UGC Net Commerce 2014 June Paper 3 Solved

PAPER-III
COMMERCE

Note : This paper contains seventy five (75) objective type questions of two (2) marks each.
All questions are compulsory.


1. The Competition Act, 2002, seeks to
regulate
 (A) Anti-competitive agreements
 (B) Mergers and amalgamation
 (C) Unfair trade practices
 (D) (A) and (B) above
Answer:(D)


2. Indicate the true statement :
 (A) Large industrial houses are
outside the purriew of the
Competition Act, 2002
 (B) There is no provision for
curbing frivolous complaints
under the CPA.
 (C) The Trade Marks Act, 1999
does not apply to services.
 (D) All of the above are true.
Answer:(C)


3. The time limit for filing a complaints
before the District forum under the
Consumer Protection Act, 1986 is
 (A) one year
 (B) two years
 (C) three years
 (D) There is no such time limit.
Answer:(B)


4. The Foreign Investment Promotion
Board (FIPB) revamps the rules and
regulations pertaining to
 (A) Accounting of Foreign Investment
 (B) Investment by NRIs
 (C) Foreign investments
 (D) All of the above
Answer:(C)


5. Which of the legislation(s) do (does)
not form part of the legal
environment of business in India ?
 (A) The Drugs and Cosmetics Act,
1940
 (B) The Prevention of Food
Adulteration Act, 1954
 (C) The Monopolies and Restrictive
Trade Practices Act, 1969
 (D) Both (B) and (C) above
Answer:(D)

6. What is the underlying concept that
support the immediate recognition of
an estimated loss ?
 (A) Substance over form
 (B) Consistency
 (C) Matching
 (D) Prudence
Answer:(D)


7. Which is not the limitation of
budgetary control ?
 (A) Budgets are based on forecasts
which may not be true
 (B) Installation and operation of a
system of budgetary control is
costly.
 (C) Budget is a tool of management
and not a substitute of
management
 (D) Budgets do not pinpoint the
lack of efficiency or the
presence of it.
Answer:(D)

8. Profit volume ratio of an enterprise is
40%. To offset 10% decrease in
selling price, how much sales must
be increased ?
 (A) 10% (B) 20%
 (C) 25% (D) 40%
Answer:(B)


9. If debt is INR 220, cash balance is INR 20
and equity is INR 300, then the gearing
ratio is
 (A) 20% (B) 40%
 (C) 50% (D) 30%
Answer:(B)


10. Responsibility accounting aims to
 (A) ensure that a manager is
punished if things go wrong.
 (B) ensure that costs become the
responsibility of a specific
manager.
 (C) allocate costs to all areas of a
business.
 (D) reduce the costs that a
department incurs.
Answer:(B)

11. Find the correct matching of the
items of List – I with the items of
List – II given below :
List – I List – II
(a) Normal (I) Excess of total revenue
Profit over total explicit cost


(b) Economic (II) Total revenue equals total
profit economic cost


(c) Accounting (III) Excess of total revenue over total of
profit explicit and implicit costs and a normal rate
        of return

Codes :
 (I) (II) (III)
 (A) (c) (a) (b)
 (B) (b) (a) (c)
 (C) (a) (b) (c)
 (D) (a) (c) (b)
Answer:(A)


12. Assertion (A) : A monopoly firm’s
revenue curve is downward
sloping from left to right.
Reason (R) : The monopoly firm
does not simultaneously enjoy
the freedom to determine both
price and quantity to be sold
according to its whims and
fancy.
 Codes :
 (A) Both (A) and (R) are true.
 (B) Both (A) and (R) are false.
 (C) (A) is true, but (R) is false.
 (D) (A) is false, but (R) is true.
Answer:(A)

13. The equilibrium level of output for a
perfect competitive firm is given by
the point where :
(A) MR = MC
 (B) MR < MC
 (C) MR > MC
 (D) MR = MC, and MC starts
rising
Answer:(D)

14. Match the following :
List – I List – II
(i) Dumping (a) Monopolistic competitive firm

(ii) Kinked (b) Oligopoly firm
Revenue
Curve

(iii) Horizontal (c) Perfectively competitive
straight line firm
revenue curve

(iv) Large number (d) Discrimin-atory monopoly
of buyers and
sellers with
differentiated
products

Codes :
 (i) (ii) (iii) (iv)
 (A) (a) (d) (c) (b)
 (B) (b) (d) (a) (c)
 (C) (d) (b) (c) (a)
 (D) (a) (b) (c) (d)
Answer:(C)

15. Penetrating pricing strategy is
appropriate when
 (A) price elasticity of demand in
the market is highly inelastic.
 (B) price elasticity of demand in
the market is uncertain.
 (C) price elasticity of demand in
the market is highly elastic.
 (D) income elasticity of demand in
the market is negatively elastic
Answer:(C)

16. Assertion (A) : The expected values
should be atleast 5 to apply the
chi-square test.
Reason (R) : The chi-square
distribution provides an
adequate approximation of the
sampling distribution.
Indicate the correct answer from the
following :
 Codes :
 (A) Both (A) and (R) are true, and
(R) is the right 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)


17. In a decision problem having four
possible alternative decisions and six
possible states of nature, the pay-off
table will include
 (A) Four payoffs
 (B) Six payoffs
 (C) Twenty four payoff
 (D) Ten payoff
Answer:(C)


18. The mathematical formula for joint
probabilities P(AB) = P(A/B) × P(B),
holds when
 (A) The events are statistically
independent.
 (B) The events are statistically
dependent.
 (C) The event is either independent
or dependent.
 (D) None of the above
Answer:(B)

19. Which one of the following
statements is the correct
interpretation of P-value of less than
0.01 in hypothesis testing ?
 (A) There is overwhelming
evidence to infer that the
alternative hypothesis is true.
 (B) There is strong evidence to
infer that the alternative
hypothesis is true.
 (C) There is weak evidence to
indicate that the alternative
hypothesis is true.
 (D) There is no evidence to infer that
the alternative hypothesis is true.
Answer:(A)


20. Two lists of items are given below :
List – I List – II
(i) Charles (a) Mossai
Babbage

(ii) Herbert A. (b) HTML
Simon

(iii) Tim (c) Computer Design
Berners
Lee


(iv) Maarc (d) Decision model
Andreessen

  Which one of the following is the
correct match ?
 Codes :
 (i) (ii) (iii) (iv)
 (A) (c) (b) (a) (d)
 (B) (a) (c) (d) (b)
 (C) (b) (a) (c) (d)
 (D) (c) (d) (b) (a)
Answer:(D)


21. Which of the following statements
are true about informal organization ?
 1. It arises spontaneously.
 2. It reflects individual and group
goals.
 3. It tends to be permanent and
stable.
 4. It tends to be small and
manageable.
 5. Its basic purpose is to improve
human relations.
 6. Its basic purpose is to achieve
organisation’s goals.
Codes :
(A) 1, 2, 3 andü 5
 (B) 1, 2, 4 and 6
 (C) 1, 2, 4 and 5
 (D) 2, 3, 5 and 6
Answer:(C)

22. Which of the following is not true
about an employee-centered leader as
identified by Michigan researchers ?
 (A) Treats subordinates as human
beings.
 (B) Shows concern for their well
being.
 (C) Focuses on work standards and
close supervision.
 (D) Encourages and involves them
in goal setting.
Answer:(C)


23. According to Talcott Parson,
organizations can be classified
primarily into four categories, based
on functions. Which of the following
is not an organization in Parson’s
scheme ?
 (A) Political organisations
 (B) Integrative organisations
 (C) Pattern maintenance
organisations
 (D) Commercial organisations
Answer:(D)


24. An MBO programme usually
involves the following steps :
 1. Establishing unit’s objectives
 2. Establishing organisational goals
 3. Negotiating or agreeing
 4. Reviewing the performance
 5. Creating action plans
 Indicate the correct sequence of the
above steps from the following codes :
(A) 1, 2, 3, 4, 5
 (B) 2, 1, 3, 5, 4
 (C) 2, 3, 1, 4, 5
 (D) 5, 4, 3, 2, 1
Answer:(B)


25. Match the following :
List – I List – II
(a) Fayol (1) Economy and Society

(b) Taylor (2) General and Industrial Administration

(c) Weber (3) Principles of Organization

(d) Mooney (4) Shop Management
and Reilly

Codes :
 (a) (b) (c) (d)
 (A) (3) (4) (1) (2)
 (B) (2) (4) (1) (3)
 (C) (1) (3) (2) (4)
 (D) (4) (3) (2) (1)
Answer:(B)


26. A primary group influencing the
buyer behaviour is a
 (A) Family
 (B) Professional association
 (C) Religious group
 (D) Trade Union
Answer:(A)


27. After conducting the business
analysis for developing a new
product, a company must do
 (A) Idea generation
 (B) Product positioning
 (C) Product development and
testing
 (D) Test marketing
Answer:(C)

28. Match the items in List – I with those
in List – II :
List – I List – II
(a) Post        (i) AIDA
purchase
behaviour

(b) Personal (ii) ACMEE
selling

(c) Everitt M. (iii) Diffusion of
Rogers Innovation

(d) Salesperson (iv) Cognitive dissonance
training

Indicate the correct matching :
Codes :
 (a) (b) (c) (d)
 (A) (i) (ii) (iii) (iv)
 (B) (iv) (ii) (iii) (i)
 (C) (iii) (ii) (i) (iv)
 (D) (iv) (i) (iii) (ii)
Answer:(D)


29. Which type of retail stores generally
has the highest operating costs ?
 (A) Department store
 (B) Supermarket
 (C) Chain store
 (D) Co-operative Store
Answer:(A)


30. Indicate the correct statement :
 (A) India has been a pioneer in
social marketing.
 (B) Advertising Standards Council
of India is a statutory body set
up by the government of India.
 (C) Both (A) and (B) are incorrect.
 (D) Both (A) and (B) are correct.
Answer:(A)


31. Match the items of List – I with the
items of List – II :
List – I List – II
(a) Trade credit (i) Maturity
and other Financing
payables that
arise in the
firm’s day
today
operations

(b) Financing and (ii) Factoring
asset needs
over time

(c) A tool for (iii) Spontaneous
accelerating financing
the collection
from the
customers

(d) Seeking (iv) Lockbox
financial system
service to
finance on its
debtors’
balances

Codes :
 (a) (b) (c) (d)
 (A) (iv) (iii) (ii) (i)
 (B) (iii) (ii) (iv) (i)
 (C) (ii) (iv) (i) (iii)
 (D) (i) (ii) (iii) (iv)
Answer:(*)


32. Indicate the cost of equity capital,
based on capital asset pricing model,
with the following information :
 Beta coefficient – 1.40
 Risk-free rate of interest – 9%
 Expected Rate of Return on
equity in the market – 16%
 (A) 9.8% (B) 18%
 (C) 18.8% (D) 16%
Answer:(C)

33. The degree of super-leverage would
be calculated by :
 (A) Adding DOL (Degree of
Operating Leverage) and DFL
(Degree of Financial Leverage)
 (B) Dividing DOL with DFL
 (C) Multiplying DOL and DFL
 (D) Subtracting DOL from DFL
Answer:(C)

34. Interim cash inflows are reinvested at
a rate of return equal to the internal
rate of return is the built-in-mechanism for
(A) Net Present Value Method
 (B) Internal Rate of Return Method
 (C) Profitability Index Method
 (D) None of the above
Answer:(B)

35. Who formulated the following model
for estimating the market price of
equity share ?

(A) Modigliani-Miller
 (B) Myron-Gordon
 (C) James E. Walter
 (D) Clarkson and Elliot
Answer:(C)

36. Indicate the quantitative methods of
job evaluation
 (A) Ranking methods and Job
comparison method
 (B) Point rating method and Factor
comparison method
 (C) Grading method and Job
classification method
 (D) Factor comparison method and
Ranking method
Answer:(B)

37. Match the items of List – I with those
List – II :
List – I List – II
(1) Career (a) The process where in an
goals executive serves as a guide


(2) Career (b) The future positions one
path          strives to reach as part of career


(3) Career (c) The sequential pattern of jobs that form a
counseling career


(4) Mentoring (d) Guiding people on their possible career path

Codes :
 (1) (2) (3) (4)
 (A) (b) (c) (d) (a)
 (B) (a) (b) (c) (d)
 (C) (d) (c) (b) (a)
 (D) (c) (b) (a) (d)
Answer:(A)

38. The process of receiving and
welcoming an employee when he
first joins a company and giving him
the basic information he needs to
settle down quickly and happily and
starts working, is referred to as
 (A) Placement
 (B) Orientation
 (C) Job Rotation
 (D) Counseling
Answer:(B)


39. Which is not relevant of succession
planning ?
 (A) Analysis of the demand for
managers
 (B) Review of existing executives
 (C) Planning individuals career
paths
 (D) Recruitment to meet immediate
needs
Answer:(D)


40. Where does recognition of an
Employee fall in Maslow’s hierarchy
of needs theory ?
 (A) Self-actualisation
 (B) Security needs
 (C) Social needs
 (D) Esteem needs
Answer:(D)


41. The profitability of public-sector
banks is low due to
 (i) Over-cautions approach to
lending
 (ii) Reserve Bank Policies
 (iii) High Overhead Costs
 (iv) Social-sector lending
 Identify the correct code :
Codes :
 (A) (i) and (ii)
 (B) (i) and (iv)
 (C) (i), (iii) and (iv)
 (D) (ii) and (iii)
Answer:(C)

42. Match the items of List – I with those
List – II and select correct answer :
List – I List – II
(1) Narasimham (a) Lending under
Committee consortium arrangement

(2) Shetty (b) Frauds and Malpractices in
Committee banks


(3) Ghosh (c) Securities operations of
Committee banks and financial institutions


(4) Janakiraman (d) Financial system in India
Committee

Codes :
 (a) (b) (c) (d)
 (A) (3) (4) (2) (1)
 (B) (2) (3) (4) (1)
 (C) (4) (2) (3) (1)
 (D) (3) (4) (1) (2)
Answer:(B)


43. Which of the following financial
institutions is not with in the
supervisory Purview of Reserve
Bank of India ?
 (A) Foreign Commercial Banks
Operating in India
 (B) Regional Rural Banks
 (C) Mutual Funds
 (D) State Co-operative Banks
Answer:(C)


44. The Repo and Reserve Repo rates are
resorted to by the RBI as a tool of
 (A) Credit Control
 (B) Settlement Systems
 (C) Currency Management
 (D) Liquidity Control
Answer:(D)

45. Which one of the following
institutions is promoted by the IFCI :
 (A) Credit Analysis and Research
Ltd (CARE)
 (B) Rashtriya Gramin Vikas Nidhi
(RGVN)
 (C) Clearing Corporation of India
Ltd (CCIL)
 (D) Small Industries Development
Bank of India (SIDBI)
Answer:(B)

46. Indicate the right sequence of the
stages of internationalization :
 (i) Multinational Company
 (ii) Global Company
 (iii) Transnational Company
 (iv) International Company
 Codes :
 (A) (i) (iv) (ii) (iii)
 (B) (iv) (i) (iii) (ii)
 (C) (i) (iv) (iii) (ii)
 (D) (iv) (i) (ii) (iii)
Answer:(D)


47. Which of the following is not one of
the components of ‘International
Reserve’ ?
 (A) Special Drawing Rights
 (B) Reserve Position in IMF
 (C) Monetary Gold
 (D) Money Market Instruments
Answer:(D)

48. Match the items given in List – I with
the most appropriate items in List – II :
List – I List – II
(a) UNCTAD (i) Foreign investment

(b) WTO (ii) Developing Countries

(c) TRIMS (iii) UNDP

(d) ITC (iv) General Council

Codes :
 (a) (b) (c) (d)
 (A) (ii) (iv) (i) (iii)
 (B) (iii) (iv) (i) (ii)
 (C) (iv) (ii) (i) (iii)
 (D) (iii) (ii) (i) (iv)
Answer:(A)


49. Duty levied on the value of goods
imported is referred to as
 (A) Ad valorem Duty
 (B) Compound Duty
 (C) Specific Duty
 (D) Import Duty
Answer:(A)


50. Which of the following can be
included in the current account of the
balance of payments ?
 (i) Purchase of goods from abroad
 (ii) Sale of services abroad
 (iii) Workers’ remittances from
aboard
 (iv) Sale of copyright to foreigners
 (v) Direct investment in equity
capital
 Codes :
 (A) (i), (ii) and (iii)
 (B) (i), (ii) and (iv)
 (C) (i), (ii), (iii) and (v)
 (D) (i), (ii), (iii) and (iv)
Answer:(A)

51. Which of the following items would
be specifically included in the
statement of cash flows constructed
in compliance with AS-3 ?
 (A) Conversion of debt to equity
 (B) Acquiring an asset through
lease
 (C) Operating and non-operating
cash flow information
 (D) Purchasing a building by
giving a mortgage to the seller
Answer:(C)

52. Fixing the value of an employee
depending upon his productivity,
promotability, transferability and
retainability is the core of the
 (A) Certainty equivalent model
 (B) Stochastic Reward Valuation
model
 (C) Human asset multiplier model
 (D) Present value of future earnings
model
Answer:(B)


53. Which of the following refers to a
situation in which the merger of
companies results in over 25% of the
market in the hands of the merged
companies ?
 (A) ‘Gateway’ condition
 (B) Restrictive practice
 (C) ‘Share of supply’ test
 (D) ‘Asset’ test
Answer:(C)

54. Which of the following is true ?
 (A) Systematic risk is diversifiable
but unsystematic risk is non-diversifiable.
(B) Systematic risk is non-diversifiable but unsystematic
risk is diversifiable.
(C) Both systematic and
unsystematic risks are
diversifiable.
(D) Both systematic and
unsystematic risks are non-diversifiable.
Answer:(B)

55. Match the following :
List – I List – II
(Explanation) (Term)
(a) It involves using (1) Audit Trail
the version of Controls
master file and
the update
transactions used
to create the
current file to re-
create the current
master file if it
becomes
damaged

(b) It involves (2) Dumping
copying the
whole or a
portion of the
database to some
back up medium,
typically
magnetics tape

(c) It stores current (3) Grandfather, Father, Son
and historical
data extracted
from various
operations
systems and
consolidates for
management
reporting and
analysis.

(d) It maintains the (4) Data warehouse
chronology of for Accounting
events that occur
either to the
database
definition or the
database itself.

Codes :
 (a) (b) (c) (d)
 (A) (3) (2) (4) (1)
 (B) (3) (1) (2) (4)
 (C) (1) (3) (2) (4)
 (D) (4) (3) (2) (1)
Answer:(A)

56. Which one is not a major component
of holistic marketing ?
 (A) Relationship marketing
 (B) Integrated marketing
 (C) Internal marketing
 (D) Socially responsible marketing
Answer:(C)


57. The final step in target marketing is
 (A) Market Analysis
 (B) Market Positioning
 (C) Market Segmentation
 (D) Market Targeting
Answer:(B)


58. The most recent consideration in
product packaging is
 (A) Cost effectiveness
 (B) Product protection
 (C) Product promotion
 (D) Economy
Answer:(C)

59. Distribution logistics (also termed as
‘market logistics’) does not include
 (A) Distribution channel
 (B) Inventory
 (C) Transportation
 (D) Warehouses
Answer:(A)


60. Most of the money spent in
measuring the effectiveness of
advertising is spent on
 (A) Communication-response
research
 (B) Pre-testing the advertisements
 (C) Post-testing the advertisements
 (D) Sales-response research
Answer:(B)


61. Which of the following is not
included in the model of the systems
approach to human resource
management ?
 (A) Departmentation
 (B) Recruitment
 (C) Performance Appraisal
 (D) Promotion
Answer:(A)

62. Which one of the following is not an
example of Herzberg’s hygiene
factors ?
 (A) Advancement
 (B) Interpersonal relations
 (C) Job security
 (D) Work conditions
Answer:(A)


63. Which of the following two forms of
collective bargaining were identified
by Chamberlain and Kuhn ?
 (A) Integrative Bargaining and
Distributive Bargaining
 (B) Conjunctive Bargaining and
Cooperative Bargaining
 (C) Integrative Bargaining and
Cooperative Bargaining
 (D) Distributive Bargaining and
Conjunctive Bargaining
Answer:(B)


64. Who observed that a worker’s
behaviour and sentiments are closely
related ?
 (A) Peter Drucker (B) Elton Mayo
 (C) F.W. Taylor (D) Dale Yoder
Answer:(B)


65. What is not an operative function of
HRM ?
 (A) Procurement
 (B) Development
 (C) Organising
 (D) Integration
Answer:(C)

66. The total number of Special
Economic Zones notified by the
Government of India till March 2011
under the SEZ Act, 2005 is
 (A) 154 (B) 184
 (C) 286 (D) 386
Answer:(*)


67. The different forms of IMF
assistance are given below. Identify
the one which is mainly meant for
Less Developed Countries (LDCs)
 (A) Credit Tranche Drawing
 (B) Extended Fund Facility
 (C) Compensatory Financing
Facility
 (D) Structural Adjustment Facility
Answer:(C)

68. In the context of globalization,
‘Levitt Thesis’ means
 (A) Standardisation strategy to
respond to the worldwide
homogenised market and
expand the market through
aggressive low pricing
 (B) Customise products to regional
markets
 (C) Customise products to meet the
national market
 (D) None of the above
Answer:(A)


69. Which one of the following is an
internal hedging technique ?
 (A) Leading
 (B) Netting
 (C) Both (A) and (B) above
 (D) Swap
Answer:(C)


70. Business conglomerates have
different names in different
countries. Which country’s
conglomerates are called ‘Chaebols’ ?
 (A) Japan
 (B) South Korea
 (C) Germany
 (D) China
Answer:(B)


71. Mr. X, a non-resident, earned
INR 36,000 as interest on German
Development Bonds. Of this, he
received one-sixth in India. The
amount to be included as interest for
the computation of his Gross Total
Income is
(A) INR 36,000 (B) INR 30,000
 (C) INR 6,000 (D) Nil
Answer:(C)

72. Consider the following problem
relating to a let-out house property :
 Municipal value – INR 60,000
 Fair rent – INR 68,000
 Standard rent under the Rent Control
Act – INR 62,000
 Annual Rent received – INR 65,000
 The Gross Annual Value of the
property will be
(A) INR 68,000 (B) INR 62,000
 (C) INR 65,000 (D) INR 60,000
Answer:(C)


73. From the following, identify by the
web-based financial software :
 (A) Private Equity Software
 (B) Share Accounting Software
 (C) Wealth Management Software
 (D) WINGS 2013
Answer:(D)


74. Which of the following are true in
tax planning ?
 (i) It is futuristic in its approach.
 (ii) It has limited scope compared
to tax management.
 (iii) The benefits arising from it are
limited particularly in the short
run.
 (iv) Its main objective is to reduce
the tax liability.
Codes :
 (A) (i), (ii) and (iii)
 (B) (i) and (ii)
 (C) (i) and (iv)
 (D) (ii), (iii) and (iv)
Answer:(C)


75. The benefits of debt financing over
equity financing are likely to be
highest in which of the following
situations ?
 (A) High marginal tax rates and
low non-interest tax benefits
 (B) Low marginal tax rates and low
non-interest tax benefits
 (C) High marginal tax rates and
high non-interest tax benefits
 (D) Low marginal tax rates and
high non-interest tax benefits
Answer:(A)

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