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Management Questions and Answers for Competitive Exams | MBA BBA Quiz Set 26

Questions
1 A project will cost ` 40,000. Its stream of earnings before depreciation and taxes during first year through five years is expected to be ` 10,000, ` 12,000, ` 14,000, ` 17,000 and ` 19,000. Assume a 50% tax rate and depreciation on straight line method. The average rate of return of the project is :
1 36%
2 40%
3 55.56%
4 16%

Answer:16%
2 Which one of the following statements is false ?
1 Derivatives are securities whose values are determined by the market price of some other assets.
2 Derivatives include options, whose values depend on the price of some underlying asset.
3 A natural hedge is a transaction between two counter parties where both parties’ risks are reduced.
4 The Black-Scholes Option Pricing Model (OPM) can be used to estimate the value of a put option.

Answer:The Black-Scholes Option Pricing Model (OPM) can be used to estimate the value of a put option.
3 The buying and selling of commodity, in case of foreign currency, that has both element of risks and chance of great profit is called
1 Arbitrage
2 Gambling
3 Speculation
4 Negotiation

Answer:Speculation
4 The segment of foreign exchange market which comprises of banks and financial institutions is called as
1 FERA
2 Exchange Traded Market
3 OTC market
4 Spot market

Answer:OTC market
5 Consider the following statements :

Statement – I : GATT was formed to decide quotas and increase tariffs.

Statement – II : RTAs replaced GATT in 1995.

Statement – III : Any sort of discrimination was prohibited as fundamental principle in GATT.

Code :
1 Statement I and III are correct and II is incorrect.
2 Only statement III is correct.
3 Only statement I is correct.
4 All above statements are correct

Answer:Only statement III is correct.
6 Under which of the following system of perfect capital, mobility increase in exports or expansion in government expenditure or a tax cut, does not affect equilibrium level of income ?
1 Fixed exchange rate system
2 Flexible exchange rate system
3 Balance of payment equilibrium
4 Changes in money supply

Answer: Flexible exchange rate system
7 Assertion (A) : Companies face different competitive situations depending on the products, strategies and countries where they operate.

Reason (R) : A company’s competitive strategy influences how and where it can operate.

Codes :
1 (A) is correct and (R) is incorrect.
2 (A) is incorrect and (R) is correct.
3 Both are correct and (R) is the right explanation of (A).
4 Both are correct, but (R) is not right explanation of (A).

Answer:Both are correct, but (R) is not right explanation of (A).
8 Consider the following statements :

Statement – I : Stakeholder cannot influence how and whether companies operate through FDI.

Statement – II : The effort to create favourable political relations has led many countries to replace obstacals to FDI with incentives for FDI.

Statement – III : The effect of a multinational enterprise activities may be simultaneously positive for one national objectives and negative for another.

Codes :
1 Only statements I & III are correct.
2 Only statement I is correct.
3 Only statement III is correct.
4 All statements are correct.

Answer:Only statement III is correct.
9 Which one of the following assumptions is not related to consumer behaviour based on the cardinal utility approach ?
1 Rationality
2 Diminishing marginal utility of money
3 Utility cardinally measurable
4 Maximization of satisfaction with limited money income

Answer:Diminishing marginal utility of money
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10 Statement – I : A rectangular hyperbola shaped demand curve has uniform slopes on all its points.

Statement – II : If the price elasticity is equal to unity, the marginal revenue corresponds to zero.

Code :
1 Both the statements are correct
2 Both the statements are incorrect
3 Statement – I is correct while Statement – II is incorrect
4 Statement – I is incorrect while Statement – II is correct

Answer:Statement – I is incorrect while Statement – II is correct
11 Statement – I : In general, the NPV and IRR methods lead to the same acceptance or rejection decision when a single project is involved.

Statement – II : The inconsistency in ranking of competing projects as per the NPV and IRR methods lies in the implicit assumptions with regard to different rates of returns on re-investment of intermediate cash flows.

Code :
1 Both statements are correct
2 Both statements are incorrect
3 Statement – I is correct while Statement – II is incorrect
4 Statement – I is incorrect while Statement – II is correct

Answer: Both statements are correct
12 Which one of the following is not covered in macro-economics ?
1 Performance of the entire economy
2 Price and output determination of a commodity
3 Factors and forces of economic fluctuations
4 Monetary and fiscal policies

Answer:Price and output determination of a commodity
13 The operant conditioning or learning approach to behaviour is based on __________.
1 Law of reinforcement
2 Law of effect
3 Law of reproduction
4 Law of expectations

Answer:Law of effect
14 The principles by which the process of perceptual organization works was first identified by Max Wertheimer in the year __________.
1 1918
2 1933
3 1924
4 1923

Answer:1923
15 The __________ leadership theory of __________ describes that effective group performance depends on the proper match between the leader’s style if interacting with his subordinates and the degree to which the situation gives control and influence to the leader.
1 ‘Iowa State Leadership Studies’; Ronald Lippitt and Ralph K. White
2 ‘Managerial Grid’; Blake and Mouton
3 ‘Trait Theory’; Stodgill and Barnard
4 Contingency Model’; Fred Fiedler

Answer: Contingency Model’; Fred Fiedler

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