PAPER-II
COMMERCE
Note : This paper contains fifty (50) objective type questions of two (2) marks each. All
questions are compulsory.
1. There is acute shortage of electricity
in some of the states in India. This
reflects a problem in which type of
business environment ?
(A) Economic
(B) Demographic
(C) Politico-legal
(D) Socio-cultural
Answer:(A)
2. Match the items given in List-I and
List-II.
List – I List – II
(a) Economic (i) IT-enabled
liberalisation services
(b) Out sourcing (ii) SFIO
(c) Corporate (iii) Macro
frauds economic stability
(d) Second (iv) Increased
generation competition
reforms
Indicate the correct combination :
Codes :
(a) (b) (c) (d)
(A) (i) (ii) (iii) (iv)
(B) (i) (iii) (ii) (iv)
(C) (ii) (iii) (iv) (i)
(D) (iv) (i) (ii) (iii)
Answer:(D)
3. Which of the following is true ?
(A) A consumer court setup under
the Consumer Protection Act,
does not have the power to
punish for its contempt.
(B) Professional services are
outside the purview of the
CPA.
(C) A consumer court cannot force
a person indulging in
misleading advertising to
confess his quit.
(D) None of the above.
Answer:(A)
4. Match the items/terms given in List-I
with those given in and List-II.
List – I List – II
(a) BIS (i) Print Media
(b) CERC (ii) Minimum support price for
agricultural products.
(c) CACP (iii) Quality of manufactured products.
(d) PCI (iv) Comparative product testing.
Indicate the correct answer :
Codes :
(a) (b) (c) (d)
(A) (iv) (iii) (ii) (i)
(B) (i) (ii) (iii) (iv)
(C) (iii) (iv) (ii) (i)
(D) (ii) (iii) (iv) (i)
Answer:(C)
5. Which one among the following is
not the salient feature of industrial
policy since 1991 ?
(A) Enormous expansion of the
private sector.
(B) Redefining the role of public
sector.
(C) Limited exposure of Indian
industry to foreign competition.
(D) Pruning of the list of items
reserved for SSI units.
Answer:(C)
6. A, a partner in a firm, is drawing
INR 500 regularly on the 16th of every
month. He will have to pay interest at
the given rate in a year on INR 6000 for
the total period of
(A) 5 months (B) 6 months
(C) 7 months (D) 12 months
Answer:(B)
7. Subsequent expenditures that extend
the useful life, improve the quality of
output, or reduce operating costs of
an existing asset beyond their
originally estimated levels are
(A) Capital expenditures
(B) Revenue expenditures
(C) Deferred Revenue expenditures
(D) None of the above
Answer:(A)
8. Marginal-costing technique is useful
for
(A) Make or Buy decisions
(B) Profit planning
(C) Shut-down decisions
(D) All of the above
Answer:(D)
9. Which one is not a feature of
budgetary control ?
(A) A tool for management control.
(B) An instrument of delegation
and authority.
(C) An instrument for evaluating
the overall performance.
(D) A statement of budget and
forecasts.
Answer:(D)
10. The Debt-Equity Ratio of a company
is 2 : 1. In this relation, match the
following :
List – I List – II
(a) Issue of equity 1. No change
shares on the ratio
(b) Cash received 2. Reduce the ratio
from debtors
(c) Redemption of 3. No change on the ratio
debentures
(d) Purchased 4. Reduce the ratio
goods on credit
Codes :
(a) (b) (c) (d)
(A) 1 2 3 4
(B) 2 3 4 1
(C) 1 3 4 2
(D) 2 4 1 3
Answer:(B)
11. Which one of the following does not
explain the basic nature of Business
economics ?
(A) Behaviour of firms in theory
and practice.
(B) Distribution theories like rent,
wages and interest along with
the theory of profit.
(C) Use of the tools of economic
analysis in clarifying problems
in organising and evaluating
information and in comparing
alternative courses of action.
(D) Integration of economic theory
with business practices for the
purpose of facilitating decision-making
Answer:(B)
12. At a point of satiety for a commodity
the marginal utility is
(A) Negative
(B) Positive
(C) Zero
(D) Highly positive
Answer:(C)
13. A rectangular hyperbola shaped
demand curve on all its points has
(A) Equal slopes and equal point
elasticities.
(B) Unequal slopes and unequal
point elasticities.
(C) Unequal slopes and equal point
elasticities.
(D) Equal slopes and unequal point
elasticities.
Answer:(C)
14. Assertion (A) : A perfectly
competitive firm is not a price-
maker but is a price-taker.
Reason (R) : The firm is interested
in deciding the level of output
only.
Codes :
(A) Both (A) and (R) are true.
(B) Both (A) and (R) are false.
(C) (A) is false, while (R) is true.
(D) (A) is true, but (R) is not a
correct explanation of (A).
Answer:(D)
15. Match the items of List-I with the
items of List-II.
List – I List – II
(a) A market I. Skimming
having high pricing
price elasticity.
(b) A market having II. Differential
high price pricing
inelasticity
(c) A market having III. Penetrating
several segments pricing
differing
prominently with
regard to price
elasticities of
their demand.
Codes :
I II III
(A) (b), (c), (a)
(B) (a), (b), (c)
(C) (b), (a), (c)
(D) (a), (c), (b)
Answer:(A)
16. Which one of the following options
deals with the process of making
estimates, predictions and decisions ?
(A) Descriptive statistics
(B) Inferential statistics
(C) Probability theory
(D) None of the above
Answer:(B)
17. A hypothesis test is being performed
for a process in which a Type-I error
will be very costly, but a Type-II
error will be relatively inexpensive
and unimportant. Which of the
following would be the best choice
for alpha (α) in this test ?
(A) 0.10
(B) 0.05
(C) 0.01
(D) 0.50
Answer:(C)
18. If the dependent variable increases as
the independent variable increases in
an estimating equation, the
coefficient of correlation will be in
the range
(A) 0 to (–) 1
(B) 0 to (–) 0
(C) 0 to (–) 0.05
(D) 0 to 1
Answer:(D)
19. Assertion (A) : When there is an
evidence of a linear
relationship between two
variables, it may not always
mean an independent-dependent relationship between
the two variables.
Reason (R) : The causal relationship
between the two variables may
not imply a reasonable
theoretical relationship between
the two.
Choose the right answer from the
following statements :
Codes :
(A) Both (A) and (R) are true and
(R) is the correct explanation.
(B) Both (A) and (R) are true, but
(R) is not the correct
explanation.
(C) (A) is true, but (R) is false.
(D) (A) is false, but (R) is true.
Answer:(A)
20. Assertion (A) : User interface is
most critical task in DSS
design
Reason (R) : DSS is used by outside
Customers frequently.
(A) (A) is correct, but (R) is wrong.
(B) Both (A) and (R) are wrong.
(C) (A) is wrong, but (R) is correct.
(D) Both (A) and (R) are correct.
Answer:(A)
21. Which of the following is not true
about Matrix Organisation ?
(A) It is relatively permanent.
(B) Its project managers authority
is distributed reasonably.
(C) There is slow information
processing.
(D) Its project heads have to share
resources with functional heads.
Answer:(C)
22. Consider the following leadership styles :
1. Telling 2. Autocratic
3. Selling 4. Motivating
5. Participating 6. Delegating
7. Charismatic
Select the four styles of leadership
explained by Hersey and Blauchard.
(A) 1, 2, 6 and 7 (B) 2, 3, 4 and 5
(C) 1, 3, 5 and 6 (D) 4, 5, 6 and 7
Answer:(C)
23. Given below are two statements, one
labelled as Assertion (A), and the
other labelled as Reason (R).
Assertion (A) : Classical
organisations believed in the
use of authority to achieve
coordination.
Reason (R) : Classical thinkers
consider organisation is an
open system.
Codes :
(A) (A) is correct, but (R) is
incorrect.
(B) Both (A) and (R) are correct.
(C) (A) is incorrect, but (R) is
correct.
(D) Both (A) and (R) are incorrect.
Answer:(A)
24. Who has modified Maslow’s
Hierarchical levels of needs and
developed ERG model ?
(A) Frederick Herzberg
(B) David C. McClelland
(C) Douglas McGregor
(D) Clayton Alderfer
Answer:(D)
25. Taylor’s differential piece work plan
provides that
(A) All labourers should be assigned
different amount of work.
(B) All labourers should be put in
different time-period.
(C) Those who produce above
standard should receive higher
wages than those producing
below standard.
(D) Payment should be the same on
a fixed standard.
Answer:(C)
26. Which one of the following stages of
the marketing research process is
most expensive ?
(A) Data analysis
(B) Data collection
(C) Developing the research plan
(D) Report writing
Answer:(B)
27. The people to adopt a new product
first are called
(A) Early adopters
(B) First users
(C) Initial adopters
(D) Innovators
Answer:(D)
28. A concept in retailing that helps
explain the emergence of new
retailers is called the ______
hypothesis.
(A) Product life cycle
(B) Service assortment
(C) Retail life cycle
(D) ‘Wheel-of-retailing’
Answer:(D)
29. Manufacturers of cars and motor
cycles typically seek_______
distribution.
(A) selective
(B) intensive
(C) exclusive
(D) restrictive
Answer:(D)
30. Which method of setting advertising
budget is most scientific and logical ?
(A) All-you-can afford method
(B) Competitive parity method
(C) Objective-and-task method
(D) Percentage-of-sales method
Answer:(C)
31. Assertion (A) : Weighted average
cost of capital should be used
as a hurdle rate for accepting or
rejecting a capital budgeting
proposal.
Reason (R) : It is because by
financing in the proportions
specified and accepting the
project, yielding more than the
weighted average required
return, the firm is able to
increase the market price of its
stock.
Codes :
(A) Both (A) and (R) are false.
(B) Both (A) and (R) are true.
(C) (A) is true, while (R) is false.
(D) (A) is false, while (R) is true.
Answer:(B)
32. A firm wants to know the Degree of
Operating Leverage (DOL) with the
following information :
Current level of sales : 6000 units
Break-even point sales : 4000 units
What would be the DOL ?
(A) 1.50
(B) 0.67
(C) 3.00
(D) None of the above
Answer:(C)
33. Assertion (A) : When two or more
investment proposals are
mutually exclusive, ranking the
proposals on the basis of IRR,
NPV and PI methods may give
contradictory results.
Reason (R) : The contradictory
results in the ranking are due to
differing dimensions relating to
the scale of investments, cash
flow patterns and project lives.
Indicate the correct answer :
Codes :
(A) Both (A) and (R) are true.
(B) (A) is true, but (R) is a
necessary condition, but not a
sufficient condition.
(C) Both (A) and (R) are false.
(D) Both (A) and (R) are true and
(R) explains the reason
sufficiently.
Answer:(B)
34. Which one of the following
assumptions is not covered in the
Walter’s Model of the dividend policy ?
(A) All financing is done through
retained earnings.
(B) Firm’s business risk does not
change due to additional
investments.
(C) The firm has an infinite life.
(D) The key variables like EPS and
DPS keep on changing.
Answer:(D)
35. Which one of the following
emphasizes the qualitative aspects of
working capital management ?
(A) Gross working capital
(B) Quick working capital
(C) Net working capital
(D) None of the above
Answer:(C)
36. Which of the following training
methods exposes the newly recruited
employee to the various business
functions, divisions and departments ?
(A) Orientation
(B) Vestibule Training
(C) Transition Analysis
(D) Role playing
Answer:(A)
37. Match the names of the Authors
given below with the motivational
theories they are associated with
List-I List-II
1. Herzberg a. ERG Theory
2. McGregor b. Three-need
theory
3. Alderfer c. Theory X and Theory Y
4. David d. Two-factor theory
McClelland
Codes :
1 2 3 4
(A) a b c d
(B) d c b a
(C) b a d c
(D) d c a b
Answer:(D)
38. Who was closely associated with
industrial relations in India ?
(A) B. Kurien
(B) Gadgil
(C) V.V. Giri
(D) Vinoba Bhave
Answer:(C)
39. Under the Trade Union Act 1926,
how many minimum number of
members are required for a trade
union to be registered ?
(A) 5 (B) 7
(C) 9 (D) 11
Answer:(B)
40. The idea that a manager tends to be
promoted to a level of his
incompetence is referred to as
(A) the advancement principle
(B) the Paul principle
(C) the Peter principle
(D) the job design principle
Answer:(C)
41. Which of the following committees
is intended to review the working of
the monetory system in India ?
(A) Narasimham Committee
(B) Tandon Committee
(C) Sukhamoy Chakravarty
Committee
(D) Deheja Committee
Answer:(C)
42. Match the items of List-I with those in
List-II and select the correct answer.
List-I List-II
(a) Bank Rate 1. Involving the shortening of the
Policy currency of bills eligible for rediscount.
(b) Credit 2. Involving the Purchase and sale of securities in
Rationing the open market.
(c) Variable 3. Involving the alteration of
Reserve discount rate.
System
(d) Open 4. Involving the variation of the
Market minimum reserves
Operations
Codes :
(a) (b) (c) (d)
(A) 1 4 2 3
(B) 2 1 3 4
(C) 4 2 1 3
(D) 3 1 4 2
Answer:(D)
43. Match the items of List-I with the
items of List-II and select the correct
answer using the codes given below
the lists.
List-I List-II
(a) Rural (i) Meant for various target
Industries groups like Rural youth, Ex-serviceman,
Programme women and Scheduled Castes/Tribes
(b) Mahila Vikas (ii) Aim at ensuring flow of credit to
Nidhi the dis-advantaged sections of the
Scheme society.
(c) Entre-preneurship (iii) Commercial exploitation of
Development local resources.
Programme
(d) Micro Credit Scheme (iv) Provides assistance to voluntary
organizations for the benefit of women.
Codes :
(a) (b) (c) (d)
(A) (i) (iii) (ii) (iv)
(B) (ii) (iv) (i) (iii)
(C) (iv) (ii) (iii) (i)
(D) (iii) (iv) (i) (ii)
Answer:(D)
44. According to the FDI Policy of the
Government of India (2012), the FDI
in banks is limited to
(A) 20% in Nationalised Banks and
74% in Private Sector Banks.
(B) 20% in Nationalised Banks and
49% in Private Sector Banks.
(C) 16% in Nationalised Banks and
74% in Private Sector Banks.
(D) 49% in Nationalised Banks and
51% in Private Sector Banks.
Answer:(A)
45. According to the recent guidelines
(2013) of the Reserve Bank of India
the Private Sector Banks are required
to have a minimum paid up equity
capital of
(A) INR 300 crores (B) INR 200 crores
(C) INR 400 crores (D) INR 500 crores
Answer:(D)
46. International trade theory which
provides that capital intensive
country should export labour-intensive
goods and import capital goods is referred to as
(A) Leontief Paradox
(B) Heckscher-Ohlin Theory
(C) Mercantilism Theory
(D) Theory of Comparative
Advantage
Answer:(A)
47. Which of the following is not a form
of economic integration in the
context of intra-regional trade ?
(A) Customs Union
(B) European Union
(C) Economic Union
(D) African Union
Answer:(D)
48. ‘Crawling Peg System’ means
(A) Fixed Exchange Rate System.
(B) Floating Exchange Rate
System.
(C) Hybrid of Fixed and Floating
Exchange System.
(D) None of the above.
Answer:(C)
49. From the following modes of
international business, identify the
mode which involves strategic alliance
(A) Franchising
(B) Leasing
(C) Turnkey Project
(D) Joint venture
Answer:(D)
50. Which of the following expressions
amount to the import restriction
measures ?
(i) Currency control
(ii) Establishment of EPZs
(iii) Tariff cuts
(iv) Imposition of tariffs
(v) Imposition of non-tariff
barriers
Codes :
(A) (i), (ii) and (iii)
(B) (i), (iv) and (v)
(C) (iii), (iv) and (v)
(D) (ii), (iii) and (v)
Answer:(B)
COMMERCE
Note : This paper contains fifty (50) objective type questions of two (2) marks each. All
questions are compulsory.
1. There is acute shortage of electricity
in some of the states in India. This
reflects a problem in which type of
business environment ?
(A) Economic
(B) Demographic
(C) Politico-legal
(D) Socio-cultural
Answer:(A)
2. Match the items given in List-I and
List-II.
List – I List – II
(a) Economic (i) IT-enabled
liberalisation services
(b) Out sourcing (ii) SFIO
(c) Corporate (iii) Macro
frauds economic stability
(d) Second (iv) Increased
generation competition
reforms
Indicate the correct combination :
Codes :
(a) (b) (c) (d)
(A) (i) (ii) (iii) (iv)
(B) (i) (iii) (ii) (iv)
(C) (ii) (iii) (iv) (i)
(D) (iv) (i) (ii) (iii)
Answer:(D)
3. Which of the following is true ?
(A) A consumer court setup under
the Consumer Protection Act,
does not have the power to
punish for its contempt.
(B) Professional services are
outside the purview of the
CPA.
(C) A consumer court cannot force
a person indulging in
misleading advertising to
confess his quit.
(D) None of the above.
Answer:(A)
4. Match the items/terms given in List-I
with those given in and List-II.
List – I List – II
(a) BIS (i) Print Media
(b) CERC (ii) Minimum support price for
agricultural products.
(c) CACP (iii) Quality of manufactured products.
(d) PCI (iv) Comparative product testing.
Indicate the correct answer :
Codes :
(a) (b) (c) (d)
(A) (iv) (iii) (ii) (i)
(B) (i) (ii) (iii) (iv)
(C) (iii) (iv) (ii) (i)
(D) (ii) (iii) (iv) (i)
Answer:(C)
5. Which one among the following is
not the salient feature of industrial
policy since 1991 ?
(A) Enormous expansion of the
private sector.
(B) Redefining the role of public
sector.
(C) Limited exposure of Indian
industry to foreign competition.
(D) Pruning of the list of items
reserved for SSI units.
Answer:(C)
6. A, a partner in a firm, is drawing
INR 500 regularly on the 16th of every
month. He will have to pay interest at
the given rate in a year on INR 6000 for
the total period of
(A) 5 months (B) 6 months
(C) 7 months (D) 12 months
Answer:(B)
7. Subsequent expenditures that extend
the useful life, improve the quality of
output, or reduce operating costs of
an existing asset beyond their
originally estimated levels are
(A) Capital expenditures
(B) Revenue expenditures
(C) Deferred Revenue expenditures
(D) None of the above
Answer:(A)
8. Marginal-costing technique is useful
for
(A) Make or Buy decisions
(B) Profit planning
(C) Shut-down decisions
(D) All of the above
Answer:(D)
9. Which one is not a feature of
budgetary control ?
(A) A tool for management control.
(B) An instrument of delegation
and authority.
(C) An instrument for evaluating
the overall performance.
(D) A statement of budget and
forecasts.
Answer:(D)
10. The Debt-Equity Ratio of a company
is 2 : 1. In this relation, match the
following :
List – I List – II
(a) Issue of equity 1. No change
shares on the ratio
(b) Cash received 2. Reduce the ratio
from debtors
(c) Redemption of 3. No change on the ratio
debentures
(d) Purchased 4. Reduce the ratio
goods on credit
Codes :
(a) (b) (c) (d)
(A) 1 2 3 4
(B) 2 3 4 1
(C) 1 3 4 2
(D) 2 4 1 3
Answer:(B)
11. Which one of the following does not
explain the basic nature of Business
economics ?
(A) Behaviour of firms in theory
and practice.
(B) Distribution theories like rent,
wages and interest along with
the theory of profit.
(C) Use of the tools of economic
analysis in clarifying problems
in organising and evaluating
information and in comparing
alternative courses of action.
(D) Integration of economic theory
with business practices for the
purpose of facilitating decision-making
Answer:(B)
12. At a point of satiety for a commodity
the marginal utility is
(A) Negative
(B) Positive
(C) Zero
(D) Highly positive
Answer:(C)
13. A rectangular hyperbola shaped
demand curve on all its points has
(A) Equal slopes and equal point
elasticities.
(B) Unequal slopes and unequal
point elasticities.
(C) Unequal slopes and equal point
elasticities.
(D) Equal slopes and unequal point
elasticities.
Answer:(C)
14. Assertion (A) : A perfectly
competitive firm is not a price-
maker but is a price-taker.
Reason (R) : The firm is interested
in deciding the level of output
only.
Codes :
(A) Both (A) and (R) are true.
(B) Both (A) and (R) are false.
(C) (A) is false, while (R) is true.
(D) (A) is true, but (R) is not a
correct explanation of (A).
Answer:(D)
15. Match the items of List-I with the
items of List-II.
List – I List – II
(a) A market I. Skimming
having high pricing
price elasticity.
(b) A market having II. Differential
high price pricing
inelasticity
(c) A market having III. Penetrating
several segments pricing
differing
prominently with
regard to price
elasticities of
their demand.
Codes :
I II III
(A) (b), (c), (a)
(B) (a), (b), (c)
(C) (b), (a), (c)
(D) (a), (c), (b)
Answer:(A)
16. Which one of the following options
deals with the process of making
estimates, predictions and decisions ?
(A) Descriptive statistics
(B) Inferential statistics
(C) Probability theory
(D) None of the above
Answer:(B)
17. A hypothesis test is being performed
for a process in which a Type-I error
will be very costly, but a Type-II
error will be relatively inexpensive
and unimportant. Which of the
following would be the best choice
for alpha (α) in this test ?
(A) 0.10
(B) 0.05
(C) 0.01
(D) 0.50
Answer:(C)
18. If the dependent variable increases as
the independent variable increases in
an estimating equation, the
coefficient of correlation will be in
the range
(A) 0 to (–) 1
(B) 0 to (–) 0
(C) 0 to (–) 0.05
(D) 0 to 1
Answer:(D)
19. Assertion (A) : When there is an
evidence of a linear
relationship between two
variables, it may not always
mean an independent-dependent relationship between
the two variables.
Reason (R) : The causal relationship
between the two variables may
not imply a reasonable
theoretical relationship between
the two.
Choose the right answer from the
following statements :
Codes :
(A) Both (A) and (R) are true and
(R) is the correct explanation.
(B) Both (A) and (R) are true, but
(R) is not the correct
explanation.
(C) (A) is true, but (R) is false.
(D) (A) is false, but (R) is true.
Answer:(A)
20. Assertion (A) : User interface is
most critical task in DSS
design
Reason (R) : DSS is used by outside
Customers frequently.
(A) (A) is correct, but (R) is wrong.
(B) Both (A) and (R) are wrong.
(C) (A) is wrong, but (R) is correct.
(D) Both (A) and (R) are correct.
Answer:(A)
21. Which of the following is not true
about Matrix Organisation ?
(A) It is relatively permanent.
(B) Its project managers authority
is distributed reasonably.
(C) There is slow information
processing.
(D) Its project heads have to share
resources with functional heads.
Answer:(C)
22. Consider the following leadership styles :
1. Telling 2. Autocratic
3. Selling 4. Motivating
5. Participating 6. Delegating
7. Charismatic
Select the four styles of leadership
explained by Hersey and Blauchard.
(A) 1, 2, 6 and 7 (B) 2, 3, 4 and 5
(C) 1, 3, 5 and 6 (D) 4, 5, 6 and 7
Answer:(C)
23. Given below are two statements, one
labelled as Assertion (A), and the
other labelled as Reason (R).
Assertion (A) : Classical
organisations believed in the
use of authority to achieve
coordination.
Reason (R) : Classical thinkers
consider organisation is an
open system.
Codes :
(A) (A) is correct, but (R) is
incorrect.
(B) Both (A) and (R) are correct.
(C) (A) is incorrect, but (R) is
correct.
(D) Both (A) and (R) are incorrect.
Answer:(A)
24. Who has modified Maslow’s
Hierarchical levels of needs and
developed ERG model ?
(A) Frederick Herzberg
(B) David C. McClelland
(C) Douglas McGregor
(D) Clayton Alderfer
Answer:(D)
25. Taylor’s differential piece work plan
provides that
(A) All labourers should be assigned
different amount of work.
(B) All labourers should be put in
different time-period.
(C) Those who produce above
standard should receive higher
wages than those producing
below standard.
(D) Payment should be the same on
a fixed standard.
Answer:(C)
26. Which one of the following stages of
the marketing research process is
most expensive ?
(A) Data analysis
(B) Data collection
(C) Developing the research plan
(D) Report writing
Answer:(B)
27. The people to adopt a new product
first are called
(A) Early adopters
(B) First users
(C) Initial adopters
(D) Innovators
Answer:(D)
28. A concept in retailing that helps
explain the emergence of new
retailers is called the ______
hypothesis.
(A) Product life cycle
(B) Service assortment
(C) Retail life cycle
(D) ‘Wheel-of-retailing’
Answer:(D)
29. Manufacturers of cars and motor
cycles typically seek_______
distribution.
(A) selective
(B) intensive
(C) exclusive
(D) restrictive
Answer:(D)
30. Which method of setting advertising
budget is most scientific and logical ?
(A) All-you-can afford method
(B) Competitive parity method
(C) Objective-and-task method
(D) Percentage-of-sales method
Answer:(C)
31. Assertion (A) : Weighted average
cost of capital should be used
as a hurdle rate for accepting or
rejecting a capital budgeting
proposal.
Reason (R) : It is because by
financing in the proportions
specified and accepting the
project, yielding more than the
weighted average required
return, the firm is able to
increase the market price of its
stock.
Codes :
(A) Both (A) and (R) are false.
(B) Both (A) and (R) are true.
(C) (A) is true, while (R) is false.
(D) (A) is false, while (R) is true.
Answer:(B)
32. A firm wants to know the Degree of
Operating Leverage (DOL) with the
following information :
Current level of sales : 6000 units
Break-even point sales : 4000 units
What would be the DOL ?
(A) 1.50
(B) 0.67
(C) 3.00
(D) None of the above
Answer:(C)
33. Assertion (A) : When two or more
investment proposals are
mutually exclusive, ranking the
proposals on the basis of IRR,
NPV and PI methods may give
contradictory results.
Reason (R) : The contradictory
results in the ranking are due to
differing dimensions relating to
the scale of investments, cash
flow patterns and project lives.
Indicate the correct answer :
Codes :
(A) Both (A) and (R) are true.
(B) (A) is true, but (R) is a
necessary condition, but not a
sufficient condition.
(C) Both (A) and (R) are false.
(D) Both (A) and (R) are true and
(R) explains the reason
sufficiently.
Answer:(B)
34. Which one of the following
assumptions is not covered in the
Walter’s Model of the dividend policy ?
(A) All financing is done through
retained earnings.
(B) Firm’s business risk does not
change due to additional
investments.
(C) The firm has an infinite life.
(D) The key variables like EPS and
DPS keep on changing.
Answer:(D)
35. Which one of the following
emphasizes the qualitative aspects of
working capital management ?
(A) Gross working capital
(B) Quick working capital
(C) Net working capital
(D) None of the above
Answer:(C)
36. Which of the following training
methods exposes the newly recruited
employee to the various business
functions, divisions and departments ?
(A) Orientation
(B) Vestibule Training
(C) Transition Analysis
(D) Role playing
Answer:(A)
37. Match the names of the Authors
given below with the motivational
theories they are associated with
List-I List-II
1. Herzberg a. ERG Theory
2. McGregor b. Three-need
theory
3. Alderfer c. Theory X and Theory Y
4. David d. Two-factor theory
McClelland
Codes :
1 2 3 4
(A) a b c d
(B) d c b a
(C) b a d c
(D) d c a b
Answer:(D)
38. Who was closely associated with
industrial relations in India ?
(A) B. Kurien
(B) Gadgil
(C) V.V. Giri
(D) Vinoba Bhave
Answer:(C)
39. Under the Trade Union Act 1926,
how many minimum number of
members are required for a trade
union to be registered ?
(A) 5 (B) 7
(C) 9 (D) 11
Answer:(B)
40. The idea that a manager tends to be
promoted to a level of his
incompetence is referred to as
(A) the advancement principle
(B) the Paul principle
(C) the Peter principle
(D) the job design principle
Answer:(C)
41. Which of the following committees
is intended to review the working of
the monetory system in India ?
(A) Narasimham Committee
(B) Tandon Committee
(C) Sukhamoy Chakravarty
Committee
(D) Deheja Committee
Answer:(C)
42. Match the items of List-I with those in
List-II and select the correct answer.
List-I List-II
(a) Bank Rate 1. Involving the shortening of the
Policy currency of bills eligible for rediscount.
(b) Credit 2. Involving the Purchase and sale of securities in
Rationing the open market.
(c) Variable 3. Involving the alteration of
Reserve discount rate.
System
(d) Open 4. Involving the variation of the
Market minimum reserves
Operations
Codes :
(a) (b) (c) (d)
(A) 1 4 2 3
(B) 2 1 3 4
(C) 4 2 1 3
(D) 3 1 4 2
Answer:(D)
43. Match the items of List-I with the
items of List-II and select the correct
answer using the codes given below
the lists.
List-I List-II
(a) Rural (i) Meant for various target
Industries groups like Rural youth, Ex-serviceman,
Programme women and Scheduled Castes/Tribes
(b) Mahila Vikas (ii) Aim at ensuring flow of credit to
Nidhi the dis-advantaged sections of the
Scheme society.
(c) Entre-preneurship (iii) Commercial exploitation of
Development local resources.
Programme
(d) Micro Credit Scheme (iv) Provides assistance to voluntary
organizations for the benefit of women.
Codes :
(a) (b) (c) (d)
(A) (i) (iii) (ii) (iv)
(B) (ii) (iv) (i) (iii)
(C) (iv) (ii) (iii) (i)
(D) (iii) (iv) (i) (ii)
Answer:(D)
44. According to the FDI Policy of the
Government of India (2012), the FDI
in banks is limited to
(A) 20% in Nationalised Banks and
74% in Private Sector Banks.
(B) 20% in Nationalised Banks and
49% in Private Sector Banks.
(C) 16% in Nationalised Banks and
74% in Private Sector Banks.
(D) 49% in Nationalised Banks and
51% in Private Sector Banks.
Answer:(A)
45. According to the recent guidelines
(2013) of the Reserve Bank of India
the Private Sector Banks are required
to have a minimum paid up equity
capital of
(A) INR 300 crores (B) INR 200 crores
(C) INR 400 crores (D) INR 500 crores
Answer:(D)
46. International trade theory which
provides that capital intensive
country should export labour-intensive
goods and import capital goods is referred to as
(A) Leontief Paradox
(B) Heckscher-Ohlin Theory
(C) Mercantilism Theory
(D) Theory of Comparative
Advantage
Answer:(A)
47. Which of the following is not a form
of economic integration in the
context of intra-regional trade ?
(A) Customs Union
(B) European Union
(C) Economic Union
(D) African Union
Answer:(D)
48. ‘Crawling Peg System’ means
(A) Fixed Exchange Rate System.
(B) Floating Exchange Rate
System.
(C) Hybrid of Fixed and Floating
Exchange System.
(D) None of the above.
Answer:(C)
49. From the following modes of
international business, identify the
mode which involves strategic alliance
(A) Franchising
(B) Leasing
(C) Turnkey Project
(D) Joint venture
Answer:(D)
50. Which of the following expressions
amount to the import restriction
measures ?
(i) Currency control
(ii) Establishment of EPZs
(iii) Tariff cuts
(iv) Imposition of tariffs
(v) Imposition of non-tariff
barriers
Codes :
(A) (i), (ii) and (iii)
(B) (i), (iv) and (v)
(C) (iii), (iv) and (v)
(D) (ii), (iii) and (v)
Answer:(B)