INTERNATIONAL BUSINESS

Chapter 1 : Theoretical Foundations of International Business

Previous Years’ Questions

COMMERCE

1 (c)    2 (c)    3 (d)  4 (d)  5 (a)  6 (a)  7 (b)  8 (d)  9 ()  10 (b)  11 (a)    12 (b)   13 (a)  14 (d)  15 (c)   16 (c)  17 (c)  18 (a)  19 (d)  20 (a)  21 (c)  22 (b)   23 (a)  24 (b)  25 (a)  26 (d)  27 (d)  28 (d)  29 (b)   30 (c)  31 (c)  32 (a)  33 (c)  34 (a)

MANAGEMENT

1 (a) 2 (a) 3 (c) 4 (c) 5 (d)

* All are non-tariff barriers.

Chapter 2 : International Financial Environment

Previous Years’ Questions

COMMERCE

1 (a)   2 (b)  3 (d)  4 (a)   5 (a)  6 (c)  7 (b)   8 (c)   9 (b)    10 (c)   11 (d)   12 (a)   13 (c)   14 (b)  15 (b)   16 (b)   17 (c)   18 (a)   19 (b)  20 (c)   21 (b)   22 (a) 23 (d) 24 (c) 25 (c) 26 (c) 27 (a) 28 (d) 29 (a) 30 (b) 31 (c) 32 (a) 33 (a) 34 () 35 (c) 36 (c) 37 (a) 38 (c) 39 (b) 40 (a) 41 (a) 42 (a) 43 (a)

MANAGEMENT

1 (c) 2 (c) 3 (d) 4 (c) 5 (a) 6 (c) 7 (b) 8 (b) 9 (b) 10 (d) 11 (c) 12 (d) 13 (a) 14 (b) 15 (b) 16 (b) 17 (b) 18 (b) 19 (b) 20 (c) 21 (b) 22 (c) 23 (c) 24 (c) 25 (b) 26 (c) 27 (a)

Chapter 3 : International Organisations & Agreements

Previous Years’ Questions

COMMERCE

1 (c)   2 (a)   3 (c)   4 (c)    5 (a)  6 (d)   7 (c)   8 (b)   9 (a)   10 (c)  11 (b***)  12 (b)  13 (c)   14 (d)  15 (a)   16 (d)  17 (b)   18 (a)   19 (c)   20 (c)  21 (c)  22 (d)  23 (d)   24 (a)  25 (b)  26 (b#)  27 (a)  28 (c)  29 (c)  30 (c)  31 (a)  32 (c)  33 (c)  34 (c)  35 (c)  36 (d)  37 (d)  38 (b)  39 (d)  40 (c)  41 (c)  42 (c)  43 (d)  44 (b)  45 (a)  46 (b)  47 (c)  48 (a)  49 (a)   50 (d)

MANAGEMENT

1 (c) 2 (d) 3 (b) 4 (c) 5 (d) 6 (a) 7 (b) 8 (b) 9 (a) 10 (b) 11 (c) 12 (b) 13 (a)

* Crrently (2017) India ranks 10^th in the IMF Quota.

** Currently (2017) there are 187 members in WCO.

***  (a)-(1), (b)-(3), (c)-(4), (d)-(2)

# The features given are:

(i) All restrictions on foreign capital are imposed.

(ii) No restriction is imposed on any area of investment.

(iii) Restrictions on repatriation of dividend is eliminated.

(iv) Imports of raw material is allowed freely.

(v) No limit on the extent offoreign investment.

Chapter 4 : Regional Economic Integration

Previous Years’ Questions

COMMERCE

1 (d)  2 (b)  3 (c)  4 (d)     5 (b)  6 (a)  7 (c)   8 (a)  9 ()  10 ()  11 (c)  12 (a)   13 (a)  14 (d)   15 (c)  16 (b)  17 (d)  18 (d)  19 (b)  20 (d)  21 (c)  22 (d) 23 (a) 24 (a) 25 (c) 26 (d) 27 (c) 28 (c)

MANAGEMENT

1 (c) 2 (b) 3 (d) 4 (d) 5 (b) 6 (c) 7 (d) 8 (c) 9 (d)

* All the given countries are members of ASEAN.

Chapter 5 : India’s Foreign Trade

Previous Years’ Questions

COMMERCE

1 ()   2 (a)   3 (b) 4 (a)   5 (c)  6 (c)  7 (b)  8 (c)  9 (b)  10 (d)  11 (d)  12 (b)   13 (a)  14 (c)  15 ()  16 (c)  17 (d)  18 (b)  19 (d)   20 (c)  21 (c) 22 (c)

MANAGEMENT

1 (d) 2 (c) 3 (a) 4 (c) 5 (b) 6 (b) 7 (d) 8 (b) 9 (a)

* According to Foreign Trade Policy 2017-18 India’s global trade is expected to grow at 4 per cent in 2018 from 2.4 per cent in 2016.

** The International Monetary Fund has estimated India’s contribution to world Gross Domestic Product in purchasing Power parity (PPP) terms for 2016:  7.32%  and for 2017: 7.73%.

*** In independent India, the first major foreign exchange crisis occurred in the year 1957.

# The total number of special Economic Zones notified by the Government of India till March 2017 under the SEZ act, 2005 is 347

Chapter 6 : International Marketing & Logistics

Previous Years’ Questions

MANAGEMENT

1 (c) 2(c) 3 (b) 4 (b) 5 (c) 6 (c) 7 (c) 8 (c) 9 (a) 10 (a,b,c,d)

ENTREPRENEURSHIP DEVELOPMENT

CHAPTER 1: ENTREPRENEURSHIP

1D     2B    3D   4C    5D    6C    7B    8A    9C    10D    11D    12B    13A    14C    15B    16B    17C    18D    19A

CHAPTER 2: ENTREPRENEURSHIP DEVELOPMENT

1A    2B    3A    4C    5B    6C    7D    8B    9C    10D    11B    12C    13B    14A   15A

CHAPTER 3: INNOVATION IN BUSINESS

1B      2D     3B     4A     5A     6C     7D     8A     9B     10A

CHAPTER 4: BUSINESS PLANNING & FEASIBILITY ANALYSIS

1D      2A     3B     4C     5A

CHAPTER 5: SMALL BUSINESS ENTERPRISES

1D*      2*    3B      4C     5A    6C     7A     8D     9D    10*   11*    12D     13D    14A      15C     16B     17C      18**       19B      20C     21A     22D    23D     24A    25C    26*    27B     28A

* According to the recent developments, the criterion to define small business enterprises has been changed by the Union Cabinet in Feb 2018 from Investments to Annual Turnover.

** In the year 2015 government removed the last 20 items from the list of reserved items thus bringing to an end a policy regime being followed since the 1960s to promote and facilitate the small sector. Currently, there are no reserved items for Small Scale Industries.

CHAPTER 6: SICKNESS IN SMALL INDUSTRIES

1A    2B     3C     4D    5D    6D     7D     8D     9B    10B     11D     12A     13A     14C    15D    16D    17D      18D     19D     20C     21C    22D    23A    24D     25D     26D    27D     28C    29A    30D    31C     

Marketing Management

CHAPTER 1: INTRODUCTION TO MARKETING MANAGEMENT

Previous Years’ Questions (UGC NET Commerce)

1D            2D        3A       4C      5B        6D   7C    8A    9B      10C     11D            12D      13A     14A     15A     16D      17C      18A       19D       20B   21D       22C      23C

Previous Years’ Questions (UGC NET Management)

1D      2B      3A    4A    5D     6C     7A         8B    9D    10A     11C   12C     13C    14D     15D    16D    17D    18D    19C    20D    21A     22D     23C     24D     25D     26D     27B    28B      29D      30B

CHAPTER 2 : MARKETING STRATEGY

Previous Years’ Questions (UGC NET Commerce)

1C     2C    3A    4C      5B    6D     7A     8A      9C     10A     11B     12C      13D     14C     15D     16*    17C    18C     19A      20C     21C      22A

* All options are incorrect. CORRECT ANS: (a) – (iii), (b) – (i), (c) – (iv), (d) – (ii)

Previous Years’ Questions (UGC NET Management)

1D     2A     3C    4C    5C     6D    7D    8D    9D     10C     11D     12C     13B     14D    15A    16D    17A     18A     19B    20A    21A

CHAPTER 3: PRODUCT DECISION

Previous Years’ Questions (UGC NET Commerce)

1B      2D    3C    4B     5B     6D    7A    8A   9A     10D     11D    12D    13C    14C    15D     16A   17D    18C    19B    20C     21D    22B    23D   24C    25D     26C    27D    28A    29D    30C    31D

Previous Years’ Questions (UGC NET Management)

1D    2C    3B    4D    5C    6B    7D   8B   9C   10D     11C    12B   13B   14B   15D    16C   17C    18B    19D   20C    21C    22B   23D   24D    25A    26A    27B   28C    29A    30A    31B    32C    33B   34A   35A    36A    37B    38C    39B    40A    41D     42C    43D    44B

CHAPTER 4: PRICING DECISION

Previous Years’ Questions (UGC NET Commerce)

1C       2B      3B      4B          5C     6C      7A          8C      9C

Previous Years’ Questions (UGC NET Management)

1A     2C     3D    4A     5D     6D    7D     8D     9B     10B      11B      12B    13B    14A       15A     16B

CHAPTER 5: DISTRIBUTION DECISION

Previous Years’ Questions (UGC NET Commerce)

1D    2C    3D    4D     5A      6C     7B    8C     9D    10B     11B    12A     13C    14B     15B     16D    17D     18A    19A    20A     21D     22A    23A     24B     25B    26C

Previous Years’ Questions (UGC NET Management)

1A    2A    3C    4B     5C    6D     7D    8D    9B    10B    11D

CHAPTER 6: PROMOTION DECISION

Previous Years’ Questions (UGC NET Commerce)

1A    2A    3D    4A      5A     6C    7A     8A     9D     10C     11C     12D     13C    14C    15B    16A    17A    18D    19D    20B    21C    22B    23D     24B    25B      26D     27C    28C     29C    30A    31D    32B    33C   34B    35A    36B    37A

Previous Years’ Questions (UGC NET Management)

1D     2C     3A      4D     5C     6C     7B     8D     9A     10D    11C    12B    13D    14B    15B    16B    17B    18D    19B    20B    21A    22D    23C     24D    25D    26A    27C    28C    29A    30C    31C    32B

CHAPTER 7: CONSUMER BEHAVIOUR

Previous Years’ Questions (UGC NET Commerce)

1B     2C     3A     4A    5D     6A     7C     8D    9A     10B     11B     12B      13D      14C      15D     16B     17C     18A      19C     20B     21A     22D     23C     24D     25A      26D      27C     28B     29B     30D     31C     32D    33A      34D     35C     36B       37A     38C     39C       40C       41B       42A       43A     44A

Previous Years’ Questions (UGC NET Management)

1A    2A      3B     4A     5A      6D     7C     8D     9A     10D     11B     12D     13B     14D     15B     16A    17B     18D     19D      20D     21D     22C     23B     24D     25D    26B    27A     28A     29C    30D     31B     32B    33C     34B     35B     36B     37B      38A      39D

CHAPTER 8: TRENDS IN MARKETING

Previous Years’ Questions (UGC NET Commerce)

1C    2C    3B   4A   5A    6B    7A    8C    9B    10D    11B    12C    13A    14C    15D    16A    17B    18B    19B    20D    21B

Previous Years’ Questions (UGC NET Management)

1D    2B    3B    4B    5C    6B    7B    8D    9B    10C    11A   12D    13D    14A    15C    16D    17A    18B    19C    20D    21C    22A    23B    24B    25C    26D    27D     28A    29C    30B

CHAPTER 9: MARKETING RESEARCH

Previous Years’ Questions (UGC NET Commerce)

1A     2D      3B     4C

Previous Years’ Questions (UGC NET Management)

1C    2B    3B     4C    5A     6D     7D     8A     9D

Chapter 1 : Basic Concepts

MCQ

1 (c) Maximization of Shareholders’ Wealth, 2 (d) None of the above   3 (d) All of the above 4 (b) Risk and Return 5 (b) Variability of Future Outcome 6 (c) Financial Decision-making 7 (d) All of the above   8 (c) Financial Accounting 9 (c) Market Price of Equity Shares 10 (a) Dividend Payout Decision 11 (b) Creating Shareholders’ value 12 (d) Risk and Return 13 (c) Maximize the PV of Equity Returns    14 (a) Maximizing MP of Equity Shares 15 (d) Maneuvering the Shares Price 16 (d) Risk-Return Trade off    17 (a) Designing Optimal Capital Structure 18 (b) Reinvestment Requirement

U.G.C. N.E.T Commerce

1 (a) Procurement of funds and their effective utilization 2 (a) Both correct 3 (c) Maximization of shareholders’ wealth 4 (d) Maximization of social benefits

U.G.C. N.E.T Management

1 (d) Capitalisation Decision 2 (c) Maximise the wealth of Equity shareholders 3 (d) Social responsibility 4 (d) I, II & III 5 (b) Earnings per share are more important than total profits. 6 (a) (A) and (R) both are correct. 7 (c) (a), (b) and (d) 8 (c) Analysing variance between standard costs and actual costs

Chapter 2 : Capital Budgeting

MCQ

1 (a) If PI < 1, its NPV is less than zero. 2 (a) Net Present value 3 (b) Discount Rate 4 (a) Only the best project is selected. 5 (c) Both (a) and (b) 6 (c) Earlier Cash Flows 7 (c) Both (a) and (b) 8 (b) PV of outflows 9 (b) Net addition to Wealth 10 (d) None of the above 11 (d) Payback Period 12 (a) Only the best one 13 (c) Internal Rate of Return 14 (a) Higher, 15 (c) Internal Rate of Return 16 (c) Profitability Index, 17 (d) None of the above 18 (b) 4 years 19 (c) That the project returns Rs. 1.30 for every Rs.1 invested in projected 20 (a) Average expected profit 21 (a) Discounting Procedure 22 (c) NPV method is superior to Payback method as the former considers time value of money. 23 (b) Decrease in working capital, 24 (b) NPV will be zero 25 (d) Changes in the signs of Cash flows 26 (c) (a) & (b)

PGT Commerce

1 (a) 0. 25%  2 (b) (Riskless cash flow )/(Risky cash flow ) × Investment  3 (c) Planning of expenditure for assets

U.G.C. N.E.T Commerce

1 (b) Present value  2 (c) Rs. 30,000  3 (d) All of these  4 (b) (a)-(iii), (b)-(iv), (c)-(i), (d)-(ii) 5 (c) (i), (iii), (ii), (iv), (v), (vi) 6 (b) Capital Budget 7 (a) Ascertain risk 8 (c) K < R 9 (c) Accounting rate of return 10 (b) Internal Rate of Return 11 (c) Only (iii) is correct 12 (c) (a)-(iv), (b)-(iii), (c)-(i), (d)-(ii) 13 (d) Cash flow before depreciation and after taxes 14 (b) Principle of discounting 15 (d) All of the above 16 (c) Average Rate of Return 17 (b) iii, ii, i, v, iv 18 (d) Intangible benefits 19 (b) Profitability index method 20 (b) Net present value method 21 (b) Both (A) and (R) are correct 22 (b) (A) is true, but (R) is a necessary condition, but not a sufficient condition 23 (b) Internal Rate of Return Method 24 (b) (a)-(iii), (b)-(i), (c)-(iv), (d)-(ii) 25 (b) That limited funds are available for investment 26 (d) Risk Free Rate 27 (c) Existing investment in a project is not treated as sunk cost 28 (b) (b) and (c) 29 (c) Net Profit after tax + Depreciation 30 (d) It is very difficult to calculate. 31 (c) I II IV 32 (d) Existing investment in a project is not treated as sunk cost. 33 (d) Risk Free Rate 34 (b) Capital budgeting decisions are reversible in nature 35 (b) Internal Rate of Return 36 (a) Statement -1 is correct, but statement – II is wrong

U.G.C. N.E.T Management

1 (c) Internal Rate of Return 2 (a) Present values of all the cash flows expected to occur over the life of a project 3 (b) Payback method considers cash flows only up to the payback period 4 (c) The Net Present Value is zero 5 (a) Payback method 6 (b) Internal Rate of Return 7 (d) 1, 2 and 3 8 (b) Sensitivity analysis 9 (d) Profitability index 10 (b) ii iii iv i 11 (b) ii iii iv i 12 (c) (A) and (B) both 13 (a) Only (a) is correct. 14 (d) Statements IV and I are correct 15 (c) 3 years and 6 months 16 (c) – Rs. 217 17 (b) a-(iv) b-(iii) c-(ii) d-(i) 18 (d) a, b and c all 19 (c) a, b and d 20 (d) Evaluating the returns and investment in projects. 21 (c) (a) and (c) only

Chapter 3 : Working Capital Management

MCQ

1 (d) Liquidity and Profitability  2 (c) Total Current Assets 3 (d) None of the above 4 (a) Financing of CA 5 (a) Hedging Approach 6 (c) Short term funds have been used for fixed assets 7 (c) Current Assets are partly financed out of long-term sources 8 (d) Increasing credit period from suppliers 9 (d) None of (a) and (b) 10 (b) Longer life 11 (a) GOC – DP 12 (d) Both (a) and (b) 13 (c) 35 days 14 (a) Production Schedule 15 (d) None of (a) and (b) 16 (a) Short term Liquidity 17 (a) Fixed Assets Level 18 (c) Current Assets over Current Liabilities 19 (a) Creditors 20 (a) Working Capital Management 21 (c) (a) Minus (b) 22 (b) Is minimum level of Current Assets 23 (b) All Current Assets 24 (c) Provision for Tax. 25 (b) 1 year

PGT Commerce

1 (c) Redemption of debentures

U.G.C. N.E.T Commerce

1 (c) (i), (v), (ii), (iii), (iv) 2 (d) Expenditure to acquire capital 3 (c) Both (1) and (2) are correct 4 (c) Both (A) and (R) are correct 5 (a) (i) and (ii) both are correct 6 (b) (ii), (iii) and (iv) 7 (c) (a)-(ii), (b)-(iii), (c)-(iv) 8 (d) (i), (ii) and (iv) 9 (a) Long term Capital Funds 10 (c) William J. Baumol 11 (*) 12 (c) Net working capital 13 (b) I, III and IV only 14 (c) I, III and IV only 15 (b) Both statements are incorrect 16 (d) Optimum order size 17 (b) Total carrying cost 18 (a) Decentralized Collection 19 (d) (a), (c), (d) 20 (a) Letter of Credit 21 (b) I, III, IV 22 (b) (a), (b), (c), (e) 23 (d) II IV 24 (c) A and C 25 (a) (a)-(ii), (b)-(iii), (c)-(i), (d)-(iv)

U.G.C. N.E.T Management

1 (c) Increase in bad debts 2 (b) Corporate Tax 3 (c) Cash Management 4 (b) William J. Baumol 5 (b) To meet day-to-day financial obligations of the company 6 (b) Operating cycle 7 (b) 8 & 45 days 8 (b) Delinquency Cost 9 (b) 200 units 10 (d) i and ii are correct. 11 (b) Net working capital 12 (b) (B) Negative cash cycle 13 (b) An aggressive approach of financing 14 (b) (i)b (ii)c (iii)d (iv)a 15 (a) Rs.2 lakhs 16 (a) 7 months 17 (c) 160 18 (b) a(iii) b(ii) c(i) d(iv) 19 (b) 12 and 1 month 20 (All) 21 (c) a, b and d 22 (b) (i)b (ii)a (iii)d (iv)c 23 (b) Delinquency cost 24 (b) b, c and d 25 (c) Delinquency Cost

Chapter 4 : Capital Structure

MCQ

1 (c) Minimum WACC 2 (d) Both (a) and (b) 3 (c) Location of the plant 4 (c) Liquidity 5 (a) All financial resources 6 (b) Maximum 7 (c) Increase in Debt 8 (c) Operating Profit 9 (d) All of the above 10 (d) Political Stability 11 (b) Debt Capacity 12 (c) Debt-service Coverage 13 (d) Retained Earnings

U.G.C. N.E.T Commerce

1 (b) Net Operating Income Approach 2 (d) All of the above 3 (d) Transferability 4 (a) Ratio between different forms of capital 5 (b) Trading on borrowed funds 6 (c) (i) is correct (ii) is incorrect 7 (c) Shortage of capital 8 (d) (d)-(iv) 9 (d) Capital Structure 10 (a) M-M Hypothesis 11 (c) Net Operating Income Approach 12 (b) Net income approach 13 (c) Comparative Analysis 14 (c) Unity for dividend payout ratio 15 (a) Assertion (A) and Reason (R) both are correct and (R) is correct explanation of (A). 16 (a) I, II and IV only 17 (b) Statement I is correct but Statement II is incorrect 18 (c) Rs. 10,80,000 19 (a) Share Capital + Reserves + Long Term-Debts 20 (b) I II III 21 (d) Statement – I is wrong and Statement – II is correct. 22 (c) Tax deductible of interest 23 (b) (A) is correct , but (R) is wrong 24 (b) M. M. Model

U.G.C. N.E.T Management

1 (a) (ii) and (iv) 2 (a) Market price of equity share is maximum 3 (c) Capital gearing 4 (c) a(ii) b(i) c(iv) d(iii) 5 () 6 (b) (A) is correct but (R) is incorrect. 7 (a) EBIT that produces the same level of EPS for two alternative capital structures. 8 (d) Good 9 (b) (i)d (ii)c (iiI)a (iv)b 10 (d) Equity, preference and debt capital

Chapter 5 : Cost of Capital

MCQ

1 (c) Required Rate of Return 2 (d) Retained Earnings. 3 (a) Equity Shares 4 (a) Risk-free Rate of Interest 5 (b) After-Tax basis, 6 (c) kO 7 (c) Cost of Debentures 8 (a) New Equity Shares 9 (b) Additional Funds 10 (b) Cost of Equity 11 (b) ke 12 (d) All of the above 13 (a) All sources,) 14 (c) Equity Shares holders would demand higher return 15 (c) Discount Rate that equates PV of inflows and outflows relating to capital 16 (c) Retained Earnings are cheaper than External Equity 17 (d) Minimum Rate of Return that the firm should earn 18 (b) Weighted Average Cost of Capital 19 (d) All of the three above 20 (b) Equity Share Capital plus Reserve and Surplus 21 (b) Equity Funds, Preference Capital and Long term Debt 22 (c) Tax-deductibility of Interest 23 (c) Market Price of Equity Share 24 (c) Debentures 25 (d) All of the above

PGT Commerce

1 (a) Earning yield method

U.G.C. N.E.T Commerce

1 (c) Expectations of investors for dividend 2 (a) External yield criterion 3 (d) (d)-(iv) 4 (b) Composite cost 5 (b) Opportunity cost to the firm 6 (d) Market risk premium for the firm 7 (a) Capital Assets pricing model 8 (b) Both (A) and (R) are true 9 (c) 18.8% 10 (c) (a)-(ii), (b)-(iii), (c)-(iv), (d)-(i) 11 (c) 6.66 per cent 12 (c) Yield of Capital Sacrifice 13 (b) 14 (d) I III IV 15 (c) Tax deductible of interest 16 (c) Cost of capital does not comprise any risk premium 17 (c) Yield to maturity method

U.G.C. N.E.T Management

1 (d) Dividend yield + expected growth rate in dividends 2 (d) D1/P0 + g 3 (d) 3 (c) 4 (a) 4.38% 5 (c) 10.53% 6 (b) 13% 7 (d) Capital assets pricing model 8 (a) Net cash inflow at the time of issue 9 (b) Proportion of different sources of finance

Chapter 6 : Dividend Policy

MCQ

1 (c) ke > r  2 (a) 0% Payout 3 (d) None of the above 4 (b) Gordon’s Model 5 (c) Passive Decision 6 (c) Arbitrage 7 ( ) 8 (c) Gordon’s Model 9 (b) Dividend and Capital Issue 10 (c) DP Ratio 11 (a) The value of the firm depends upon earning power 12 (c) That dividend is paid after retaining profits for reinvestment 13 (c) Investors are not ready to offer any price 14 (b) Constant growth Model of equity valuation 15 (c) Equal 16 (b) DPS ÷ EPS 17 (b) 30 days 18 (c) Company to Government 19 (b) Rs. 4 20 (a) Share-split 21 (c) Profit after Tax 22 (d) Both (a) and (b) 23 (d) 7 days 24 (c) Stable Dividend Payment 25 (c) Stable Dividend Policy 26 ( ) 27 (c) Informational content 28 (d) There need not be much variation in dividend payment over years. 29 (c) Financial restructuring 30 (d) Market price for share decreases 31 (d) Preceding year EPS 32 (d) Retained Earnings

PGT Commerce

1 (a) Increase 2 (d) Bonus share 3 (C) Composite dividend

U.G.C. N.E.T Commerce

1 (c) r < k 2 (c) Both (i) and (ii) are correct 3 (c) Modigliani and Miller 4 (b) Irrelevant 5 (a) Retained earnings, the only source of financing 6 (a) Retained earnings is only source of financing 7 (a) (a)-(ii), (b)-(iii), (c)-(i), (d)-(iv) 8 (d) M. M. Model 9 (a) Both (A) and (R) is correct 10 (c) James E. Walter 11 (d) The key variables like EPS and DPS keep on changing 12 (b) Myron J. Gordon 13 (c) The firm has finite life 14 (c) Modigliani Miller 15 (d) Rs. 77 16 (c) Payout Ratio 17 (c) I II IV 18 (b) 19 (d) Arbitrage

U.G.C. N.E.T Management

1 (d) None of the above 2 (b) Walter model 3 (c) Pay-out Ratio 4 (a) All financing is done through retained earnings; external sources of funds like debt or new equity capital are not used. 5 (c) iii ii iv i 6 (c) Price per share increases as the dividend pay-out ratio decreases. 7 (a) Partly on current earnings and partly on the previous year’s dividend. 8 (c) I, II, III and IV are correct. 9 (C) Rs. 400, Rs. 150 and Rs. 105.88, respectively 10 (b) Dividend yield 11 (b) Rs.20 12 (b) Rs.130 13 (c) Rs. 40 14 (d) Stability of the dividend considerations

Chapter 7 : Mergers and Acquisition

PGT Commerce

1 (d) Circular combination 2 (a) Merger

UGC NET Commerce

1 (b) (a)-(iii), (b)-(i), (c)-(iv), (d)-(ii) 2 (c) Acquisition 3 (a) De merger 4 (c) ‘Share of supply’ test 5 (d) External reconstruction 6 (b) (I) (IV) (V) (III) (II) 7 (a) I, II, IV, V 8 (c) Shareholders of the acquired or target firm vote by their response to a tender offer in an acquisition of stock but cast a formal vote in a merger situation. 9 (b) (a), (b) and (d)

UGC NET Management

1(c) Shareholder value 2 (d) Split up 3 (b) AS – 14 4 (b) Issued capital of the two companies 5 (b) The acquisition of certain block of equity capital of a company which enables the acquirer to exercise control over the affairs of the company. 6 (c) (i), (ii), (iii) and (iv) 7 (c) a-2 b-1 c-3 d-4 8 (c) Good will 9 (b) a-ii b-iii c-i 10 (b) White knight 11 (a) Crown jewels 12 (b) Description and number of shares issued 13 (d) An equity carve – out 14 (c)  I-b II-d III-a IV-c 15 (b) Different stages of distribution and production in same business activity

Chapter 8 : Elements of Derivatives

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1 (b) Derived financial asset 2 (a) (I), (II), (III)

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1(b)Option 2 (c)Interest rate parity 3 (d) (D) iv-ii-i-iii 4 (b) $ 4200 5 (a)$ 1,25,000 6 (a)Swap 7 (c)Rs. 1.000 8 (a)Price of the option — Intrinsic value of option 9(a)Forward Market 10 (b) The parties agree to trade at a specified time in the future, at a price set now; a derivative involves only payments of money, with no delivery of any commodity or assets 11(a)Cash or collateral provided by a customer to a broker to protect the broker from loss on a contract 12 (a)Cross rate 13 (b)Closing out a futures contract before maturity with an offsetting trade 14 (b)Which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries

Chapter 9 : Measurement of risk and returns on securities and portfolios

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1 (b) Systematic risk is non-diversifiable but unsystematic risk is diversifiable 2 (b) Reverse variability of possible return to expected return 3 (c) 0.6 4 (c) (a) and (b)

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1 (d) 16.75% 2 (c) Risk and the required rate of return 3 (b) Risk 4 (c) Systematic risk or non-diversifiable risk 5 (b) 0 6 Question not available 7 (d) I, IV and V only 8 (b) 9 (c) 1.6 10 (d) Negative Alphas 11 (d) All of the above 12 (c) A stock’s relevant risk is greater than its stand-alone risk. 13 (c) Liability risks are associated with product, and not with service, or with employee actions. 14 (d) The slope of the security market line tells the degree to which investors are not risk averse. 15 (c) Sharpe, Lintner and Treynor 16 (a) Systematic Risk 17 (a) Systematic risk is unavoidable; this is the contribution of an individual asset to the risk of market portfolio.

Chapter 10 : Valuation of Securities 

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1 (d) II, III

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Mutual Fund

1 (b) Index Fund

Bonds

1 (b) At a Discount 2 (b) Present value of annual interest plus present value of maturity value 3 (c) ii iii i 4 (b) That makes the present value of cash flows receivable from owning the bond equal to the price of the bond 5 (b)Statement I is correct, but Statement II is incorrect 6 (c) Statements I and III are correct 7 (d)  8 (d) Liquidating value 9 (d) If interest rates rise so that the required rate of return increases, then the bond will increase in value

Chapter 11 : Long Term Source of Finance

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1 (b) Systematic risk is non-diversifiable but unsystematic risk is diversifiable 2 (b) Reverse variability of possible return to expected return 3 (c) 0.6 4 (c) (a) and (b)

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1 (d) 16.75% 2 (c) Risk and the required rate of return 3 (b) Risk 4 (c) Systematic risk or non-diversifiable risk 5 (b) 0 6 () 7 (d) I, IV and V only 8 (b) 9 (c) 1.6 10 (d) Negative Alphas 11 (d) All of the above 12 (c) A stock’s relevant risk is greater than its stand-alone risk. 13 (c) Liability risks are associated with product, and not with service, or with employee actions. 14 (d) The slope of the security market line tells the degree to which investors are not risk averse. 15 (c) Sharpe, Lintner and Treynor 16 (a) Systematic Risk 17 (a) Systematic risk is unavoidable; this is the contribution of an individual asset to the risk of market portfolio.

Chapter 12 : Understanding Financial Statements and Analysis there of

Financial Statement

M.Com (Entrance)

1 (c) Cross-sectional analysis

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1 (d) All of the above

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Fund Flow Statement

PGT Commerce

1 (d) Both (A) and (R) are correct and (R) is the correct explanation of (A)   2 (b) Payment of dividends is a use of funds 3 (d) Increase or decrease in working capital

M.Com (Entrance)

1 (d) Retirement of long term by issue of preferred capital

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1 (d) Current Assets – Current Liabilities 2 (d) Building sold on credit 3 (b) Rs. 30,000 4 (d) All of the above 5 (a) Realization of cash from debtors 6 (b)(ii) and (iii) 7 (b) Working Capital 8 (d) Only (d) 9 (c) (b), (c), (e)

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Profit Volume Analysis

PGT Commerce

1 (d) 12% 2 (d) 1,000 units 3 (a) Total revenue is equal to total cost 4 (a) Fixed cost + profit  5 (a) Volume

M.Com (Entrance)

1 (d) Production volume decreases 2 (b) Rs. 6,000 3 (b) 12% of total sales 4 (b) Rs. 2,40,000 5 (c) 60% 6 (a) Rs. 1,00,000 7 (c) Rs. 24,000 8 (c) Rs. 2,00,000 9 (c) Rs. 3,00,000 10 (b) Sales = Variables Cost + Fixed Cost + Profit 11 (d) Increase in Break-even Point 12 (d) All of the above 13 (d) All of these 14 (d) All of the above 15 (b) Inventory quantities change during the year 16 (c) Rs. 152 17 (c) Rs. 120 lakhs 18 (b) 30% 19 (c) Rs. 300 lakhs 20 (b)Inventory quantities change during the year 21 (c) Rs. 7,20,000 22 (b) Increase in breakeven level 23 (d) A relevant range of volume 24 (b) 150

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1 (a) 5,000 units 2 (a) Profit and Volume 3 (c) Relationship between cost and sales 4 (b) Rs. 1,50,000 5 (a)-wrong (b)-Ture (c)-Ture (d)-Ture 6 (c) 3 and 4 7 (b) Sales – Variable cost 8 (d) All of the above 9 (b) 20% 10 (a)  11 (c) Rs. 55,000 12 (b) 88,000 units 13 (d) Required sales to earn desired profits = (Desired Profit)/(P/V Ratio)

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Decision Making

M.Com (Entrance)

1 (a) Direct material and labour costs in producing the order 2 (c) Variable costs 3 (d) Unchanged fixed cost 4 (d) Contribution margin 5 (c) An opportunity cost of the company 6 (b) Sunk cost

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1 (b) Total Cost 2 (b) Only (A) is correct, but (R) is wrong 3 (d) All of the above 4 (b) (A) is correct but (R) is not correct.

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Ratio Analysis