QUESTION SET -9 (CBSE COMMERCE NET )
QUESTION SET-9 ( CBSE COMMERCE NET)
56.Which one is not finance company?
A.Hire purchase company
B. IRDA
C.mutual benefit finance company
D.loan companies
ANSWER:-B
EXPLANATION:-IRDA stands for " Insurance Regulatory and Development Authority of India". It is an autonomous, statutory agency.Its main function is to regulate to regulate and promote the insurance and reinsurance industries in India. Its headquartered in Hyderabad, Telangana. Current chairman of IRDA is T.S. Vijayan. It is not a finance company it is an insurance company.
57.Assertion(A): use of paper money is replaced by plastic money.The future will see the electronic money clearance through satellite networking.
Reason(R):RBI is encouraging e banking
codes:-
A.(A) is false but(R)is true.
B.(A) is true but (R) is false.
C.both (A) and (R) are false.
D.both (A) and (R) are true.
ANSWER:-D
EXPLANATION:-Option D is correct RBI is promoting the use of plastic money like ATM, debit card , and credit card instead of paper money.Digital India and recent demonetization is a perfect example of this initiative.All this initiative was taken with a view to encourage paperless transaction.
Technology is enabling banks to provide the convenience of anytime-anywhere-banking.Banks are now re engineering the way in which their services can be reached to their customers by bringing in flexibility in their "distribution channels". Technology is taking banks to homes or offices, 24 hours a day, 365 days a year through ATM's, internet banking and phone banking. It started with Electronic funds Transfers (EFT) .Then came the credit cards came and then ATM's and smart cards and its latest version is Electronic Banking.
Technology is enabling banks to provide the convenience of anytime-anywhere-banking.Banks are now re engineering the way in which their services can be reached to their customers by bringing in flexibility in their "distribution channels". Technology is taking banks to homes or offices, 24 hours a day, 365 days a year through ATM's, internet banking and phone banking. It started with Electronic funds Transfers (EFT) .Then came the credit cards came and then ATM's and smart cards and its latest version is Electronic Banking.
58.When a population is heterogeneous it is divided into groups so that there is homogeneity within the group and heterogeneity between the groups and some items are selected at random from each group.It is a case of:
A.cluster random sampling
B.systematic random sampling
C.Quota sampling
D.stratified random sampling
ANSWER:-D
EXPLANATION:-Stratified sampling is a type of sampling method in which the total population is divided into smaller groups or strata to completer the sampling process. The strata is formed based on some common characteristics in the population data. After dividing the population into strata, the researcher randomly selects the sample proportionally.It is a common sampling technique used by researcher when trying to draw conclusion from different sub-group or strata. The strata or sub-group should be different and the data should overlap. While using stratified sampling, the research should use simple probability sampling. The population is divided into various subgroups on the basis of some factor like age, gender, nationality, job profile , education level.Stratified sampling is used when researcher wants to find relationship between two groups.
Cluster random sampling is used when mutually homogeneous yet internally heterogeneous groupings are evident in a statistical population .In this sampling plan the total population is divided into these groups (knows as cluster ) and a simple random sample of the groups is selected. In this method researcher divides the population into separate groups, called clusters. Then a simple random sample of clusters is selected form the population . The researcher conducts his analysis on data form the sampled clusters.
Quota sampling is an non -probability sampling method of gathering representative data from a group.Application of quota sampling ensure that sample group represents certain characteristics of the population chosen by the researcher. This sampling method is further divided into controlled quota sampling and uncontrolled quota sampling.
systematic random sampling is a random sampling technique which is used by researcher for its simplicity .In this technique sample members from a larger population are selected according to a random starting point and a fixed periodic interval. this interval called the sampling interval, is calculated by dividing the population size by desired sample size.
Cluster random sampling is used when mutually homogeneous yet internally heterogeneous groupings are evident in a statistical population .In this sampling plan the total population is divided into these groups (knows as cluster ) and a simple random sample of the groups is selected. In this method researcher divides the population into separate groups, called clusters. Then a simple random sample of clusters is selected form the population . The researcher conducts his analysis on data form the sampled clusters.
Quota sampling is an non -probability sampling method of gathering representative data from a group.Application of quota sampling ensure that sample group represents certain characteristics of the population chosen by the researcher. This sampling method is further divided into controlled quota sampling and uncontrolled quota sampling.
systematic random sampling is a random sampling technique which is used by researcher for its simplicity .In this technique sample members from a larger population are selected according to a random starting point and a fixed periodic interval. this interval called the sampling interval, is calculated by dividing the population size by desired sample size.
59.A view that the dividend policy of a firm has a bearing on share valuation advocated by James E. Walter is based on which one of the following assumption:
A.retained earning is the only source of finanace
B.cost of capital does not remain constant.
C.return on investment fluctuate.
D.all of the above
ANSWER:-A
EXPLANATION:-James E. Walter has propounded the theory of dividend policy where he state that there exist a relationship between value of firm and dividend policy.This theory is based on certain assumption as discussed is separate blog these assumption are as follows:-
1)The firm finance all investment through retained earnings . That means Fresh issue of debenture and equity is not resorted for financing its activity. No external financing is resorted.
2)The firms internal rate of return and its cost of equity remains constant.
3)All earnings are either distributed as dividend or reinvested internally immediately.
4)The firm has a very long or infinite life.
1)The firm finance all investment through retained earnings . That means Fresh issue of debenture and equity is not resorted for financing its activity. No external financing is resorted.
2)The firms internal rate of return and its cost of equity remains constant.
3)All earnings are either distributed as dividend or reinvested internally immediately.
4)The firm has a very long or infinite life.
60.) In case , cost of capital is 10% , EPS ₹ 10 IRR 8% and retention ratio is 60% then the calue of equity share as per GORDON'S MODEL will be
A. 100
B. 87
C. 90
D. 77
ANSWER:-D
EXPLANATION:- As per Gordon's model
P0=E(1-B) / (Ke-Br) where, E =earning per share=10
B=retention ratio=60%
Ke=cost of capital=10%
Br=g (growth)=retention*rate of return=0.60*0.08
P0= 10 (1-.60) /(.10-.60*.08)
P0=(10*.40) / 0.052
P0=77
61.)When a business is purchased any amount paid in excess of of the total of assets, minus the liabilities taken is called:
A. Share premium
B.Goodwill
C.Capital Employed
D. Working Capital
ANSWER:-B
EXPLANATION:-Goodwill is an intangible assets that arises when one company purchase another for a premium value. The value of a company's brand name, solid customer base , good customer relations, good employees relations and any patents or proprietary technology represent goodwill.
Goodwill is considered as an intangible asset as it can not be seen and touched like tangible assets like plant and machinery and land and building.
Share premium is the amount which is paid in excess of share nominal value for example a share of rupees 10 nominal value was issued at rupees here rupees 2 i.e (12-10) which is the difference between 12 and 10 is premium amount.
Working capital is the difference between total current assets and total current liabilities.
Capital employed is the total amount of investment made for running the business . It should not be confused with the term capital. Capital represents funds contributed by the owners in a business whereas Capital Employed has a wider meaning. It includes funds coming from both the owners and lenders.It can be computed by adding share capital , reserve and surplus and long term borrowing.
CAPITAL EMPLOYED=SHARE CAPITAL+ RESERVE & SURPLUS + LONG TERM BORROWING
62.) Which of the following is not a 'force' in the "Porter Five Forces Model" ?
A.Buyers
B. Suppliers
C. Complementary produce
D.Industry rivalry
ANSWER:-C
EXPLANATION:-Porter's five forces model is a simple but powerful tools for understanding of competitiveness of business environment and for identifying business strategy's profitability.The tool was created by Harvard Business School professor Michael Porter, to analyze an industry's attractiveness and likely profitability. Since its publication in 1979, it has become one of the most popular and highly regarded business strategy tools.Porter recognized that organisations likely keep a close watch on their rivals, but he encouraged them to look beyond the actions of their competitors and examine what factors could impact the business environment. He identified five forces that make up the competitive environment , and which can erode your profitability.These are;-
1 competitive rivarly
2.supplier power
3.Buyer power
4. threat of substitution
5.threat of new entry.
63.) Concentration banking is a method of:
A. Decentralized Banking
B. Centralized banking
C. Direct collection
D.payment only through cheques
ANSWER:-A
EXPLANATION:- A concentration bank is a financial institution that is the primary bank of a specific organisation . A concentration bank may also be where the organisation conducts most of its transactions. Several organisations uses multiple banks, but generally deal significantly with one bank that is the concentration bank .Its a tool of working capital management.
64.) SWIFT stands for;
A. Society for worldwide Inter-bank Fund Transfer
B.Society for worldwide Inter-bank Fast Transmission
C. Society for Worldwide Inter-bank Financial Telecommunication
D.None of the above.
ANSWER:-A
EXPLANATION:-SWIFT or the society for worldwide Inter bank Financial Telecommunication is the world's largest electronic payment messaging system .it is basically just a bank to ;bank messaging system. It supplies a standardized language that institutions use to communicate payment instructions and other info rot each other. Before SWIFT , there was TELEX .It's helpful to start there, because rather than being created from scratch, the SWIFT system is rooted in some precedent. Telex or the TELEPRINTER EXCHANGE, if we're getting formal was one of the original ways to transmit data developed during World War II. Though its roots were in the military, it was quickly adopted by financial institutions for their system to communicate internationally.
65.) If opening stock is ₹10,000, net purchases ₹ 70,000 , wages is ₹2500 ,carriage inward is₹ 500 and closing stock is₹ 15000. What is the manufacturing cost?
A. ₹65,000
B. ₹83,000
C. ₹68,000
D. ₹73,000
ANSWER:-C
EXPLANATION:-manufacturing cost=opening stock + net purchase + direct expense ( carriage inward and wages) -closing stock
=10,000+70,000+2500+500-15,000
=80,000+3000-15,000
=83,000-15,000
= ₹68,000
A. 100
B. 87
C. 90
D. 77
ANSWER:-D
EXPLANATION:- As per Gordon's model
P0=E(1-B) / (Ke-Br) where, E =earning per share=10
B=retention ratio=60%
Ke=cost of capital=10%
Br=g (growth)=retention*rate of return=0.60*0.08
P0= 10 (1-.60) /(.10-.60*.08)
P0=(10*.40) / 0.052
P0=77
61.)When a business is purchased any amount paid in excess of of the total of assets, minus the liabilities taken is called:
A. Share premium
B.Goodwill
C.Capital Employed
D. Working Capital
ANSWER:-B
EXPLANATION:-Goodwill is an intangible assets that arises when one company purchase another for a premium value. The value of a company's brand name, solid customer base , good customer relations, good employees relations and any patents or proprietary technology represent goodwill.
Goodwill is considered as an intangible asset as it can not be seen and touched like tangible assets like plant and machinery and land and building.
Share premium is the amount which is paid in excess of share nominal value for example a share of rupees 10 nominal value was issued at rupees here rupees 2 i.e (12-10) which is the difference between 12 and 10 is premium amount.
Working capital is the difference between total current assets and total current liabilities.
Capital employed is the total amount of investment made for running the business . It should not be confused with the term capital. Capital represents funds contributed by the owners in a business whereas Capital Employed has a wider meaning. It includes funds coming from both the owners and lenders.It can be computed by adding share capital , reserve and surplus and long term borrowing.
CAPITAL EMPLOYED=SHARE CAPITAL+ RESERVE & SURPLUS + LONG TERM BORROWING
62.) Which of the following is not a 'force' in the "Porter Five Forces Model" ?
A.Buyers
B. Suppliers
C. Complementary produce
D.Industry rivalry
ANSWER:-C
EXPLANATION:-Porter's five forces model is a simple but powerful tools for understanding of competitiveness of business environment and for identifying business strategy's profitability.The tool was created by Harvard Business School professor Michael Porter, to analyze an industry's attractiveness and likely profitability. Since its publication in 1979, it has become one of the most popular and highly regarded business strategy tools.Porter recognized that organisations likely keep a close watch on their rivals, but he encouraged them to look beyond the actions of their competitors and examine what factors could impact the business environment. He identified five forces that make up the competitive environment , and which can erode your profitability.These are;-
1 competitive rivarly
2.supplier power
3.Buyer power
4. threat of substitution
5.threat of new entry.
63.) Concentration banking is a method of:
A. Decentralized Banking
B. Centralized banking
C. Direct collection
D.payment only through cheques
ANSWER:-A
EXPLANATION:- A concentration bank is a financial institution that is the primary bank of a specific organisation . A concentration bank may also be where the organisation conducts most of its transactions. Several organisations uses multiple banks, but generally deal significantly with one bank that is the concentration bank .Its a tool of working capital management.
64.) SWIFT stands for;
A. Society for worldwide Inter-bank Fund Transfer
B.Society for worldwide Inter-bank Fast Transmission
C. Society for Worldwide Inter-bank Financial Telecommunication
D.None of the above.
ANSWER:-A
EXPLANATION:-SWIFT or the society for worldwide Inter bank Financial Telecommunication is the world's largest electronic payment messaging system .it is basically just a bank to ;bank messaging system. It supplies a standardized language that institutions use to communicate payment instructions and other info rot each other. Before SWIFT , there was TELEX .It's helpful to start there, because rather than being created from scratch, the SWIFT system is rooted in some precedent. Telex or the TELEPRINTER EXCHANGE, if we're getting formal was one of the original ways to transmit data developed during World War II. Though its roots were in the military, it was quickly adopted by financial institutions for their system to communicate internationally.
65.) If opening stock is ₹10,000, net purchases ₹ 70,000 , wages is ₹2500 ,carriage inward is₹ 500 and closing stock is₹ 15000. What is the manufacturing cost?
A. ₹65,000
B. ₹83,000
C. ₹68,000
D. ₹73,000
ANSWER:-C
EXPLANATION:-manufacturing cost=opening stock + net purchase + direct expense ( carriage inward and wages) -closing stock
=10,000+70,000+2500+500-15,000
=80,000+3000-15,000
=83,000-15,000
= ₹68,000
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