgeting theory, a firm determines its optimal capital expenditure level by balancing project returns against capital costs.

The Investment Opportunity Schedule (IOS) curve plots potential capital projects in descending order of their internal rate of return.

The Marginal Cost of Capital (MCC) curve plots the ascending cost of raising successive increments of new financing.

The intersection point where the marginal return on investment equals the marginal cost of capital defines the optimal capital budget, maximizing enterprise value.
Sign in to read the full explanation
Question 79
The total return for an equity stock during a year was 12.5 per cent. The rate of inflation during that year was 3.5 per cent. The real (inflation-adjusted) return was:
1. A9.26 per cent
2. B16.00 per cent
3. C7.65 per cent
4. D8.70 per cent
Answer: (D) 8.70 per cent
Explanation
Sign in to read the full explanation
Question 80
Which of the following is not the limitation of activity based costing?
1. AIt involves various support activities in the process of making products
2. BIt does not provide relevant information for decision making
3. CAll costs cannot be identified easily with a particular activity
4. DSet up cost as well as costs of running and updating the ABC system are very high
Answer: (A) It involves various support activities in the process of making products
Explanation
Activity-Based Costing (ABC) models overhead consumption by assigning indirect resources to cost pools based on operational activities.

Involving support activities in the manufacturing workflow (A) is a core structural feature and operational strength of ABC, enabling more accurate cost tracing rather than representing a defect or limitation.

High implementation and software maintenance costs (D) and difficulty identifying non-linear cost drivers for complex activities (C) represent genuine operational limitations of ABC systems.
Sign in to read the full explanation
Question 81
In the context of banking sector, Spread is defined as a function of the following:

a) Forex
b) Net Interest income
c) Rate Sensitive Assets
d) Asset Ratio
e) Leverage Ratio

Choose the correct answer from the options given below:
1. Ac and e only
2. Ba and c only
3. Cb and d only
4. Db and e only
Answer: (C) b and d only
Explanation
In commercial bank financial analysis, interest rate spread measures the difference between the average yield on earning assets and the average rate paid on interest-bearing funds.

Spread is derived from Net Interest Income (b), which represents gross interest revenue minus gross interest expenditure.

It is scaled and evaluated against the bank's underlying earning asset base through asset ratios (d).

Forex activities (a) generate non-interest fee income rather than spread, and leverage ratios (e) monitor solvency and capital adequacy.
Sign in to read the full explanation
Question 82
Which committee had recommended a comprehensive framework of reform in the insurance sector?
1. AGhosh Committee (1993)
2. BSodhani Committee (1994)
3. CMalhotra Committee (1993)
4. DKalia Committee (1994)
Answer: (C) Malhotra Committee (1993)
Explanation
The Committee on Reforms in the Insurance Sector was constituted by the Government of India in 1993 under the chairmanship of R.N. Malhotra, former Governor of the Reserve Bank of India.

The Malhotra Committee submitted its report in 1994, recommending ending state monopolies in life and general insurance, permitting private and foreign equity participation, and establishing an independent statutory regulatory authority.

These recommendations culminated in the enactment of the Insurance Regulatory and Development Authority (IRDA) Act, 1999.

Ghosh Committee addressed bank frauds, and Sodhani Committee examined foreign exchange markets.
Sign in to read the full explanation
Question 83
"It is an art of dodging tax without actually breaking the law". This is related with:
1. ATax Management
2. BTax Avoidance
3. CTax Planning
4. DTax Evasion
Answer: (B) Tax Avoidance
Explanation
Tax avoidance describes the practice of minimizing tax obligations by legally exploiting drafting ambiguities and loopholes within the tax statute.

In judicial precedents including McDowell & Co. Ltd., courts described tax avoidance as the art of dodging tax without violating the literal text of the statute.

Tax Evasion (D) involves illegal concealment or fraudulent misrepresentation.

Tax Planning (C) legitimately aligns financial affairs with the legislative intent of statutory deductions and exemptions.

Tax Management (A) focuses on administrative compliance and procedural filings.
Sign in to read the full explanation
Question 84
In which of the following balance of payment accounts changes in holdings of gold and foreign currencies by official monetary institutions are accounted for?
1. ACurrent Account
2. BCapital Account
3. COfficial Reserves Account
4. DForeign Exchange Account
Answer: (C) Official Reserves Account
Explanation
In balance of payments accounting, international transactions are classified into the current account, the capital and financial account, and the official reserves account.

The Official Reserves Account records net changes in the foreign asset holdings of the central bank and monetary authorities, including monetary gold, foreign exchange assets, Special Drawing Rights (SDRs), and reserve tranche positions in the IMF.

The Current Account tracks international trade in merchandise, services, and unilateral transfers.

The Capital Account records international asset purchases and debt flows between private entities and governments.
Sign in to read the full explanation
Question 85
The steps to be followed by a firm while strategizing to go international are as follows:

a) Deciding when to enter
b) Deciding which markets to enter
c) Deciding whether to go global
d) Choosing a mode of entry
e) Deciding how to enter the chosen market

Choose the correct answer from the options given below:
1. Ae, d, c, b, a
2. Bc, a, e, d, b
3. Cc, b, a, e, d
4. Da, b, c, e, d
Answer: (C) c, b, a, e, d
Explanation
Global marketing strategy follows a structured decision hierarchy for international business expansion.

c, b, a, e, d

Step 1: Deciding whether to go global (c) — evaluates domestic market maturity and global competitiveness

Step 2: Deciding which markets to enter (b) — screens candidate countries by market potential and risk

Step 3: Deciding when to enter (a) — determines strategic timing and order of market entry

Step 4: Deciding how to enter the chosen market (e) — evaluates operational and resource commitments

Step 5: Choosing a mode of entry (d) — selects exporting, licensing, franchising, joint ventures, or direct subsidiaries
Sign in to read the full explanation
Question 86
Which of the following are correct for Agricultural Income?

a) Income from self-grown grass, trees, bamboo
b) Rent and Rates derived from land
c) Income from making the produce fit for marketing
d) Income from land used for storing agriculture produce
e) Income from farmhouse

Choose the correct answer from the options given below:
1. Ab, c and e only
2. Bb, d and e only
3. Ca, c and d only
4. Dc, d and e only
Answer: (A) b, c and e only
Explanation
Under Section 2(1A) of the Income Tax Act, 1961, agricultural income comprises specific statutory categories of earnings derived from land situated in India used for agricultural purposes.

Rent or revenue derived from agricultural land (b)

Income from performing manual or mechanical operations ordinarily employed to make produce fit for market (c)

Income from buildings or farmhouses directly required for agricultural operations on the land (e)

Income from wild, self-grown grass, timber, or bamboo without human cultivation (a) is non-agricultural income.

Commercial rent from storing produce in commercial warehouses (d) is taxable business income.

Therefore, statements b, c, and e represent agricultural income.
Sign in to read the full explanation
Question 87
The problem-definition process involves following steps. Arrange them in a logical Sequence:

a) Determine the unit of analysis
b) Determine the relevant variables
c) Write managerial decision statement and research objectives
d) Write research question and/or research hypothesis
e) Identify key problems

Choose the correct answer from the options given below:
1. Aa, b, e, d, c
2. Bc, d, a, b, e
3. Cb, e, a, c, d
4. De, c, a, b, d
Answer: (D) e, c, a, b, d
Explanation
In business research methodology, formulating and defining the research problem follows a progressive analytical sequence.

e, c, a, b, d

Step 1: Identify key business problems and symptoms (e)

Step 2: Write managerial decision statements and research objectives (c)

Step 3: Determine the unit of analysis such as individuals or organizations (a)

Step 4: Determine relevant variables and operational concepts (b)

Step 5: Formulate formal research questions and testable hypotheses (d)
Sign in to read the full explanation
Question 88
Which one of the following is the hiring related turnover cost when an employee quits an organization?
1. AAdvertising
2. BInterviewing
3. CTraining
4. DRecruiter fees
Answer: (B) Interviewing
Explanation
Human resource turnover costing separates employee replacement expenses into distinct operational categories.

Interviewing (B) — represents the internal management time and executive hiring cost incurred when screening prospective candidates to replace departed personnel.

Advertising (A) and Recruiter fees (D) — are classified as pre-employment recruitment and candidate attraction costs.

Training (C) — constitutes an onboarding and development expenditure incurred after hiring.
Sign in to read the full explanation
Question 89
A multinational company can use which prices to create profits in low tax regimes and loss in high tax regimes?
1. ADivisional prices
2. BInter-Divisional Prices
3. CHolding company prices
4. DTransfer prices
Answer: (D) Transfer prices
Explanation
Transfer pricing refers to the internal price charged on transactions involving goods, services, or intellectual property exchanged between related entities of a multinational enterprise.

By setting high transfer prices on sales originating from subsidiaries located in low-tax jurisdictions to affiliates in high-tax regimes, the enterprise artificially lowers taxable income in high-tax countries.

Tax authorities enforce Arm's Length Price rules under transfer pricing regulations to counter base erosion and profit shifting.
Sign in to read the full explanation
Question 90
An attacking strategy which involves introducing new products or technologies that rewrite the rules of competition in the market and avoid direct conflict with a rival is known as:
1. AFlanking
2. BBypass
3. CEncirclement
4. DGuerrilla
Answer: (B) Bypass
Explanation
In competitive marketing strategy, market challengers deploy specific offensive maneuvers against entrenched market leaders.

Bypass attack (B) — correct. The firm circumvents the competitor's established stronghold by diversifying into unrelated product categories, developing new geographical markets, or introducing disruptive technologies that change competitive boundaries.

Flanking (A) — attacks vulnerable gaps in competitor geographic or segment coverage.

Encirclement (C) — launches multiple simultaneous offensives across price, product, and distribution fronts.

Guerrilla (D) — utilizes small, intermittent promotional strikes.
Sign in to read the full explanation
Question 91
Which of the following use cases are expected to promote the growth of payment banks?

a) UPI integration with the digital rupee
b) Dislocation of payment banks from digital transactions
c) UPI facilitation of cross-border remittances
d) Keeping a safe distance from the contactless payment infrastructure
e) Consumer lending through RuPay Credit Cards

Choose the most appropriate answer from the options
Interoperability guidelines for prepaid payment instruments with United Payments Interface (UPI) bolster the business case for digital wallets. For a loading fee on transactions through UPI, payments banks, for instance, can widen the adoption of wallets among customers and merchants. This increases use cases for UPI, which largely works on a model of free peer-to-peer-merchant transactions. The opportunity provided by the scorching growth of UPI transactions must, however, cross the hurdle of consumer behavior that is shaped by zero fees for payments made from their bank accounts. For survival, payments banks — which can accept deposits but are prohibited from lending — need to be part of the UPI ecosystem. They also need to carve out a distinct business segment where they have an advantage over full-service banks.

Those use cases are expected to grow as UPI diversifies into cross-border remittances, introduces consumer lending through RuPay credit cards, offers currency exchange to foreign travelers, and bill payments using standing instructions gain traction. UPI will also have to integrate with the digital rupee that is undergoing tests for retail and wholesale transactions. The digital payments platform will continue to play a key role in the infrastructure that is being developed around contactless payments. This involves building additional UPI context around digital transactions such as billing and credit-profiling. Initial adoption has surpassed the most optimistic expectations, principally on account of the waiver of the merchant discount rate. In the next leg, UPI will grow by providing solutions for the conduct of business. It will have to incorporate lending at some point to become a comprehensive medium of commerce. The infrastructure must encourage fintechs to push innovation in finance. Payments banks have a strong correlation with the growth of digital transactions. They are a vital piece of the machinery being built, and interoperability with UPI guidelines plugs them deeper.
1. Aa, b and c only
2. Bc, d and e only
3. Ca, c and e only
4. Db, d and e only
Answer: (C) a, c and e only
Explanation
The reading passage specifies multiple emerging digital use cases that bolster the business case and expansion of payments banks.

UPI integration with the central bank digital rupee (a)

UPI facilitation of cross-border remittances (c)

Consumer lending through RuPay credit cards (e)

Dislocating payment banks (b) and distancing them from contactless payments (d) directly contradict the passage.
Sign in to read the full explanation
Question 92
Contactless payments infrastructure will empower fintechs for:
Interoperability guidelines for prepaid payment instruments with United Payments Interface (UPI) bolster the business case for digital wallets. For a loading fee on transactions through UPI, payments banks, for instance, can widen the adoption of wallets among customers and merchants. This increases use cases for UPI, which largely works on a model of free peer-to-peer-merchant transactions. The opportunity provided by the scorching growth of UPI transactions must, however, cross the hurdle of consumer behavior that is shaped by zero fees for payments made from their bank accounts. For survival, payments banks — which can accept deposits but are prohibited from lending — need to be part of the UPI ecosystem. They also need to carve out a distinct business segment where they have an advantage over full-service banks.

Those use cases are expected to grow as UPI diversifies into cross-border remittances, introduces consumer lending through RuPay credit cards, offers currency exchange to foreign travelers, and bill payments using standing instructions gain traction. UPI will also have to integrate with the digital rupee that is undergoing tests for retail and wholesale transactions. The digital payments platform will continue to play a key role in the infrastructure that is being developed around contactless payments. This involves building additional UPI context around digital transactions such as billing and credit-profiling. Initial adoption has surpassed the most optimistic expectations, principally on account of the waiver of the merchant discount rate. In the next leg, UPI will grow by providing solutions for the conduct of business. It will have to incorporate lending at some point to become a comprehensive medium of commerce. The infrastructure must encourage fintechs to push innovation in finance. Payments banks have a strong correlation with the growth of digital transactions. They are a vital piece of the machinery being built, and interoperability with UPI guidelines plugs them deeper.
1. AInteroperability with the UPI
2. BInnovation in finance
3. CIntegration with the UPI ecosystem
4. DIntegration with the full service banks
Answer: (B) Innovation in finance
Explanation
The reading passage discusses the strategic role of payment infrastructure development.

The passage states: "The infrastructure must encourage fintechs to push innovation in finance."

Promoting innovation in finance enables fintechs to develop contextual transaction layers around billing, credit-profiling, and commercial lending.
Sign in to read the full explanation
Question 93
Why do the payment banks need to carve out a distinct business segment for themselves?
Interoperability guidelines for prepaid payment instruments with United Payments Interface (UPI) bolster the business case for digital wallets. For a loading fee on transactions through UPI, payments banks, for instance, can widen the adoption of wallets among customers and merchants. This increases use cases for UPI, which largely works on a model of free peer-to-peer-merchant transactions. The opportunity provided by the scorching growth of UPI transactions must, however, cross the hurdle of consumer behavior that is shaped by zero fees for payments made from their bank accounts. For survival, payments banks — which can accept deposits but are prohibited from lending — need to be part of the UPI ecosystem. They also need to carve out a distinct business segment where they have an advantage over full-service banks.

Those use cases are expected to grow as UPI diversifies into cross-border remittances, introduces consumer lending through RuPay credit cards, offers currency exchange to foreign travelers, and bill payments using standing instructions gain traction. UPI will also have to integrate with the digital rupee that is undergoing tests for retail and wholesale transactions. The digital payments platform will continue to play a key role in the infrastructure that is being developed around contactless payments. This involves building additional UPI context around digital transactions such as billing and credit-profiling. Initial adoption has surpassed the most optimistic expectations, principally on account of the waiver of the merchant discount rate. In the next leg, UPI will grow by providing solutions for the conduct of business. It will have to incorporate lending at some point to become a comprehensive medium of commerce. The infrastructure must encourage fintechs to push innovation in finance. Payments banks have a strong correlation with the growth of digital transactions. They are a vital piece of the machinery being built, and interoperability with UPI guidelines plugs them deeper.
1. ATo be a part of the UPI ecosystem
2. BBecause payment banks are in competition with full service banks
3. CBecause payment banks are mandated to push innovation in finance
4. DIn order to entitle themselves for lending
Answer: (B) Because payment banks are in competition with full service banks
Explanation
The passage details the operational constraints faced by payments banks relative to commercial banks.

The text states: "For survival, payments banks — which can accept deposits but are prohibited from lending — need to be part of the UPI ecosystem. They also need to carve out a distinct business segment where they have an advantage over full-service banks."

Because payments banks are in structural competition with full-service banks that offer lending and zero-fee transactions, they must establish a differentiated niche to ensure commercial viability.
Sign in to read the full explanation
Question 94
Assertion (A): Payment banks — which can accept deposits but are prohibited from lending — need to be part of the UPI ecosystem.
Reason (R): Loading fee on transactions through UPI, payment banks can widen the adoption of wallets among customers and merchants.
Interoperability guidelines for prepaid payment instruments with United Payments Interface (UPI) bolster the business case for digital wallets. For a loading fee on transactions through UPI, payments banks, for instance, can widen the adoption of wallets among customers and merchants. This increases use cases for UPI, which largely works on a model of free peer-to-peer-merchant transactions. The opportunity provided by the scorching growth of UPI transactions must, however, cross the hurdle of consumer behavior that is shaped by zero fees for payments made from their bank accounts. For survival, payments banks — which can accept deposits but are prohibited from lending — need to be part of the UPI ecosystem. They also need to carve out a distinct business segment where they have an advantage over full-service banks.

Those use cases are expected to grow as UPI diversifies into cross-border remittances, introduces consumer lending through RuPay credit cards, offers currency exchange to foreign travelers, and bill payments using standing instructions gain traction. UPI will also have to integrate with the digital rupee that is undergoing tests for retail and wholesale transactions. The digital payments platform will continue to play a key role in the infrastructure that is being developed around contactless payments. This involves building additional UPI context around digital transactions such as billing and credit-profiling. Initial adoption has surpassed the most optimistic expectations, principally on account of the waiver of the merchant discount rate. In the next leg, UPI will grow by providing solutions for the conduct of business. It will have to incorporate lending at some point to become a comprehensive medium of commerce. The infrastructure must encourage fintechs to push innovation in finance. Payments banks have a strong correlation with the growth of digital transactions. They are a vital piece of the machinery being built, and interoperability with UPI guidelines plugs them deeper.
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 not 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
The opening paragraph of the passage links wallet loading fees directly to the necessity of UPI participation.

Assertion (A) is true because payments banks cannot lend and must integrate with UPI to capture volume and survive.

Reason (R) is true because charging loading fees on UPI transactions allows payments banks to expand wallet adoption and build viable revenue streams.

Reason (R) directly explains the economic motivation in Assertion (A), showing why UPI ecosystem integration is indispensable.
Sign in to read the full explanation
Question 95
Statement I: Initial UPI adoption has surpassed the most optimistic expectations on account of the waiver of the merchant discount rate.
Statement II: The future growth of the UPI will be facilitated by providing solution for the conduct of business and to becoming a medium of commerce.
Interoperability guidelines for prepaid payment instruments with United Payments Interface (UPI) bolster the business case for digital wallets. For a loading fee on transactions through UPI, payments banks, for instance, can widen the adoption of wallets among customers and merchants. This increases use cases for UPI, which largely works on a model of free peer-to-peer-merchant transactions. The opportunity provided by the scorching growth of UPI transactions must, however, cross the hurdle of consumer behavior that is shaped by zero fees for payments made from their bank accounts. For survival, payments banks — which can accept deposits but are prohibited from lending — need to be part of the UPI ecosystem. They also need to carve out a distinct business segment where they have an advantage over full-service banks.

Those use cases are expected to grow as UPI diversifies into cross-border remittances, introduces consumer lending through RuPay credit cards, offers currency exchange to foreign travelers, and bill payments using standing instructions gain traction. UPI will also have to integrate with the digital rupee that is undergoing tests for retail and wholesale transactions. The digital payments platform will continue to play a key role in the infrastructure that is being developed around contactless payments. This involves building additional UPI context around digital transactions such as billing and credit-profiling. Initial adoption has surpassed the most optimistic expectations, principally on account of the waiver of the merchant discount rate. In the next leg, UPI will grow by providing solutions for the conduct of business. It will have to incorporate lending at some point to become a comprehensive medium of commerce. The infrastructure must encourage fintechs to push innovation in finance. Payments banks have a strong correlation with the growth of digital transactions. They are a vital piece of the machinery being built, and interoperability with UPI guidelines plugs them deeper.
1. ABoth Statement I and Statement II are correct
2. BBoth Statement I and Statement II are incorrect
3. CStatement I is correct but Statement II is incorrect
4. DStatement I is incorrect but Statement II is correct
Answer: (A) Both Statement I and Statement II are correct
Explanation
Both statements are confirmed by the text of the reading passage.

Statement I is correct: "Initial adoption has surpassed the most optimistic expectations. But that is principally on account of the waiver of the merchant discount rate."

Statement II is correct: "In the next leg, UPI will grow by providing solutions for the conduct of business. It will have to incorporate lending at some point to become a comprehensive medium of commerce."

Therefore, both Statement I and Statement II are correct.
Sign in to read the full explanation
Question 96
The money used for trading is allowed to be transferred directly to clearing corporation through:
The proposed facility similar to the Applications Supported by Blocked Amount (ASBA) for secondary markets has elements to protect investors while increasing their potential earnings. The way it works now in the primary market is that money remains blocked in investor accounts, earning interest till issues of Initial Public Offerings (IPO) accept subscriptions. Replicating this for the secondary market is more complicated because of the number of parties, as well as the kinds of transactions, involved. Investors place a variety of orders over differing time horizons with or without leverage for multiple securities in the secondary market. Incorporating all these variables for a mechanism like ASBA involves escrow arrangements with counterparties in a dynamic environment.

The technical challenge may be considerable but not insurmountable. In this, the Securities and Exchange Board of India (SEBI) is on the right course in its effort to provide such a structure for investors. The Unified Payments Interface (UPI) allows money used for trading to be transferred directly to clearing corporations, which can then settle with brokers. This flushes out money idling with brokers, lowering risk of abuse and containing the fallout in case of broker default. This also offers a pathway for direct settlement, bypassing the pool accounts of intermediaries. SEBI has thus acted on its regulatory remit of protecting investors' cash as well as their securities.

SEBI has offered relief to brokerages that stand to lose float income on account of upstreaming client money to clearing corporations. Brokerages have been allowed to upstream clients' funds in the form of fixed deposit lien or mutual fund units. This should keep intermediation fees low while the market regulator nudges the system to clear excess funds from the broker channel. Higher upfront brokerage fees are an improvement over those subsidized by float income, bettering systemic oversight. This could lead to concentration among brokerages as discount players lose their advantage.
1. AEscrow Arrangement
2. BUnified Payments Interface
3. CE-banking
4. DCredit cards
Answer: (B) Unified Payments Interface
Explanation
The reading passage explains the technological architecture facilitating secondary market ASBA.

The text states: "The Unified Payments Interface (UPI) allows money used for trading to be transferred directly to clearing corporations, which can then settle with brokers."

This direct transfer flushes out uninvested cash idling with brokers and minimizes intermediary default risk.
Sign in to read the full explanation
Question 97
Which are reasons that make replication of ASBA for the secondary market complicated:

a) Kinds of transactions
b) Presence of large number of brokers
c) Applicability of SEBI guideline
d) Number of Parties
e) Differing time horizon

Choose the most appropriate answer from the options
The proposed facility similar to the Applications Supported by Blocked Amount (ASBA) for secondary markets has elements to protect investors while increasing their potential earnings. The way it works now in the primary market is that money remains blocked in investor accounts, earning interest till issues of Initial Public Offerings (IPO) accept subscriptions. Replicating this for the secondary market is more complicated because of the number of parties, as well as the kinds of transactions, involved. Investors place a variety of orders over differing time horizons with or without leverage for multiple securities in the secondary market. Incorporating all these variables for a mechanism like ASBA involves escrow arrangements with counterparties in a dynamic environment.

The technical challenge may be considerable but not insurmountable. In this, the Securities and Exchange Board of India (SEBI) is on the right course in its effort to provide such a structure for investors. The Unified Payments Interface (UPI) allows money used for trading to be transferred directly to clearing corporations, which can then settle with brokers. This flushes out money idling with brokers, lowering risk of abuse and containing the fallout in case of broker default. This also offers a pathway for direct settlement, bypassing the pool accounts of intermediaries. SEBI has thus acted on its regulatory remit of protecting investors' cash as well as their securities.

SEBI has offered relief to brokerages that stand to lose float income on account of upstreaming client money to clearing corporations. Brokerages have been allowed to upstream clients' funds in the form of fixed deposit lien or mutual fund units. This should keep intermediation fees low while the market regulator nudges the system to clear excess funds from the broker channel. Higher upfront brokerage fees are an improvement over those subsidized by float income, bettering systemic oversight. This could lead to concentration among brokerages as discount players lose their advantage.
1. Ac, d and e only
2. Ba, b and c only
3. Ca and d only
4. Db and c only
Answer: (C) a and d only
Explanation
The opening paragraph of the passage details why adapting ASBA to the secondary market is complex.

The text explicitly states: "Replicating this for the secondary market is more complicated because of the number of parties (d), as well as the kinds of transactions (a), involved."

The passage highlights these two specific drivers of complexity.

Therefore, factors a and d represent the exact reasons identified in the passage.
Sign in to read the full explanation
Question 98
Assertion (A): SEBI has offered relief to brokerages that stand to lose float income on account of up streaming client money to clearing corporations.
Reason (R): Brokerage have been allowed to upstream clients' fund in the form of fixed deposit lien or mutual fund units.
The proposed facility similar to the Applications Supported by Blocked Amount (ASBA) for secondary markets has elements to protect investors while increasing their potential earnings. The way it works now in the primary market is that money remains blocked in investor accounts, earning interest till issues of Initial Public Offerings (IPO) accept subscriptions. Replicating this for the secondary market is more complicated because of the number of parties, as well as the kinds of transactions, involved. Investors place a variety of orders over differing time horizons with or without leverage for multiple securities in the secondary market. Incorporating all these variables for a mechanism like ASBA involves escrow arrangements with counterparties in a dynamic environment.

The technical challenge may be considerable but not insurmountable. In this, the Securities and Exchange Board of India (SEBI) is on the right course in its effort to provide such a structure for investors. The Unified Payments Interface (UPI) allows money used for trading to be transferred directly to clearing corporations, which can then settle with brokers. This flushes out money idling with brokers, lowering risk of abuse and containing the fallout in case of broker default. This also offers a pathway for direct settlement, bypassing the pool accounts of intermediaries. SEBI has thus acted on its regulatory remit of protecting investors' cash as well as their securities.

SEBI has offered relief to brokerages that stand to lose float income on account of upstreaming client money to clearing corporations. Brokerages have been allowed to upstream clients' funds in the form of fixed deposit lien or mutual fund units. This should keep intermediation fees low while the market regulator nudges the system to clear excess funds from the broker channel. Higher upfront brokerage fees are an improvement over those subsidized by float income, bettering systemic oversight. This could lead to concentration among brokerages as discount players lose their advantage.
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
The final paragraph of the passage connects regulatory relief directly to upstreaming mechanisms.

Assertion (A) is true: "SEBI has offered relief to brokerages that stand to lose float income on account of up streaming client money to clearing corporations."

Reason (R) is true: "Brokerages have been allowed to upstream clients' funds in the form of fixed deposit lien or mutual fund units."

Reason (R) defines the specific relief mechanism granted by SEBI, providing the direct explanation for Assertion (A).
Sign in to read the full explanation
Question 99
The SEBI has acted on its regulatory remit of protecting investors cash and:
The proposed facility similar to the Applications Supported by Blocked Amount (ASBA) for secondary markets has elements to protect investors while increasing their potential earnings. The way it works now in the primary market is that money remains blocked in investor accounts, earning interest till issues of Initial Public Offerings (IPO) accept subscriptions. Replicating this for the secondary market is more complicated because of the number of parties, as well as the kinds of transactions, involved. Investors place a variety of orders over differing time horizons with or without leverage for multiple securities in the secondary market. Incorporating all these variables for a mechanism like ASBA involves escrow arrangements with counterparties in a dynamic environment.

The technical challenge may be considerable but not insurmountable. In this, the Securities and Exchange Board of India (SEBI) is on the right course in its effort to provide such a structure for investors. The Unified Payments Interface (UPI) allows money used for trading to be transferred directly to clearing corporations, which can then settle with brokers. This flushes out money idling with brokers, lowering risk of abuse and containing the fallout in case of broker default. This also offers a pathway for direct settlement, bypassing the pool accounts of intermediaries. SEBI has thus acted on its regulatory remit of protecting investors' cash as well as their securities.

SEBI has offered relief to brokerages that stand to lose float income on account of upstreaming client money to clearing corporations. Brokerages have been allowed to upstream clients' funds in the form of fixed deposit lien or mutual fund units. This should keep intermediation fees low while the market regulator nudges the system to clear excess funds from the broker channel. Higher upfront brokerage fees are an improvement over those subsidized by float income, bettering systemic oversight. This could lead to concentration among brokerages as discount players lose their advantage.
1. ASecurities
2. BDividend Income
3. CGrievances of payment
4. DPublic Deposits
Answer: (A) Securities
Explanation
The passage outlines the regulatory mandate of the Securities and Exchange Board of India.

The text states: "SEBI has thus, acted on its regulatory remit of protecting investors' cash as well as their securities."

Facilitating direct clearing house settlements shields both investor funds and securities from broker insolvency.
Sign in to read the full explanation
Question 100
The Application Supported by Blocked Amount (ASBA) originally developed for which market?
The proposed facility similar to the Applications Supported by Blocked Amount (ASBA) for secondary markets has elements to protect investors while increasing their potential earnings. The way it works now in the primary market is that money remains blocked in investor accounts, earning interest till issues of Initial Public Offerings (IPO) accept subscriptions. Replicating this for the secondary market is more complicated because of the number of parties, as well as the kinds of transactions, involved. Investors place a variety of orders over differing time horizons with or without leverage for multiple securities in the secondary market. Incorporating all these variables for a mechanism like ASBA involves escrow arrangements with counterparties in a dynamic environment.

The technical challenge may be considerable but not insurmountable. In this, the Securities and Exchange Board of India (SEBI) is on the right course in its effort to provide such a structure for investors. The Unified Payments Interface (UPI) allows money used for trading to be transferred directly to clearing corporations, which can then settle with brokers. This flushes out money idling with brokers, lowering risk of abuse and containing the fallout in case of broker default. This also offers a pathway for direct settlement, bypassing the pool accounts of intermediaries. SEBI has thus acted on its regulatory remit of protecting investors' cash as well as their securities.

SEBI has offered relief to brokerages that stand to lose float income on account of upstreaming client money to clearing corporations. Brokerages have been allowed to upstream clients' funds in the form of fixed deposit lien or mutual fund units. This should keep intermediation fees low while the market regulator nudges the system to clear excess funds from the broker channel. Higher upfront brokerage fees are an improvement over those subsidized by float income, bettering systemic oversight. This could lead to concentration among brokerages as discount players lose their advantage.
1. APrimary Market
2. BSecondary Market
3. CMoney Market
4. DForex Market
Answer: (A) Primary Market
Explanation
The opening lines of the reading passage describe the operational foundation of the ASBA mechanism.

The passage states: "The way it works now in the primary market is that money remains blocked in investor accounts, earning interest till issues of Initial Public Offerings (IPO) accept subscriptions."

Therefore, ASBA was established and currently operates in the primary equity market for IPO subscriptions.
Sign in to read the full explanation

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

Exam	UGC NET June 2023
Papers	Paper 2 (Commerce)
Exam date(s)	June 13, 2023
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 (International Trade theories)	List-II (Theory Propounders)
A. Factor Endowment theory	I. Adam Smith
B. Product life cycle theory	II. Michel Porter
C. Absolute cost advantages theory	III. Hecksher and ohin
D. Competetive advantage theory	IV. Reymond Vernon

LIST I (Nature of Goods)	LIST II (Demand Elasticities)
A. Inferior goods	I. Positive cross price elasticity of demand (Eₓᵧ > 0)
B. Substitute goods	II. Greater than unitary income elasticity of demand. (Eᵢ > 1)
C. Complimentary goods	III. Negative income elasticity of demand (Eᵢ < 0)
D. Luxury goods	IV. Negative cross price elasticity of demands, (Eₓᵧ < 0)

List I (Capital Structure theories)	List II (Key Components)
A. MM approach	I. Costs of financial distress
B. Pecking order theory	II. Assymetric information
C. Trade off theory	III. No target capital structure
D. Signaling theory	IV. Home made Leverage

List I (Valuation Approaches)	List II (Key Propounders)
A. Opportunity cost Approach	I. David Watson
B. Replacement cost Approach	II. Rensis Likert and Eric G. Flamholtg
C. Historical cost Approach	III. Brummer Flamholtz and Pyle
D. Standard cost Approach	IV. Hekimian and jones

List I (General Applications)	List II (Specific Purpose)
A. Development uses	I. Identification for performance, recognition, individual performance, salary, promotion, termination
B. Administrative uses' decisions	II. Critics of validity research, Helping meet legal requirement.
C. Organisational maintained objectives	III. Identification of individual needs, strengths, performance feed back.
D. Documentation	IV. HR planning, Determining organisation trainings needs.

List I (Stage of Buyers-Seller Relationship)	List II (Characterised by the Following)
A. Pre-relationship stage	I. Political supplies attempt to reduce risk of change and to shift risk.
B. Early stage	II. Shared muted dependence and high levels of commitment.
C. Development stage	III. Customer concerns about risk of change and its distance between validity and the potential supplies
D. Long-term stage	IV. Reduction of uncertainty and distance.

List I (Regression Variations)	List II (Measurement)
A. Total sum of square	I. Σ(ŷᵢ − ȳᵢ)²
B. Sum of square due to regression	II. Σ(yᵢ − ŷᵢ)²
C. Sum of square due to curve	III. Σ(yᵢ − ȳᵢ)²
D. Standard error of estimate	IV. √[Σ(yᵢ − ŷᵢ)² / n − 2]

List I (Schedules of the Companies Act, 2013)	List II (Deals With)
A. Schedule III	I. Code for independent director
B. Schedule IV	II. Corporate social responsibility activities
C. Schedule V	III. Preparation of Balance sheet and statement of profit and loss
D. Schedule VII	IV. Appointment and remuneration to managerial personnels

List I (Committee)	List II (Purpose)
A. Basel Committee	I. India's Money market
B. Raghuram Rajan Committee	II. Reform for financial sector
C. Vaghal Committee	III. Supervision of Bank
D. Urjit patel committee	IV. Examining the monetary framework.

List I (Person Non-Resident Indian)	List II (Rate of Deduction of Tax at Source)
A. On income from Dividend	I. 30%
B. On income by way of short term capital gain referred to in section 111 A	II. 10%
C. On income by way of winning from horse race	III. 20%
D. On income by way of royalty or fees for technical services payable by Government	IV. 15%

UGC NET Commerce June 2023 Question PaperPaper 2 with Answer Key

UGC NET June 2023 at a glance

Commerce

Commerce

Paper 2 — Commerce · Shift 1

Question 1

Question 2

Question 3

Question 4

Question 5

Question 6

Question 7

Question 8

Question 9

Question 10

Question 11

Question 12

Question 13

Question 14

Question 15

Question 16

Question 17

Question 18

Question 19

Question 20

Question 21

Question 22

Question 23

Question 24

Question 25

Question 26

Question 27

Question 28

Question 29

Question 30

Question 31

Question 32

Question 33

Question 34

Question 35

Question 36

Question 37

Question 38

Question 39

Question 40

Question 41

Question 42

Question 43

Question 44

Question 45

Question 46

Question 47

Question 48

Question 49

Question 50

Question 51

Question 52

Question 53

Question 54

Question 55

Question 56

Question 57

Question 58

Question 59

Question 60

Question 61

Question 62

Question 63

Question 64

Question 65

Question 66

Question 67

Question 68

Question 69

Question 70

Question 71

Question 72

Question 73

Question 74

Question 75