NTA UGC NET/JRF Exam, June 2020 Commerce (Evening-Shift)

Total Questions: 100

21. Which one of the following is the most pervasive and sustaining objectives of financial decision making?

Correct Answer: (a) Profit maximization
Solution:

Profit maximization is the most perasive and sustaining objectives of financial decision making.
Conventionally, profit maximization is believed as the altimate objective of business entity.
Profit maximization, in financial management represents the proves or the approach by which profit earning per shear (EPS) is increased
In simple word, all the decision whether investment or financing etc are focused on maximizing the profits to optimium levels.

22. Political risk management comes in the ambit of which of the following financial decisions?

Correct Answer: (d) Multinational capital budgeting
Solution:

Multinational capital budgeting, like traditional domestic capital budgeting, focuses on the cash inflow and outflow associated with prospective long-term investment projects.

Multination capital budgeting is capital budgeting for a foreign project using the same theoretical framwork as domestic capital budgeting.

Political risk management comes in the ambit of multinational capital budgeting. e The political stability of a country directly impacts borrowing costs, taxes, and regulation for business.

23. A company purchased a machinery on 01-01-2015 for a sum of Rs. 60,000. The retail price index on that date was 150. What is the value of machinery according to CPP method on 31st December 2015. When the price index was 200.

Correct Answer: (c) Rs. 80,000
Solution:

24. X and Y are partners in a business sharing profit and losses in the ratio of 3:2. They admit Z as a new partner with 1/5 share in the profits. Calculate the new profit sharing ratio of Valuex partners.

Correct Answer: (a) 12:8:5
Solution:

25. If Activity Ratio of a firm is 80% and capacity ratio is 120% find out its efficiency ratio.

Correct Answer: (d) 66.67%
Solution:

Activity Ratio = Capacity ratio × efficiency ratio
efficiency ratio = activity ratio/capacity ratio
∴ Efficiency ratio = 80/120
Efficiency Ratio = 66.67%

26. When current ratio is 2:1 and if equal increase in current assets and current liabilities would result in

Correct Answer: (c) Decrease in current ratio
Solution:

When the current ratio is 2:1, an equal increase in current assets and current liabilities would.
Decrease the current ratio
Let us understand this through an example:

27. Which one of the following is a correct equation?

Correct Answer: (c) Opening capital = Closing capital + Drawings - Additional capital - Profit
Solution:

28. In penetration pricing a business firm seeks to access deeper market penetration by keeping prices........

Correct Answer: (c) Low
Solution:

Penetration pricing is a marketing strategy used by businesses to attract customers to a new product or service by offering a lower price during its initial offering.

The lower price helps a new product or service penetrate the market and attract customers away from| competitors.

29. Sub- optimal allocation of resources under monopoly to cause social welfare loss is often inferred as

Correct Answer: (a) Deadweight loss
Solution:

The deadweight loss is the potential gains that did not go to the producer or consumer. As a result of the dead weight loss, the combined surplus (welth) of the monopoly and the consumer is loss than that obtained by consumers in a competitive market.

30. Which of the following is the first order conditions to profit maximisation?

Correct Answer: (b) MR =MC
Solution:

Marginal Revenue- is the additional revenue gained from selling one more unit of output.
Profit- is the difference between total revenues and| total costs.
The profit maximizing rules for a perfectly competitive firm is to produce the level of output where marginal revenue equals marginal cost.