Super Sure MCQs on ManagementCommerce PART 3.pdf

10% DISCOUNT UNACADEMY PLUS REFERAL CODE:
VISHAL .VERMA0501
OR
VISHALLIVE
QUALIFIED NTA UGC NET/JRF
MANAGEMENT, COMMERCE, HRM & ECO
100 % JRF FOR SURE JUNE 2021
UCRT TMT SSA MST & DEA APPROACH
UNLEARN WITH VISHAL VERMA
त्याग और समर्पण ही
सफलता की क
ुं जी हैं I

 UNIT WISE & TOPIC WISE SPECIFIC STUDY
(100 % COVERAGE)
 COMPLETE STUDY MATERIALS NOTES IN PDF FORM
 PREVIOUS YEAR QUESTIONS (PYQ)
 EXPECTED IMPORTANT QUESTIONS FOR THE
UPCOMMING EXAM
 TOP MCQS OF THE WEEK (TOP 10)
 QUIZES AND QUESTIONS (TEST)
 MOCK PAPERS AFTER COMPLETION OF EVERY
TOPIC
 MCQs CHALLENGES EVERY WEEK
 DOUBT CLEARING AND REVISION CLASSES
10% OFF PLUS REFERAL CODE: -
VISHAL.VERMA0501 OR VISHALLIVE
UNLEARN WITH VISHAL VERMA
जजन खोजा जतन र्ाइया, गहरे
र्ानी र्ैठ, मैं बर्रा बूडन डरा,
रहा जकनारे बैठ।

SUPER SURE MCQs ON
MANAGEMENT/COMMERCE
PART - 2
ASST. PROF. VISHAL VERMA
QUALIFIED NTA UGC NET JRF
MANAGEMENT ,COMMERCE, HRM & ECONOMICS
CERTIFIED CAREER PLANNER
PROFESSIONAL CERTIFICATION IN ONLINE TEACHING
REFERRAL-CODE-10% OFF: VISHAL.VERMA0501 or VISHALLIVE

FREE SPECIAL CLASSES SERIES FOR JRF 2021
REFERRALCODE: VISHAL.VERMA0501 or VISHALLIVE

Question: In which year was the SFURTI scheme launched?
Options:
(a) 2001
(b) 2006
(c) 2004
(d) 2005
WATSAAP OR TELEGRAM @7007993387 REFERRALCODE:VISHAL.VERMA0501

Correct Option/Answer: (d) 2005
Explanation: Scheme of Fund for Regeneration of Traditional Industries is a
scheme launched by the government in 2005. It is for the artisans and traditional
industries so that they are supported for long-term sustainability.
SFURTI scheme
Scheme of Fund for Regeneration of Traditional Industries (SFURTI) Scheme of
Fund for Regeneration of Traditional Industries (SFURTI) is an initiativeby Ministry
of MSME to promote Cluster development. Khadi and Village Industries
Commission (KVIC) is the nodal Agency for promotion of Cluster development for
Khadi.

What is cluster development scheme?
What it is the definition of Cluster? A group of enterprises located
within an identifiable and as far as practicable, contiguous area,
producing same/similar product/ services.

Question: Match the following:
1 2 3
(a) B A C
(b) A B C
(c) C A B
(d) A C B
List I List II
Sick Industrial Companies Act 1985
Make in India 1977
ISEC Scheme 2014

Correct Option/Answer: (d) 1- A, 2-C and 3-B
The Sick Industrial Companies Act was established in 1985 for
encouraging business. Make in India was a scheme that was
launched by the government in 2014. The Interest Subsidy Eligibility
Certificate (ISEC) scheme was launched in May 1977. Therefore,
option (d) is correct.

Total income earned by resources for their contribution of land,
labour, capital, and organizational ability is known as:
Options:
(a)Net National Product
(b)National Income
(c)Disposable Income
(d)Per Capita Income

Correct Option/Answer: (b)National Income
Explanation: National Income is also called as National Income at
factor cost. It is the value of total goods & services produced in an
economy over a given period of time.
NI=NNP +Subsidies-Interest Taxes
=GNP-Depreciation +Subsidies-Indirect Taxes
=NI=C+G+I+(X-M) +NFIA-Depreciation-Indirect Taxes +Subsidies

Question: The Business ethos principle which is not practiced by
Indian Companies?
Option:
(a) Principle of ‘sacrifice’
(b) Principle of ‘harmony’
(c) Principle of ‘non-violence’
(d) Principle of ‘honesty’

Correct Option/Answer: (d)
Explanation: There are several Business ethos principles practiced by
Indian Companies like Principle of ‘sacrifice’, Principle of ‘harmony’,
Principle of ‘non-violence’, Principle of ‘reward’, Principle of ‘justice’,
Principle of ‘taxation’, Principle of ‘Integrity’, Principle of ‘Polygamy’.

Question: ___________ is the branch of philosophy concerned with
developing theories that determine which human actions are right
and wrong.
Option:
(a)Meta Ethics
(b) Political Ethics
(c) Virtue Ethics
(d) Normative Ethics

Explanation: The word Normative comes from the word ‘norm’
which means a ‘standard’ or ‘rule’. Normative Ethics is a type of
ethics which is focused on right and wrong, it is constructive in
nature and is a branch of moral philosophy. It seeks to set norms and
standards for conduct and is practical in nature.

Question: Which of the following statements is correct about Negative income
elasticity of demand (EY<0)?
Option:
(a) As the income of consumer increases, they either stop or consume less of
inferior goods.
(b) As the income of consumer increases, they either stop or consume less of
luxury goods.
(c) As the income of consumer decreases, they either stop or consume less of
inferior goods.
(d) As the income of consumer increases, they consume more inferior goods.

Correct Option/Answer: (a)
Explanation: Negative Income Elasticity means that the demand of
the consumer decreases with a rise in the income level of the
customer and vice-versa.

Which of the following is not the assumption of the Law of Equi-
Marginal Utility?
Option:
(a) Income of the consumer is given and remains constant.
(b) Each commodity holds the law of diminishing marginal utility,
and its marginal utility schedule is known.
(c) Prices of the commodity remain increasing.
(d) Tastes and preferences of the consumer remain constant

Correct Option/Answer: (c)
Explanation: The Law of Equi- Marginal Utility means that the
consumer’s income is limited so he wants to spend his money in
such a way that the last unit of money spent on a product gives him
equal marginal utility.

Question: Which one among the following does not belong to the
models of individual behaviour?
Option:
(a)Social Man
(b) Organisational Man
(c) Rigid Man
(d) Complex Man

Explanation: 5 Models of Individual Behaviour in an Organization are
Rational Economic Man, Social Man, Organizational Man, The Self
Actuating Man, and Complex Man.

Question: Who is the propounder of the Operant Conditioning
Theory?
Options:
(a)B. F. Skinner
(b)Elton Mayo
(c)Chester Barnard
(d)David Mc Cellan

Explanation: Operant is defined as behaviour that produces an
effect. Operant conditioning theory is given by B.F. Skinner who said
that individuals emit responses that are rewarded and will not emit
responses that are either not rewarded or are punished. The
relationship between behaviour and consequences is explained in
operant conditioning.

Question: What is meant by Negative Punishment in Operant
Conditioning Theory?
Options:
(a)Add something to increase behaviour
(b) Add something to decrease behaviour
(c) Remove something to increase behaviour
(d) Remove something to decrease behaviour

Reinforcement Punishment
Positive Stimulus Positive
Reinforcement
Positive Punishment
Negative Stimulus Negative
Reinforcement
Negative Punishment

The group structure is defined as the layout of a group. It is a
combination of which one among the following?
Options:
(a) group roles, norms, group, friendly attitude.
(b) reference groups, status, social loafing, social disputes.
(c) cohorts, group demography, group harmony.
(d) group roles, conformity, workplace behavior, status,
cohesiveness.

Explanation: The group structure is called for a layout of a group. It is
a combination of group roles, reference groups, status, social
loafing, cohorts, group demography norms, conformity, workplace
behavior, status, and cohesiveness.

Question: What are the points mentioned in the Job Description?
Options:
(a)Job title, job location, machines to be used, qualification
(b) Job summary, reporting to, experience
(c) Hazards, job duties, job title, job location
(d) Qualification, experience, training, skills

Explanation: The points mentioned in the Job Description are:
1. Title and summary of the job to be performed
2. Duties to be performed
3. Physical requirements
4. Work environment
5. Employment conditions
6. Professional experience
7. Education level and desired qualifications
8. Core skills required
9. Necessary certificates, licenses, and registrations
10. Report to whom

Question: What is the correct sequence of the Selection Process??
Options:
(a) Preliminary interview, Screening of applications, Employment test, Receiving
applications , Employment interview, Physical examination, Checking references,
Final selection.
(b) Preliminary interview, Receiving applications, Checking references, Screening of
applications, Employment test, Employment interview, Physical examination, Final
selection.
(c) Preliminary interview, Receiving applications, Screening of applications,
Employment test, Employment interview, Final selection, Physical examination,
Checking references,.
(d) Preliminary interview, Receiving applications, Screening of applications,
Employment test, Employment interview, Physical examination, Checking references,
Final selection.

Explanation: Selection Process Steps are:- Preliminary interview,
Receiving applications, Screening of applications, Employment test,
Employment interview, Physical examination, Checking references,
Final selection.

Question: Which is the correct Socialization Process?
Options:
(a)Pre-arrival Stage, Encounter Stage, Metamorphosis Stage
(b)Pre-arrival Stage, Metamorphosis Stage, Encounter Stage
(c)Arrival Stage, Metamorphosis Stage, Encounter Stage
(d)Pre-arrival Stage, Metamorphosis Stage, End Stage

Explanation: Socialization is the process of adapting the organization norms,
values, culture, beliefs, and working procedure.
Pre-arrival stage: This stage is also known as the pre-entry stage. Employees know
the basic information, knowledge, rules, and regulation regarding job
responsibilities before they join the organization.
Encounter Stage: Individuals may not have a clear understanding of organizational
norms, culture, and values before joining the organization. They may have
accepted the common job-related behaviors but the organization may have a
different organizational culture.
Metamorphosis stage: This stage is also called the change stage. In this stage, the
employee unlearns the old norms, values, and culture to learn a new one.
Employees fully accept organizational norms and values.

Question: Which among the following points are correct regarding
Distress?
Options:
(a) Motivates, focuses energy, is short-term, is perceived as within our coping
abilities, Feels exciting, Improves performance
(b) Is perceived as within our coping abilities, feels exciting, Improves
performance, Decreases performance, Can lead to mental and physical problems
(c) Causes anxiety or concern, Can be short- or long-term, Is perceived as outside
of our coping abilities, Feels unpleasant, Decreases performance, Can lead to
mental and physical problems
(d) Can be short- or long-term, Is perceived as outside of our coping abilities, Feels
pleasant, increases performance, Can lead to mental and physical problems

Explanation: There are two types of stress. Eustress is positive stress
and Distress is negative stress. Distress causes anxiety, it can be
short- or long-term, feels unpleasant, decreases work performance,
and it can lead to mental and physical problems.

Question: The four steps of emotional intelligence are?
Options:
(a) Self-awareness, Self- check, Social awareness and relationship
management
(b) Self-awareness, Self- management, Social awareness and
relationship management
(c) Self-management, Self- awareness, Social awareness and
relationship management
(d) Relationship management, Self- management, Social awareness
and Self-awareness

Correct Option/Answer: (b)
Explanation: There are four steps involved in emotional
intelligence. Self-awareness is when you are able to display your
correct emotions. Self-management exists when you direct your
emotions in a positive way. Social awareness exists when you know
how others feel. Relationship management exists when you are able
to help others.

Question: If the equation y = 7 + 0.5x was graphed, the slope
would be?
Options:
(A) Slope would be – 7
(B) Vertical intercept would be + 0.5
(C) Slope would be + 7
(D) Slope would be + 0.5

Explanation: In this equation, x and y are constant, 7 is vertical
intercept and 0.5 is slope.

Which of the following statements is correct about Theory X
employees?
Options:
(A) People are committed to their responsibilities.
(B) People are always motivated towards attaining their goals.
(C) The perceived relationship between a given level of efforts and
an expected performance.
(D) People are not committed to their responsibilities.

Answer: (d)
Explanation: Theory X type employees are not passionate about
their work, they work for only money, they have little ambitions, and
do not like to take responsibility. Theory Y employees are completely
opposite.

Question: Which do Hard Skills include?
Options:
(a) Ability to deal with adversity
(b) Networking
(c) Adaptability
(d) Fluency in Spanish

Answer: (d)
Explanation: Hard skills are the skills relating to any specific task and
are easy to measure. They are knowledge-based, such as mastery in
a subject, certification, and technical skills and Soft skills are the
skills relating to a personality like communication, leadership.
Hard skills are teachable and measurable abilities, such as writing,
reading, math or ability to use computer programs. By contrast, soft
skills are the traits that make you a good employee, such as
etiquette, communication and listening, getting along with other
people.

Work-life balance refers to the level of prioritisation between personal and
professional activities in an individual’s life and the level to which activities
related to their job are present in the home. The Six Components of Work-Life
Balance are?
Options:
(a) Self-Management, Time Management, Stress Management, Change
Management, Technology Management, Leisure Management
(b) Dual-Management, Time Management, Stress Management, Change
Management, Technology Management, Relationship Management
(c) Self-Management, Cultural Management, Work-life Management, Change
Management, Technology Management, Leisure Management
(d) Self-Management, Administration Management, Financial Management,
Change Management, Technology Management, Human Resource Management

Explanation: The Six Components of Work-Life Balance are Self-
Management, Time Management, Change Management, Leisure
Management, Stress Management and, Technology Management.

Who invented work/life balance?
Lillian Moller Gilbreth
This article may be expanded with text translated from the
corresponding article in German. (May 2021) Click [show] for
important translation instructions. Work–life balance is the
equilibrium between personal life and career work. Lillian Moller
Gilbreth established the philosophical basis for work-life balance.

____________ are the building blocks which are the planned
activities designed to improve the organization’s functioning
through the participation of the members of the organization.
Options:
(a)OD Interventions
(b)Industrial Relation
(c)Organisation Development
(d)Organisation Change

Explanation: OD Interventions involve developmental activities that
are there to improve organization performance and effectiveness.
Organizational Development (OD) Interventions are structured
program designed to solve a problem, thus enabling an organization
to achieve the goal. These intervention activities are designed to
improve the organization's functioning and enable managers and
leaders to better manage their team and organization cultures.

What are OD intervention techniques?
OD interventions are the building blocks which are the planned activities
designed to improve the organisation's functioning through the participation of
the organisational members. OD interventions include team development,
laboratory training, managerial grid training, brainstorming and intergroup team
building.

The ___________regulate the conditions of employment from the
stage of entry to the organisation to the stage of exit from the
organisation.
Options:
(a)Collective Bargaining
(b)Standing Order
(c)Code of Discipline
(d)Tripartite Bodies

Explanation: The standing orders are the code of conduct which is for employees
who enter the organization until they leave it. It tells about do’s and don’ts. It
regulates the industrial relation in an organization and tells about various
conditions to be followed.

What are the conditions for the certification of the standing orders under the
Industrial Employment Standing Orders Act 1946?
It is mandatory for every employer covered under the Industrial
Employment (Standing Orders) Act has to get standing orders certified by
submitting five draft copies of the standing orders to the certifying officer such as
labour commissioner or a regional labour commissioner and also includes any
other officer ...

What are the matters set out in standing orders?
Matters to be provided in Standing Orders under this Act
Manner of intimating to workmen periods and hours of work, holidays, pay-days
and wage rates. Shift working. Attendance and late coming. Conditions of
procedure in applying for, and the authority which may grant, leave and holidays.
What is standing order Labour law?
Section 2(g) of the Act states that “standing orders” are the rules relating to
matters set out in the Schedule, i.e. with reference to: The classification of
workmen; Manner of intimation to workers about work and wage-related details;
Conditions of 'termination of'/'suspension from' employment;

Question:
(A) (B) (C) (D)
(a) (iii) (ii) (iv) (i)
(b) (ii) (i) (iv) (iii)
(c) (i) (iii) (iv) (ii)
(d) (iv) (iii) (i) (ii)
(a) Distributive bargaining (i)Work together to make a pie bigger
(b) Integrative bargaining (ii)Resolving internal conflict
(c) Attitudinal restructuring (iii)Cooperative bargaining
(d) Intra-organizational bargaining (Iv)Shaping reshaping attitude

Explanation: In distributive bargaining, one party gains and the other party loses.
Under Integrative bargaining, it’s a win-win situation. In attitudinal bargaining,
there is shaping and reshaping of attitude and under intra-organizational
bargaining involves finding a solution to internal conflict.

What is distributive bargaining and integrative bargaining?
Distributive bargaining, according to the University of Colorado Boulder, is the
approach to bargaining (or negotiation) that is used when the parties are trying to
divide something up or distribute something. It contrasts with integrative
bargaining in which the parties are trying to make more of something.
Distributive bargaining is a competitive bargaining strategy in which one party
gains only if the other party loses something. It is used as a negotiation strategy
to distribute fixed resources such as money, resources, assets, etc. between both
the parties.

What is integrative bargaining with an example?
Example: The classic example involves two teenagers and an orange. If there's
only one orange in the refrigerator and both teenagers demand it simultaneously,
a distributive bargain might well involve each of them getting half of it. ...
The integrative bargain is obviously better for both.
Integrative bargaining (also called "interest-based bargaining," "win-
win bargaining") is a negotiation strategy in which parties collaborate to find a
"win-win" solution to their dispute. This strategy focuses on developing mutually
beneficial agreements based on the interests of the disputants.

What is attitudinal structuring?
'Attitudinal structuring is the process aimed at influencing the course of
negotiations by changing the attitudes of the other party and the nature of the
encounter'
Attitudinal Bargaining Process Attitudinal bargaining takes place in
every negotiation, especially in any involved in long-term relationships. It assumes
that the desired relationship can be structured through the negotiation.

The interaction between the negotiator and bargaining team members in an
attempt to achieve consensus, called intraorganizational bargaining, is the focus
of this study. Strategies of intra-organizational bargaining from various theorists
were developed into a coding system.

Which among the following is not a type of Strike?
Options:
(a)Economic Strike
(b)Sympathetic Strike
(c)Gherao
(d)Sit-down Strike

Explanation: Gherao is a process in which the workers do not allow employers to
leave the workplace and puts them under huge pressure. It does not come under
the type of strike.

Options:
(A) (B) (C) (D)
(a) (iii) (ii) (iv) (i)
(b) (ii) (i) (iv) (iii)
(c) (i) (iii) (iv) (ii)
(d) (iv) (iii) (i) (ii)
(a)Historical Cost (i) An asset is shown in the balance sheet at the sum of present
discounted net cash inflows that the asset is expected to generate in
the normal course of business activities
(b)Current Cost (ii) Assets is their current value, or what it would cost to replace them
at this time
(c)Realisable Value (iii)Acquisition Price
(d)Present Value (iv)Amount gained by selling the asset

Explanation: Historical Cost means acquisition price, i.e., the amount
of cash paid to acquire an asset. The current cost is the cost when
the same or equivalent assets were acquired currently. Realizable
Value is the value that we get by selling the assets in a routine
manner. In Present Value, an asset is shown in the balance sheet at
the sum of present discounted net cash inflows that the asset is
expected to generate in the normal course of business activities.

The ratio used to measure the effectiveness of the use of
capital/assets in the business?
Options:
(a) Profitability Ratios
(b) Turnover Ratios or Activity Ratios
(c) Financial Ratios or Solvency Ratios
(d) Market Test Ratios

Explanation:
Turnover Ratios or Activity Ratios are used to measure the effectiveness of the use
of capital/assets in the business. These ratios are usually calculated on the basis of
sales or cost of goods sold and are expressed in integers rather than as
percentages.

What is the purpose of activity ratios?
Activity ratios are most useful when employed to compare two competing
businesses within the same industry to determine how a particular company
stacks up amongst its peers. But activity ratios may also be used to track a
company's fiscal progress over multiple recording periods, to detect changes over
time.
How do you interpret solvency ratios?
In general, a solvency ratio measures the size of a company's profitability and
compares it to its obligations. By interpreting a solvency ratio, an analyst or
investor can gain insight into how likely a company will be to continue meeting its
debt obligations. A stronger or higher ratio indicates financial strength.

Market Test Ratios help investor to estimate the attractiveness of a
potential or existing investment and get an idea of its valuation.
These ratios are concerned with the return on investment for
shareholders, and with the relationship between return and the
value of an investment in company's shares.

Which statement is correct about the Flow of Fund?
Options:
(a)Fixed asset changes into current asset or current assets changes into fixed
assets
(b) Fixed asset changes into fixed asset
(c) Current asset changes into current liabilities
(d) Non-Current asset changes into non-current liabilities

Explanation: The flow of funds includes both “inflow” and “outflow”. The term “
flow of funds” means “Transfer of economic values from one asset to another and
one liability to another.” The flow of funds takes place whenever there is a change
in working capital. This change may be either inflow or outflow of funds.

The Formula used to calculate ROE?
Options:
(a) ROE = Profit Margin × Asset Turnover × Financial Leverage
(b)ROE = (Net Income/Net Sales) × (Net Sales/Total Liabilities) × (Total Assets/Total
Shareholders’ Equity)
(c) ROE = Net Income/Total Asset
(d) ROE = Profit Margin × Equity Turnover × Financial Leverage

Explanation: The DuPont Analysis we calculate the Return on Equity (ROE).
ROE = Profit Margin × Asset Turnover × Financial Leverage
Profit Margin is the difference between turnover and profits
Asset Turnover is the difference between turnover and assets used
Financial Leverage is the relationship between profitability and the costs of
borrowed capital.

Which of the following statements is not correct about the Cost Sheet?
Options:
(a) It gives total cost and cost per unit for a particular period.
(b) It gives information to management for cost control.
(c) It provides comparative study of actual current costs with the cost of
corresponding periods.
(d)It states clearly about the financial position of the company

Explanation: Cost sheet is a statement which provides the detailed cost of a cost
centre or cost unit. It is a statement of cost to show the various components of
cost of goods produced like prime cost, factory cost, cost of production, total cost
and cost per unit.

Question: In __________ an activity level is determined at which all relevant
costs are recovered and there is a situation of no profit or no loss. This activity
level is called breakeven point.
Options:
(a)CVP/BEP analysis
(b)Marginal Cost
(c)Margin of Safety
(d)Stock Valuation

Explanation: In break-even analysis or CVP analysis an activity level is determined
at which all relevant costs are recovered and there is a situation of no profit or no
loss. This activity level is called breakeven point. Cost–volume–profit (CVP)
analysis is defined as the study of the effects on future profit of changes in fixed
cost, variable cost, sales price, quantity and mix.
Break-even analysis, a subset of cost-volume-profit (CVP) analysis, is used by
management to help understand the relationships between cost, sales volume
and profit. This techniques focuses on how selling prices, sales volume, variable
costs, fixed costs and the mix of product sold affects profit.

Material Usage Variance=
Options:
(a)(Standard Quantity*Actual Price) – (Actual Quantity*Actual Price)
(b) (Standard Quantity*Standard Price) – (Actual Quantity*Actual Price)
(c) (Actual Quantity*Standard Price) – (Standard Quantity*Standard Price)
(d) (Standard Quantity*Standard Price) – (Actual Quantity*Standard Price)

Explanation: The materials usage variance is favorable when the actual quantity of
materials used is less than the standard quantity of material. The materials usage
variance is unfavorable when the actual quantity of materials is more than the
standard quantity of materials.

Which assumption regarding Net Income Approach of Capital Structure is not
correct?
Options:
(a) The total capital requirement of the firm is given and remains constant.
(b) Cost of debt (Kd) is less than cost of equity (Ke).
(c) Cost of equity (Ke) is less than cost of debt (Kd).
(d) Both Kd and Ke remain constant

Explanation: According to the NOI approach, there is a relationship between
capital structure and the value of the firm, it means that the firm value can
change if the debt proportion in capital structure gets changed. The Net Income
Approach makes the following assumptions:
1. The total capital requirement of the firm is given and remains constant.
2. The cost of debt (Kd) is less than the cost of equity (Ke).
3. Both Kd and Ke. remain constant

The popular approach used to estimate the cost of equity using the below
formula is:
Ke = Rf + (Rm - Rf ) ß
Options:
(a) Bond Yield Plus Risk Premium Approach
(b) CAPM model
(c) Dividend Growth Model Approach
(d) Earnings-Price Ratio approach

Correct Option/Answer:(b)
Explanation: CAPM is a method used to calculate cost of equity. According to the
CAPM, the cost of equity capital is:
Ke = Rf + (Rm - Rf ) ß
Where:
Ke = Cost of equity
Rf = Risk-free rate
Rm = Equity market required return (expected return on the market portfolio)
ß = beta is Systematic Risk Coefficient.

The statement which is correct regarding suitability of using NPV method is:
Options:
(a) Where the firms suffers from liquidity problem and is interested in quick
recovery of fund than profitability
(b) High external financing cost of the project
(c) For projects involving very uncertain return
(d) Where availability of resources is not a constraint

Explanation: NPV method is used in a firm where there is a large
amount of financial resources.

Question: What is the right sequence of Capital Budgeting Processes?
(a) Identification of Investment Opportunities, Assembling Investment Proposals,
Budgeting Capital Expenditure, Decision Making, Implementation and Controlling of
Projects, Follow-up and Performance Report
(b) Assembling Investment Proposals, Identification of Investment Opportunities,
Decision Making, Budgeting Capital Expenditure, Implementation and Controlling of
(c) Identification of Investment Opportunities, Assembling Investment Proposals,
Decision Making, Implementation and Controlling of Projects, Budgeting Capital
Expenditure, Follow-up and Performance Report
(d) Identification of Investment Opportunities, Assembling Investment Proposals,
Decision Making, Budgeting Capital Expenditure, Implementation and Controlling of

Explanation: Capital budgeting consists of planning how to use finance for the
maximization of long-term profitability. The Capital Budgeting process is
Identification of Investment Opportunities, Assembling Investment Proposals,
Decision Making, Budgeting Capital Expenditure, Implementation and Controlling
of Projects, Follow-up, and Performance Report.

Question: Which of the following statements is the assumption of Gordon’s
Model?
Options:
(a) A corporate tax does exist
(b) The firm has a very long or infinite life
(c) The retention ratio (b) once decided upon is constant
(d) The firm finances all investment through retained earnings; that is debt or new
equity is not issue

Explanation: Gordon’s Model is the relevance theory of the firm which states that
the use of debt has a direct impact on the value of the firm. This model which
opines that the dividend policy of a firm affects its value of the share and firm is
based on the following assumptions:
(a) The firm is an all-equity firm.
(b) There is no outside financing and all investments are financed exclusively by retained
earnings.
(c) The internal rate of return of the firm is constant.
(d) The cost of capital (k) of the firm also remains.
(e) The firm derives its earnings in perpetuity.
(f) The retention ratio (b) once decided upon is constant. Thus the growth rate of frim (g) is also
constant (g=br).
(g) ke >g.
(h) A corporate tax does not exist

It occurs when someone purchases a company using almost entirely debt. The
purchaser secures that debt with the assets of the company they're acquiring
and it (the company being acquired) assumes that debt.
Options:
(a) Leveraged Buyout
(b)Takeover
(c)Merger
(d)Acquisition

Explanation: A leveraged buyout (LBO) occurs when someone purchases a
company using debt only. The purchaser secures that debt with the assets of the
company they're acquiring

What is LBO and MBO?
A management buyout (MBO) is a corporate finance transaction where the
management team of an operating company acquires the business by borrowing
money to buy out the current owner(s). An MBO transaction is a type of leveraged
buyout (LBO) and can sometimes be referred to as a leveraged management
buyout (LMBO).
A leveraged buyout (LBO) is the acquisition of another company using a
significant amount of borrowed money to meet the cost of acquisition. The assets
of the company being acquired are often used as collateral for the loans, along
with the assets of the acquiring company.

Why Leveraged buyouts are bad?
Criticisms-of-leveraged-buyouts
The risks of a leveraged buyout for the target company are also high. Interest
rates on the debt they are taking on are often high, and can result in a lower
credit rating. If they're unable to service the debt, the end result is bankruptcy.

Who developed the first modern portfolio analysis model?
Options:
(a) William F Sharpe
(b) Dr. Harry M. Markowitz
(c) John Linter
(d) Jan Mossin

Explanation: Dr. Harry M. Markowitz is credited with developing the first modern
portfolio analysis model. It provides a theoretical framework for analysis of risk-
return choices. The concept of efficient portfolios has been used in this model. A
portfolio is efficient when it gives the highest return for a particular level of risk.

Who invented modern portfolio theory?
Harry Markowitz
Invented by Harry Markowitz in the 1950s, MPT is based on several key
principles: Portfolios are described by various levels of expected risk and return.
Who is the father of modern portfolio theory?
Harry Markowitz
Modern portfolio theory, introduced by Harry Markowitz in 1952, is
a portfolio construction theory that determines the minimum level of risk for an
expected return. It assumes that investors will favor a portfolio with a lower risk
level over a higher risk level for the same level of return.

Question: The risk penalty formula is:
Options:
(a) Risk penalty = Risk squared/Risk tolerance
(b) Risk penalty = Risk tolerance/ Risk squared
(c) Risk penalty = Risk covered/Risk tolerance
(d) Risk penalty = Risk squared/Risk coverage

Explanation: Risk penalty = Risk squared/Risk tolerance
Risk squared is the variance of return of the portfolio. Risk tolerance is a number
from zero through 100. The size of the risk tolerance number reflects the
investor’s willingness to bear more risk for more return. Low (high) tolerance
indicates low (high) willingness. Risk penalty is less as tolerance is increased.

How is risk tolerance calculated?
risk tolerance (the degree of uncertainty you are willing to take on to achieve
potentially greater rewards) is determined by a combination of factors, including
your investment goals and experience, how much time you have to invest, your
other financial resources and your “fear factor.”
What are the different levels of risk tolerance?
There are three basic levels of risk tolerance: aggressive, moderate and
conservative.

What are the two fundamental types of risk?
Broadly speaking, there are two main categories of risk: systematic and
unsystematic.
What is systematic and unsystematic risk?
While systematic risk can be thought of as the probability of a loss that is
associated with the entire market or a segment thereof, unsystematic risk refers
to the probability of a loss within a specific industry or security.
Examples of systematic risks include: Macroeconomic factors, such as inflation,
interest rates, currency fluctuations. Environmental factors, such as climate
change, natural disasters, resource, and biodiversity loss. Social factors, such as
wars, changing consumer perspectives, population trends.
unsystematic risk can be eliminated through diversification of a portfolio.

Continue your learning
on Unacademy Plus
Use Referral Code – VISHAL.VERMA0501

Super Sure MCQs on ManagementCommerce PART 3.pdf

Recommended

Recommended

More Related Content

Similar to Super Sure MCQs on ManagementCommerce PART 3.pdf

Similar to Super Sure MCQs on ManagementCommerce PART 3.pdf (20)

More from Unlearn with Vishal Sir

More from Unlearn with Vishal Sir (6)

Recently uploaded

Recently uploaded (20)

Super Sure MCQs on ManagementCommerce PART 3.pdf