PAPER-II
COMMERCE
Note : This paper contains fifty (50) objective type questions of two (2) marks each. All
questions are compulsory.
1. Who is the fiscal agent and advisor to
Government in monetary and
financial matters ?
(A) NABARD
(B) SBI
(C) RBI
(D) None of the above
Answer:(C)
2. Match the items of List – I with the
items of List – II :
List – I List – II
(a) National (i) Industrial Licensing
Manufactu-ring Policy
Competitive-ness
Council (NMCC)
(b) National (ii) Eleventh Five
Investment Year Plan
Fund (NIP)
(c) The (iii) The Competition
Industries Act, 2002
(Develop-
ment and
Regulation)
Act (IDRA),
1951
(d) Increase in (iv) Public Sector
Employment Undertakings
Codes :
(a) (b) (c) (d)
(A) (iv) (i) (ii) (iii)
(B) (iii) (iv) (i) (ii)
(C) (i) (ii) (iii) (iv)
(D) (iv) (iii) (ii) (i)
Answer:(B)
3. Kyoto Protocol pertains to
(A) Capital formulation
(B) Globalisation
(C) Environmental protection
(D) Unemployment reduction
Answer:(C)
4. Uruguay Round pertains to
(A) WTO
(B) IMF
(C) GATT
(D) World Bank
Answer:(C)
5. Which of the following are outside
the scope of the Consumer Protection
Act, 1986 ?
(A) Newspaper industry
(B) Services provided under
contract of personal service
(C) Banking industry
(D) Both (A) and (B)
Answer:(D)
6. Which of the following is ‘true’
regarding the Prudence Principle of
Accounting ?
(A) Taking care of the future losses
(B) Taking care of the future
profits
(C) Taking care of bad debts
(D) Taking care of inventory and
depreciation
Answer:(A)
7. Which of the following is a non-operating expense ?
(A) Salary of Managing Director
(B) Depreciation
(C) Advertisement expenditure
(D) Interest on loan
Answer:(D)
8. A and B are partners sharing profits
in the ratio of 3 : 2. Their books
showed goodwill at INR 3,000. C is
admitted with 1/4th share of profits and
brings INR 10,000 as his capital. But he
is not able to bring in cash for his
share of goodwill INR 3,000. How will
you treat this ?
(A) Goodwill is raised by INR 12,000
(B) C will remain as debtor for
INR 3,000
(C) C’s A/c. is debited for INR 3,000
(D) Goodwill is raised by INR 9,000
Answer:(*)
9. If there is mutual indebtedness
between the transferor company and
the transferee company in business
combination, which of the following
is correct ?
(A) No adjustment is required in
the books of the transferor
company.
(B) Adjustment is required in the
books of the transferor
company.
(C) No adjustment is required in
the books of the transferee
company.
(D) None of the above
Answer:(A)
10. Improvement of profit-volume ratio
can be done by
(A) Increasing selling price
(B) Altering sales mixture
(C) Reducing variable cost
(D) All of the above
Answer:(D)
11. Business Economics is a subject which
(A) studies economic relationships
(B) studies economic activities at
the aggregate level
(C) deals with the tools of
economics used for decision
making in business
(D) studies optimum allocation of
limited resources
Answer:(C)
12. Match List – I with List – II and
select the correct code for the answer :
List – I List – II
(a) Cross (i) Price = AVC
elasticity is
zero
(b) Shut-down (ii) Two commodities are
point independent
(c) Slutsky (iii) Trans-formation line
theorem
(d) Production (iv) Substitution
Possibility effect
Curve
Codes :
(a) (b) (c) (d)
(A) (ii) (iv) (i) (iii)
(B) (iii) (ii) (iv) (i)
(C) (i) (iii) (ii) (iv)
(D) (ii) (i) (iv) (iii)
Answer:(D)
13. Assertion (A) : The demand curve
has negative slope showing
inverse relationship between
price and the quantity
demanded.
Reason (R) : This applies only to
Giffen goods.
Codes :
(A) Both (A) and (R) are true.
(B) (A) is true, but (R) is false.
(C) (A) is false, but (R) is true.
(D) Both (A) and (R) are false.
Answer:(B)
14. The consumer is said to be in
equilibrium when he plans his
expenditure on x, y and z
commodities in such a way that he
ultimately attains :
Answer:(C)
15. Match the items in List – I with those
in List – II and select the correct code
for the answer :
List – I List – II
(a) Monopoly (i) Price Taker
(b) Monopolistic (ii) Homo-geneous product’s
competition price maker
(c) Perfect
competition (iii) Hetero-geneous product
(d) Oligopoly (iv) Price Rigidity
Codes :
(a) (b) (c) (d)
(A) (ii) (iii) (i) (iv)
(B) (i) (ii) (iv) (iii)
(C) (iii) (iv) (ii) (i)
(D) (iv) (i) (iii) (ii)
Answer:(A)
16. Match the following items in List – I
with most suitable options in List – II :
List – I List – II
(a) Fisher (i) Inverse probability
(b) Karl Pearson (ii) Normal Distribution
(c) Thomas Baye’s (iii) Correlation Coefficient
(d) Karl Gauss (iv) Index Numbers
Codes :
(a) (b) (c) (d)
(A) (iv) (iii) (ii) (i)
(B) (iv) (iii) (i) (ii)
(C) (iv) (ii) (iii) (i)
(D) (iv) (ii) (i) (iii)
Answer:(B)
17. The law of statistics, which says
‘Moderately large number of items
chosen at random from a large group
possess the characteristics of the
large group’, is referred to as :
(A) The Central Limit Theorem
(B) The Law of Statistical Regularity
(C) The Law of Inertia of Large
Numbers
(D) None of the above
Answer:(B)
18. A distribution, where the value of
arithmetic mean is maximum as
compared to median and mode, is
(A) Normal distribution
(B) Positively-skewed distribution
(C) Negatively-skewed distribution
(D) None of these
Answer:(B)
19. The most appropriate average to be
used to compute the average rate of
growth in population is
(A) Arithmetic mean
(B) Median
(C) Geometric mean
(D) Harmonic mean
Answer:(C)
20. “The life expectancy of people in
Kerala is more than that of Tamil
Nadu.” This statement is an example of
(A) Descriptive Hypothesis
(B) Causal Hypothesis
(C) Correlational Hypothesis
(D) None of the above
Answer:(A)
21. Match the items of List – I with the
items of List – II and choose the
correct answer :
List – I List – II
(a) Intrapersonal
communication (i) Informa-tion
(b) Element of a (ii) Develop-ment of ‘will’ to work
communication
event
(c) Objective of (iii) Thinking
organisational
communication
(d) Goals of (iv) Purpose
organisational
communication
Codes :
(a) (b) (c) (d)
(A) (i) (ii) (iii) (iv)
(B) (iii) (iv) (ii) (i)
(C) (ii) (iii) (i) (iv)
(D) (iv) (iii) (ii) (i)
Answer:(B)
22. According to the Boston Consulting
Group, a business which has a high
growth rate but a weak market share
is referred to as a
(A) Cash Cow
(B) Dog
(C) Question Mark
(D) Star
Answer:(C)
23. ‘No ideas are ever criticized’ and ‘the
more radical the ideas are the better’
– are the rules of which decision
making process ?
(A) Programmed decision-making
(B) Non-programmed decision
making
(C) Brainstorming
(D) Group discussion
Answer:(C)
24. According to McClelland’s Needs
Theory, which of the following is not
a motivating need ?
(A) Need for Power
(B) Need for Security
(C) Need for Achievement
(D) Need for Affiliation
Answer:(B)
25. In the managerial grid, developed by
Blake and Mouton, a manager who
has high consideration for production
but little concern for people is known
as
(A) 1.1 Management
(B) 1.9 Management
(C) 9.1 Management
(D) 5.5 Management
Answer:(C)
26. Which of the following is not the
major component of holistic
marketing ?
(A) Relationship marketing
(B) Integrated marketing
(C) Customer satisfaction
(D) Socially-responsible marketing
Answer:(C)
27. Which of the legislations listed
below do not form part of the
marketing environment of India ?
(A) The Drugs and Cosmetics Act,
1940
(B) The Prevention of Food and
Adulteration Act, 1954
(C) The Monopolies and
Restrictive Trade Practices Act,
1969
(D) Both (B) and (C)
Answer:(D)
28. The set of all actual and potential
buyers of a product is known as
(A) Customer group
(B) Industry
(C) Market
(D) None of the above
Answer:(C)
29. In the model of consumer behaviour
given by Philip Kotler, what
constitutes the marketing stimuli ?
(A) Marketing environment
(B) Four P’s of marketing
(C) Consumer needs and wants
(D) None of the above
Answer:(B)
30. The factor that exerts the broadest
and deepest influence on consumer
behaviour is
(A) Culture
(B) Sub-culture
(C) Social class
(D) Income
Answer:(A)
31. Which one of the following is not
among the assumptions of the
Modigliani-Miller model ?
(A) Perfect capital market
(B) Equivalent risk classes
(C) Unity for dividend payout ratio
(D) Absence of taxes
Answer:(C)
32. The most suitable coverage ratio for
deciding the debt capacity of a firm
is
(A) Interest Coverage Ratio
(B) Cash Flow Coverage Ratio
(C) Debt Service Coverage Ratio
(D) Fixed Assets Coverage Ratio
Answer:(B)
33. Which one of the following is the
most popular method for estimating
the cost of equity ?
(A) Capital asset pricing model
(B) Dividend yield method
(C) Gordon’s dividend discount
model
(D) Earnings yield method
Answer:(A)
34. Which one of the following is not the
internal factor affecting the weighted
average cost of capital of a firm ?
(A) Investment policy of the firm
(B) Capital structure of the firm
(C) Dividend policy followed
(D) Market risk premium for the
firm
Answer:(D)
35. Most common approach for analysing
the capital structure of a firm is
(A) Ratio Analysis
(B) Cash Flow Analysis
(C) Comparative Analysis
(D) Leverage Analysis
Answer:(C)
36. Who propounded “Theory Z” ?
(A) William Ouchi
(B) Peter F. Drucker
(C) Joseph H. Jurau
(D) Douglas McGregor
Answer:(A)
37. Another name for MATRIX
organisation is
(A) Flexible organisation
(B) Geographic organisation
(C) Project organisation
(D) None of the above
Answer:(C)
38. Which of the following are methods
of on-the-job training ?
(i) Coaching
(ii) Vestibule training
(iii) Demonstration
(iv) Role-playing
(v) Apprenticeship training
Select the right answer from the
following codes :
(A) (i), (ii), (iii), (iv)
(B) (i), (iii), (v)
(C) (ii), (iii), (iv)
(D) (i), (ii), (iii), (iv), (v)
Answer:(B)
39. The idea that a manager tends to be
promoted to the level of his
incompetence is referred to as
(A) The advancement principle
(B) The Parkinson’s law
(C) The Peter principle
(D) The job design principle
Answer:(C)
40. Assertion (A) : The emphasis in
industrial psychology has
shifted from the studies of the
isolated individual and the
physical environment to the
consideration of motivation and
morale.
Reason (R) : A motivated
employee with a high morale
will always give high
productivity.
Codes :
(A) Both (A) and (R) are correct,
and (R) is the right explanation
of (A).
(B) (A) is correct, but (R) is not
correct.
(C) Both (A) and (R) are incorrect.
(D) Both (A) and (R) are correct,
but (R) is not the right
explanation of (A).
Answer:(B)
41. Match the following items of List – I
and List – II in terms of functions of
commercial banks :
List – I List – II
(a) Letter of (i) Advancing loans
reference
(b) Sale of gold (ii) Receiving deposits
coins
(c) Recurring (iii) Non-banking function
Account
(d) Overdrafts (iv) Agency function
Codes :
(a) (b) (c) (d)
(A) (i) (ii) (iii) (iv)
(B) (iv) (iii) (ii) (i)
(C) (iv) (ii) (iii) (i)
(D) (i) (iii) (ii) (iv)
Answer:(B)
42. Which of the following are included
under representation functions of a
bank ?
(i) Payment of cheques and bills
(ii) Providing remittance facilities
(iii) Underwriting of securities
(iv) Advancing clean credit
(v) Allowing overdrafts on current
account
(vi) Purchase and sale of securities
Codes :
(A) (i), (ii), (iii) and (iv)
(B) (iii), (iv), (v) and (vi)
(C) (i), (ii), (iii) and (vi)
(D) (ii), (iii), (v) and (vi)
Answer:(C)
43. Call money rate is applicable for a
very short period to
(A) Inter bank advances
(B) Bank to Reserve Bank
advances
(C) Reserve Bank to Bank advances
(D) Commercial Banks to
Industrial Banks advances
Answer:(A)
44. Match the following List – I with
List – II :
List – I List – II
(Name of (Type of Securities)
Securities)
(a) Bonds of (i) Semi-Government
Land Development Securities
Banks
(b) Treasury (ii) First Order
Bills Securities
(c) Shares of a (iii) Personal Securities
Public Ltd.
Co.
Codes :
(a) (b) (c)
(A) (i) (ii) (iii)
(B) (ii) (i) (iii)
(C) (iii) (ii) (i)
(D) (i) (iii) (ii)
Answer:(A)
45. Reserve Bank of India controls the
activities of some of the following
banks in India :
(i) Commercial Banks
(ii) Cooperative Banks
(iii) Foreign Banks
(iv) Rural Banks
Codes :
(A) (i), (ii) and (iii)
(B) (i), (iii) and (iv)
(C) (ii), (iii) and (iv)
(D) (i), (ii), (iii) and (iv)
Answer:(D)
46. Match the following List – I with
List – II and select the correct answer:
List – I List – II
(a) Comparative (i) Gottfried
Cost Theory of Haberler
International
Trade
(b) International (ii) J.S. Mill
Trade Theory
of Opportunity
Cost
(c) Factor (iii) David
Endowment Ricardo
Theory of
International
Trade
(d) Doctrine of (iv) Hecksher-Ohlin
Reciprocal
Demand
Codes :
(a) (b) (c) (d)
(A) (iii) (ii) (iv) (i)
(B) (i) (iii) (ii) (iv)
(C) (iii) (i) (iv) (ii)
(D) (ii) (i) (iv) (iii)
Answer:(C)
47. Identify the one, from the following,
which is not a type of disequilibrium
in the balance of payments of a
country :
(A) Cyclical disequilibrium
(B) Secular disequilibrium
(C) Structural disequilibrium
(D) Sectoral disequilibrium
Answer:(D)
48. The participants who take advantage
of different exchange rates in
different markets are
(A) Speculators
(B) Arbitrageurs
(C) Hedgers
(D) Investors
Answer:(B)
49. Assertion (A) : The liability of the
option buyer is limited in the
currency options market.
Reason (R) : Option buyer need
not exercise the option if the
exchange rate is not favourable
for him.
Codes :
(A) (R) is correct and (A) is wrong.
(B) (A) is correct and (R) is wrong.
(C) Both (A) and (R) are correct.
(D) Both (A) and (R) are wrong
Answer:(C)
.
50. An MNC that maintains a balance
between the home market and host
market oriented policies is
(A) Ethnocentric firm
(B) Polycentric firm
(C) Geocentric firm
(D) None of the above
Answer:(C)