NTA UGC NET/JRF Exam, Dec. 2021/June 2022 (Commerce) Shift-II

Total Questions: 100

61. Which one of the following is false with respect to interest rate structure in the Indian money market

(a) A very tight liquidity position will increase the call rates whereas excess liquidity will give fairly low and stable rates
(b) If the liquidity crunch of the banks is passed on to the system, it may lead to high volatility in the call rates
(c) Call rates under normal liquidity conditions are the cap rate for the term money market
(b) If the liquidity crunch of the banks is passed on to the system, it may lead to high volatility in the call rates

Correct Answer: (c) Call rates under normal liquidity conditions are the cap rate for the term money market

Solution:

Call rates under normal liquidity conditions are the cap rate for the term money market.
Call money rate is the rate at which short - term funds are borrowed and lent in the money market.
Call money is a short - term; interest paying loan from one to 14 days made by a financial institution to another financial institution.

62. Under Indian Income Tax Act, in order to claim deduction of interest on home loan for house property, which of the following things need to be taken care of?

A. The home loan must be used for the purchase/construction of the house property
B. The loan must be taken on or after 1st April,
C. The amount of loan must be used within 10 days from the date of loan taken
D. The purchase or construction must be completed within 5 years from the end of Financial Year in which the loan was taken
E. The rate of interest on loan cannot exceed 22%.
Choose the most appropriate answer from the options given below:

(a) A, B, D only
(b) A, C, D, E only
(c) B, C, D, E only
(d) A, D only

Correct Answer: (d) A, D only

Solution:

Deduction of interest on Home Loan for the property.
• Homeowners can claim a deduction of up to Rs. 2 lakh on their home loan interest if the owner or his family reside in the house property. The same treatment applies when the house is vacant. If you have rented out the property, entire interest on the home loan is allowed as deduction.
• The deduction on interest is limited to Rs. 30,000 if you fail to meet any of the conditions given below for the Rs. 2 lakh rebate :-
• The home loan must be for the purchase and construction of a property.
• The loan must be taken on - or after 1 April 1999.
• The purchase or construction must be completed within 5 years from the end of the financial year in which the loan was taken.

63. Which of the following statements are correct?

A. Internal reliability is described as the consistency of a measure taken at two different points of time
B. A distribution is random walk if it has a mean of 0 and variance of 1
C. Increase and decrease in scores measured overtime that produce a variance of less than 50% is reliable
D. Normal distribution cannot be applied to real life situations
E. Factor Analysis supersedes multiple discriminant analysis
Choose the most appropriate answer from the options given below:

(a) A, B, E only
(b) C, D, E only
(c) B, C, D only
(d) B, D, E only

Correct Answer: (a) A, B, E only

Solution:

Following statements are correct :-
• Internal reliability is described as the consistency of a measure taken at two different points of time.
• A distribution is random walk if it has a mean of 0 and variance of 1.
• Factor Analysis supersedes multiple discriminant analysis.

64. Match List-I with List-II

List-I (Legal Latin Phrase)	List-II (Description)
A. Consensus ad idem	I. Something in return
B. Quid pro quo	II. As much as earned
C. Quantum meruit	III. Buyer beware
D. Caveat emptor	IV. Meeting of minds

Choose the correct answer from the options given below:

(a) A-I, B-II, C-IV, D-III
(b) A-IV, B-I, C-II, D-III
(c) A-II, B-I, C-III, D-IV
(d) A-I, B-IV, C-II, D-III

Correct Answer: (b) A-IV, B-I, C-II, D-III

Solution:

List-I (Legal Latin Phrase)	List-II (Description)
A. Consensus ad item	IV. Meeting of minds
B. Quid pro quo	I. Something in return
C. Quantum meruit	II. As much as earned
D. Caveate emptor	III. Buyer beware

65. Match List-I with List-II

List-I (Income Tax Disposition)	List-II (Particular/Section)
A. Donation to National Defence Fund	I. Section 140(A)
B. Hedging of Tax	II. Tax Management
C. Compliance with Legal Formalities	III. Tax Avidance
D. Permanent Account Number (PAN)	IV. 100% Deduction

Choose the correct answer from the options given below:

(a) A-III, B-II, C-I, D-IV
(b) A-IV, B-III, C-II, D-I
(c) A-II, B-IV, C-III, D-IV
(d) A-I, B-IV, C-II, D-III

Correct Answer: (b) A-IV, B-III, C-II, D-I

Solution:

List-I (Income Tax Disposition)	List-II (Particular/Section)
A. Donation to National Defence Fund	IV. 100% Deduction
B. Hedging of Tax	III. Tax Avidance
C. Compliance with Legal Formalities	II. Tax Management
D. D. Permanent Account Number (PAN)	I. Section 140(A)

66. Preference share in India is issued by a company for a maximum period of:

(a) 10 years
(b) 15 years
(c) 20 years
(d) unlimited period

Correct Answer: (c) 20 years

Solution:

Preference share in India is issued by a company for a maximum period of 20 years.
Preference shares also known as preferred stock, is an exclusive share option which enables shareholders to receive dividends announced by the company before the equity shareholders.

67. Why do Central Bank intervene to affect exchange rates?

A. To influence domestic production
B. To influence trade flows
C. To influence domestic interest rates
D. To inject liquidity in domestic markets
E. To smoothen fluctuations in exchange rates
Choose the most appropriate answer from the options given below:

(d) A, B and E only
(b) C, D and E only
(c) B, C and D only
(d) A, B and E only

Correct Answer: (d) A, B and E only

Solution:

The Reserve Bank's exchange rate policy focuses on ensuring orderly conditions in the foreign exchange market. For the purpose, it closely monitors the developments in the financial market at home and abroad. When necessary, it intervenes in the market by buying or selling foreign currencies.

• To influence domestic production.
• To influence trade flows
• To smoothen fluctuations in exchange rates.

68. Which are the major factors that lead to capital rationing?

A. Imperfection of capital market.
B. Reluctance of broaden the equity share-base for the fear of losing control
C. Inability to manage
D. Deficiencies in market information which might effect the availability of capital
E. Efficiency of Capital Market
Choose the correct answer from the options given below:

(a) A, B, D only
(b) C, D, E only
(c) A, B, C, E only
(d) A, B, C, D only

Correct Answer: (d) A, B, C, D only

Solution:

Capital Rationing :- Capital Rationing is the process through which companies decide how to allocate their capital among different projects, given that their resources are not limitless.
• Factors leading to Capital rationing :
(i) External constraints
(ii) Internal constraints imposed by management.

(i) External Factors :- External capital rationing arises out of the inability of the firm to raise sufficient funds from the market at a given cost of capital. Capital rationing may arise to external factors like.
(a) Imperfections of capital market.
(b) Deficiencies in market information which might effect the availability of capital.
(ii) Internal Factors :- Internal capital rationing is caused by self - imposed restriction by management to its capital expenditure outlays.

Reluctance to take resort to financing by external equities in order to avoid assumption of further risk.
Reluctance to broaden the equity share base for fear of losing control.
Inability to manage the firm.

69. Match List-I with List-II

List-I (Type of Exposure)	List-II (Description)
A. Economic Exposure	I. Potential changes in all future cash flows of a firm that result from unanticipated changes in exchange rates
B. Translation Exposure	II. It arises when items of financial statements that are stated in foreign currencies are restated in the home currency of an MNC
C. Transaction Exposure	III. It arises when a firm's contract obligations are exposed to unanticipated changes in exchange rate.
D. Operating Exposure	IV. When a firm's real assets are exposed to unanticipated changes in exchange rates

Choose the correct answer from the options given below:

(a) A-III, B-IV, C-II, D-I
(b) A-I, B-II, C-III, D-IV
(c) A-IV, B-I, C-II, D-III
(d) A-I, B-IV, C-III, D-II

Correct Answer: (b) A-I, B-II, C-III, D-IV

Solution:

List-I (Type of Exposure)	List-II (Description)
A. Economic Exposure	I. Potential changes in all future cash flows of a firm that result from unanticipated changes in exchange rates
B. Translation Exposure	II. It arises when items of financial statements that are stated in foreign currencies are restated in the home currency of an MNC
C. Transaction Exposure	III. It arises when a firm's contract obligations are exposed to unanticipated changes in exchange rate.
D. Operating Exposure	IV. When a firm's real assets are exposed to unanticipated changes in exchange rates

70. Match List-I with List-II

List-I (Personality Factor)	List-II (Bipolar Dimension)
A. Warmth	I. Imaginative vs practical
B. Abstractedness	II. Controlled vs casual
C. Openness to change	III. Outgoing vs reserved
D. Perfectionism	IV. Experimental vs conservative

Choose the correct answer from the options given below:

(a) A-II, B-I, C-IV, D-III
(b) A-III, B-I, C-IV, D-II
(c) A-I, B-IV, C-III, D-II
(d) A-III, B-II, C-IV, D-I

Correct Answer: (b) A-III, B-I, C-IV, D-II

Solution:

List-I (Personality Factor)	List-II (Bipolar Dimension)
A. Warmth	iii. Outgoing vs reserved
B. Abstractedness	i. Imaginative vs practical
C. Openness to change	iv. Experimental vs conservative
D. Perfectionism	ii. Controlled vs casual