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This paper has in total 46 questions and 5 sections. All Questions are compulsory. All questions are of
different marks and marks are indicated for each section

Section 1 1 to 5 3 marks 15 marks


Section 2 6 to 21 2.5 marks 40 marks
Section 3 22 to 29 1.5 marks 12 marks
Section 4 30 to 42 1 mark 13 marks
Section 5 43 to 46 5 marks 20 marks

Section 1:Questions 1 to 5 in this section are for 3 marks each

1 Sovereign Gold Bonds (SGB):


1. are issued by RBI
2. are tradable on stock exchanges
3. assure market value of gold at time of maturity plus periodical interest
Which of the above statements is/are correct?
1 and 2
2 and 3
1 and 3
1,2 and 3 Yes
SGBs are government securities issued by Reserve Bank on behalf of Government of India. The
bonds are excellent substitutes for holding physical gold. Investors are assured of the market value
of gold at the time of maturity and periodical interest, but there may be a risk of capital loss if the
market price of gold declines with the time period.

2 Recently, RBI had announced that the government would be repurchasing the
unsuccessful inflation indexed bonds (IIBs) maturing in 2023 through a reverse
auction. Which of the following
statements is/are correct about Inflation Indexed Bonds (IIBs) in India?
1. IIBs are auctioned directly by RBI.
2. IIBs are traded in primary as well as secondary market.
3. Foreign institutional investors are not allowed to invest in IIBs.
Select the correct option from the codes given below:
1 and 2 Yes
2 and 3
1 and 3
1,2 and 3
Third statement is wrong because both foreign institutional investors and domestic investors are
allowed to invest in IIBs.
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3 Consider the following differences between hedge funds and mutual funds:
1. Hedge funds are more risky than their mutual fund counterparts.
2. While only "accredited" investors are legally allowed to invest with hedge funds,
mutual funds
are easily accessible to every investor.
3. While hedge funds focus on short-term profits, mutual funds focus on long
duration profits.
Which of the above statements is/are correct?
1 and 2
2 and 3
1 and 3
1,2 and 3 Yes
Hedge funds are managed much more aggressively than their mutual fund counterparts, and hence
are more risky. The main aim behind investing in hedge funds is to enhance the leverage – and
thus the risk – of the fund. This also means that it's possible for hedge funds to make money when
the market is falling. Mutual funds, on the other hand, are not permitted to take these highly
leveraged positions and are typically safer as a result. Also, hedge funds are only available to a
specific group of sophisticated investors with high net worth, whereas, in case for mutual funds, it
is very easy to purchase with minimal amounts of money

4 In recent times, a number of Indian firms are gearing up to raise funds from issuing
what are known as "masala bonds". Which of the following statements is/are correct
about masala bonds?
1. Masala bonds are capital market instruments.
2. Masala bonds are rupee-denominated bonds.
3. Registration with SEBI is not compulsory to purchase masala bonds.
Select the correct option from codes given below:
1 and 2
2 and 3
1 and 3 only
1,2 and 3 Yes
Masala bonds are capital market debt instrument, which allow Indian corporates to raise money
from overseas investors. Furthermore, any capital gains arising in case of appreciation of rupee
between the date of issue and the date of redemption against the foreign currency in which the
investment is made would be exempt from capital gains tax. No registration as FII with SEBI is
required for investment in masala bonds.

5 In 2015, "Value Stocks" were said to outperform "Growth Stock" in Indian financial
markets.
With this reference, consider the following differences between value stocks and
growth stocks:
1. While growth stocks generally do not return dividends, value stocks return
dividends.
2. While value stocks are usually traded at discount, growth stocks are traded at
premium.
Which of the above statements is/are correct?
1 only
2 only
Both 1 and 2 Yes
Neither 1 nor 2
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Growth stocks are associated with high-quality; successful companies whose earnings are expected
to continue growing at an above-average rate relative to the market. But with declining GDP
growth rate in India, earnings growth rates have also eroded. With declining GDP growth rate,
earnings growth rates have also eroded. Furthermore, growth stocks have higher price-to-earnings
ratios when compared to value stocks, but growth stocks generally do not return any dividend.
Thus; all this led to decline of growth stock in Indian financial markets. On the other hand foreign
investors prefer stocks that are currently undervalued and have a steady dividend paying record
over those companies with a reputation of consistent earnings growth. Since value stocks are
traded at undervalued rate and generally earn high dividends; these stocks performed well above
growth stocks.

Section 2: Questions 6 to 21 in this section are for 2.5 marks

6 With reference to Bitcoin, which among the following statements is / are correct?
1.It is similar to a fiat currency in its nature
2.The bitcoin transactions don’t need a formal banking system
3.The bitcoin have a common function with the money that they have store of value
Which among the above statements is / are correct?
1 only
1 and 2 only
2 and 3 only Yes
1,2 and 3
Only 2 & 3 are correct statements. Kindly note that a fiat currency is one which is backed by some
government and has no intrinsic value. The bitcoin does not have an intrinsic value but it is not
backed by a sovereign so it cannot be called a fiat currency.

7 With reference to National Urban Health Mission, consider the following statements:
1. It envisages for setting up of Urban Primary Health Centre (U-PHC) for population
more than 50,000.
2. It aims to make targeted interventions using Accredited Social Health Activists
(ASHAs).
3. It seeks the active involvement of urban local bodies.
Which of the statements given above is/are correct?
1 and 2
2 and 3
3 only
1,2 and 3 Yes
The National Urban Health Mission (NUHM) has been approved as a sub-mission under an overarching
National Health Mission (NHM) for providing equitable and quality primary health care services to the
urban population with special focus on slum and vulnerable population.
The NUHM covers all cities and towns with more than 50,000 population as well as district headquarters
and state headquarters having population between 30,000- 50,000. It envisages for setting up of Urban
Primary Health Centre (U-PHC) for population more than 50,000 and Urban Community Health Centre
(U-CHC) in cities with more than five lakh population and targeted interventions for slum areas such as
Accredited Social Health Activists and Mahila Arogya Samiti.
Cities and towns with population below 50,000 will continue to be covered under NRHM. NUHM does
not cover those cities and towns. It also provides for augmentation of Human Resources in terms of
medical, para-medical and program management staff. Partnershipwith community and local bodies for a
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more proactive involvement in planning, implementation, and monitoring of health activities is an
important feature.

8 With reference to the Pension Fund Regulatory and Development Authority (PFRDA),
consider the following statements:
1. It is a statutory and autonomous body.
2. It regulates both National Pension Scheme (NPS) and Employee Provident Fund (EPF)
Scheme.
Which of the statements given above is/are correct?
1 only Yes
2 only
Both 1 and 2
Neither 1 nor 2
The Pension Fund Regulatory and Development Authority (PFRDA) is set up under the PFRDA Act. The
PFRDA is regulating the National Pension Scheme, subscribed by employees of Government of
India, State Governments and by employees of private organizations and unorganized sectors.
The Employee Provident Funds Scheme (EPF) is being administered by a Board, which is under the
administrative control of Ministry of Labour and Employment. It is not regulated by the PFRDA, which is
under the administrative control of Ministry of Finance.

9 Which of the following is not included under the Indradhanush Mission, launched to
revamp functioning of public sector banks (PSBs)?
Disinvestment: To introduce competetion, market discipline and Yes
encouraging wider share of ownership
De-stressing PSBs: To develop vibrant debt market for PSBs in order to
reduce lending pressure on banks.
Empowerment: Provide greater flexibility in hiring of manpower in
PSBs.
Framework of accountability: It will seek to streamline vigilance
process for quick action in case of major frauds.
Union Government has launched a seven pronged plan called Indradhanush Mission to revamp
functioning of public sector banks (PSBs). The seven shades of Indradhanush mission include
appointments, de-stressing PSBs, capitalisation, empowerment, framework of accountability and
governance reforms. It seeks to achieve the objective of economic growth revival through improving
credit and minimising the political interference in the functioning of PSBs.
1. Appointments: Selection of non-executive chairman in remaining 6 state owned PSBs
till November 2015.
2. Capitalisation: Infuse 25,000 crore rupees of capital into debt-laden banks in this fiscal in phased
manner. Out of this 20,000 crore rupees would be injected in August 2015. Rest 5,000 crore rupees will
be performance based allocation to be allocated in the last quarter of 2016.
3. De-stressing PSBs: To develop vibrant debt market for PSBs in order to reduce lending pressure on
banks. Strengthen asset reconstruction of companies.
4. Empowerment: Provide greater flexibility in hiring of manpower in PSBs.
5. Framework of accountability: It will seek to streamline vigilance process for quick action in case
major frauds and also include connivance of staff.
6. Governance reforms in PSBs: Next Gyan Sangam (also known as the Banker’s Retreat) will be held
from 14 to 16 January 2016. Employee Stock Option Plan (ESOP) will be initiated for top management.
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10 Which of the following is/are the feature(s) of "Start-up India"?
1. No income tax and capital gains tax for three years on Start-ups.
2. System of self-certification for Start-ups, with no labour inspection for three years.
3. Maximum days to exit from Start-ups will be 90 days.
Which of the above is/are correct statements?
1 and 2
2 and 3
1 and 3
1,2 and 3 Yes
Prime Minister Narendra Modi has unveiled the "Start-up India, Stand-up India" action plan in
New Delhi to boost startup ventures in the country. Its important features are:
Start-up profits to be tax-free for 3 years and also no labour inspections for 3 years of
launch of the venture.
Compliance regime based on self-certification for labour and environmental laws
Easy exit policy for start-ups with 90 days
Tax exemption to be provided on capital gains if money is invested in another start up
Government to create Rs. 10,000 crore corpus fund for development and growth of
innovation driven enterprises
It will be Rs. 2500 crore a year for four years Liberalised Fast-track mechanism for start-up
patent applications under intellectual property rights protection with 80% cost rebate

11 In the Railway Budget 2016-17, the Minister of Railways announced to set up an


organisation called 'SRESTHA'. Which of the following statements is/are correct
about it?
1. The organisation will be headed by the chairman of the railway board
2. The main aim of the organisation is to carry out long term railway research
activities.
Which of the above statements is/are correct?
1 only
2 only Yes
Both 1 and 2
Neither 1 nor 2
First statement is incorrect because SRESTHA (Special Railway Establishment for Strategic
Technology & Holistic Advancement) would be headed by an eminent scientist reporting directly
to Chairman, Railway Board and would be staffed with scientists and a limited number of Railway
experts. RDSO functioning will be made totally transparent with time bound results.

12 The objectives of the Fiscal Responsibility and Budget Management Act (FRBMA)
act is / are __:
1. Eliminate Fiscal deficit
2. Eliminate Revenue deficit
3. Give more powers to RBI to manage inflation
Choose the correct option from the codes given below:
1 only
1 and 2
2 and 3 Yes
1,2 and 3
Fiscal Responsibility and Budget Management Act (FRBMA). Objectives:
• Institutionalize financial discipline
• Reduce India’s fiscal deficit to 3 % by March 2008
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• Eliminate India’s revenue deficit
• Improve macroeconomic management
• Overall management of the public funds by moving towards a balanced budget.
• To introduce transparent fiscal management systems in the country
• To introduce a more equitable and manageable distribution of the country’s debts over the years
• To aim for fiscal stability for India in the long run
• Additionally, the act was expected to give necessary flexibility to Reserve Bank of India(RBI) for
managing inflation in India.

13 With reference to the Indian Budget, which among the following statements is / are
correct?
1.Salaries of government servants is Capital expenditure
2.Sale proceeds of government bonds is Capital receipts
Choose the correct option from the codes given below:
1 only
2 only Yes
Both 1 and 2
Neither 1 nor 2
The first statement is not correct because that is a revenue expenditure.

14 NBFCs are doing functions similar to banks. What is difference between banks &
NBFCs ?
1. NBFC cannot accept demand deposits
2. NBFCs do not form part of the payment and settlement system
3. NBFCs cannot issue cheques drawn on itself
Choose the correct option from the codes given below:
1 and 2
2 and 3
1 and 3
1,2 and 3 Yes
All statements are correct

15 The functions of the Reserve Bank of India include:


1. Dealing with Foreign Exchange
2. Controlling the money supply
3. Work as Banker to the Government
Choose the correct option from the codes given below:

1 only
1 and 2
2 and 3
1,2 and 3 Yes
All statements are correct

16 What is sold and purchased during Open Market Operations by RBI?


1. Government Securities
2. Commercial Papers
3. Certificates of Deposits
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Choose the correct option from the codes given below:
1 only Yes
1 and 2
2 and 3
1,2 and 3
Commercial paper is a money-market security issued (sold) by large corporations to obtain funds
to meet short-term debt obligations.
A certificate of deposit is issued by a bank to a person depositing money for a specified length of
time at a specified rate of interest.

17 Which among the following is / are essential features of the “Core Banking"?
1. Anywhere banking
2. Everywhere access
3. Technology upgradation
Choose the correct option from the codes given below:
1,2 and 3 Yes
2 and 3
1 and 3
3 only
1,2 and 3 only
18 Which among the following is the main factor which makes the banks to maintain a
Capital Adequacy Ratio?
Liquidity
Risk Yes
Credit Rating
Hedging
Risk
17 Financial Inclusion means access to :
1. Affordable Credit
2. Financial Advice
3. Insurance
4. payment and transfer services
Choose the correct option from the codes given below:
1 only
1,2 and 3
1,2 and 4
1,2,3 and 4 Yes
1,2,3 and 4

19 Which among the following generally fall into the category of Alternative Investment
Funds?
1. Private Investment in Public Equity Funds
2. Infrastructure Equity Fund
3. Venture Capital Fund
4. Mutual Fund
Choose the correct option from the codes given below:
1 and 2
1,2 and 3 Yes
2 and 3
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1,2,3 and 4
As per the SEBI (Alternative Investment Funds) Regulations, 2012 (AIF Regulations), Category I
AIF are – those AIFs with ‘positive spillover effects’ on the economy, for which certain incentives
or concessions might be considered by SEBI or the Government of India or other regulators in
India; and which shall include Venture Capital Funds, SME Funds, Social Venture Funds,
Infrastructure Funds and such other Alternative Investment Funds (AIFs) as may be specified.

20 Consider the following difference(s) between money markets and capital markets:
1. While money markets are related to short term funds, capital markets are related
to long term funds.
2. While treasury bills are money markets instruments, national saving certificates
are capital market instruments.
Which of the above statements is/are correct?
1 only
2 only
Both 1 and 2 Yes
Neither 1 nor 2
Money markets are short term funds with maximum maturity period up to 1 year. Capital markets
are long term funds with minimum maturity more than a year.
National Saving Certificates have a lock-in of 5 years and 10 years, and hence cannot be included
in money markets.Treasury bills have maximum maturity period of 91 days, 182 days, 273 days or
364 days i.e less than 1 year, and hence they are included under the money markets. Also, note that
that money markets increases the short term liquidity in the market whereas; capital markets are
mobilisation of savings.

21 The Finance Commission recommends measures to__:


1. augment the consolidate fund of India
2. augment the Consolidated Fund of a State
3. augment the resources of Panchayats and Municipalities
Select the correct option from the codes given below:
1 and 2
2 and 3 Yes
1 and 3
2 only
Regarding Union
Finance Commission does not tell the Union Government on how to increase its funds. Its work is
to make recommendations on distribution between the Union and the States of the net proceeds of
taxes and the principles which should govern the grants-in-aid of the revenues of the States out of
the Consolidated Fund of India and the sums to be paid to the States which are in need of
assistance by way of grants-in-aid of their revenues.
Regarding States
Finance Commission suggests the measures needed to augment the Consolidated Fund of a State
to supplement the resources of the Panchayat and Municipalities in the State on the basis of the
recommendations made by the Finance Commission of the State.
On Panchayat and Municipalities
The role of the Finance Commission has widened after the 73rd and 74th Constitutional
amendments to recognise the rural and urban local bodies as the third tier of government. Article
280 (3) (bb) and Article 280 (3) (c) of the Constitution mandate the Commission to recommend
measures to augment the Consolidated Fund of a State to supplement the resources of Panchayats
and Municipalities based on the recommendations of the respective State Finance Commissions
(SFCs). This also includes augmenting the resources of Panchayat and municipalities.
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For example, the FC-XII identified fourteen best practices, which included the following:
measures for augmenting 1. resources of panchayats such as compulsory levy of major taxes
and exploring all non-tax revenue sources;
2. obligatory levy of user charges
3. insistence on collection of minimum revenue and providing incentive grants for collections
beyond this prescribed minimum amount
4. identifying revenue generating common property resources and ensuring adequate income
from them; and
5. giving powers to intermediate or district panchayats to levy tax or cess or surcharge on
agricultural holdings.

Section 3: Question 22 to 29 are of 1.5 marks

22 The 14th Finance Commission has recommended an increase in states’ share in


central taxes to 42%, which is largest ever change in percentage of devolution.
Which among the following is / are included in the divisible pool of central taxes?
1. Direct taxes
2. Indirect Taxes
3. Cess
4. Surcharges
Select the correct option from the codes given below:
1,2 and 3
2,3 and 4
1 and 2 Yes
1 and 3
Kindly note that the cess and surcharges are not part of the divisible pool of central taxes.
The share of cess and surcharges in gross tax revenue of the Union government increased from
7.53% in 2000-01 to 13.14% in 2013-14.
From Finance Commission Report:
Almost all States have argued that cess and surcharges should form part of the divisible pool, with
some suggesting that this should be done if cess and surcharges continue for more than three
years.
A few States have proposed a minimum guaranteed tax devolution to insulate States’ finances from
the volatility of Union revenues for the purpose of predictability of transfer and stability in the
management of State finances

23 Consider the following:


1. Krishi Kalyan Cess
2. Infrastructure Cess
3. Swachh Bharat Cess
4. Clean Environment Cess
Which of the above has/have been introduced in Union budget 2016-17?
1 only
1 and 2 Yes
1,2 and 3
1,2,3 and 4
Swachh Bharat Cess was introduced in 2015. Clean Energy Cess was renamed as Clean
Environment Cess in budget 2016-17. Krishi Kalyan Cess and Infrastructure Cess were introduced
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in Union budget 2016-17.

24 Recently, the Securities and Exchange Board of India (SEBI), issued new norms for
Real Estate Investment Trusts (REITs), allowing the public issue of maximum 75 per
cent to Qualified Institutional Buyers (QIBs) and at least 25 per cent to other
investors. Who among the following may fall in the category of Qualified Institutional
Buyer?
1. Pension Funds
2. Mutual Funds
3. Individuals with certain networth
4. Scheduled Commercial Banks
Select the correct option from the codes given below:
1,2 and 3
1,2 and 4 Yes
2,3 and 4
1,2,3 and 4
SEBI is the regulator of capital market in India while RBI is the regulator of money market in
India. Qualified institutional investors are investors are institutions and not individuals who invest
in primary market in India. As per SEBI documents Qualified Institutional Buyers are those
institutional investors who are generally perceived to possess expertise and the financial muscle to
evaluate and invest in the capital markets. In terms of clause 2.2.2B (v) of DIP Guidelines, a
`Qualified Institutional Buyer' shall mean:
Public financial institution as defined in section 4A of the Companies Act, 1956;
Scheduled commercial banks;
Mutual funds;
Foreign institutional investor registered with SEBI;
Multilateral and bilateral development financial institutions;
Venture capital funds registered with SEBI.
Foreign Venture capital investors registered with SEBI.
State Industrial Development Corporations.
Insurance Companies registered with the Insurance Regulatory and Development
Authority (IRDA).
Provident Funds with minimum corpus of Rs. 25 crore
Pension Funds with minimum corpus of Rs. 25 crore.
These entities are not required to be registered with SEBI as QIBs. Any entities falling under the
categories specified above are considered as QIBs for the purpose of participating in primary
issuance process.

25 The Insolvency and Bankruptcy Code, 2015 mandates:


1. adjudicating authority to notify the debtor, within two days of the receipt of the
application from creditor
2. no civil court or authority to have jurisdiction over matters on the Debt Recovery
Tribunal
3. solution to the case within 180 days, with one-time extension of up to 90 days
under discretionary power of adjudicating authority
Which of the above statements is/are correct?
1 only
1 and 2 Yes
2 and 3
1,2 and 3
Third statement is incorrect because if three-fourths of the creditors decide that the case is
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complex and cannot be addressed within 180 days, then only, the adjudicator can grant a one-time
extension of up to 90 days on the process
25 India is suffering from the menace of Transfer pricing. What is “Transfer Pricing”?
It is a method of tax-dodging by illicit capital flows outside the Yes
country.
It is a factor responsible for continuous price rise of food items in
India.
It is a new phenomenon that emerged responsible for bad loans of
Indian banks.
It is a global phenomenon responsible for devaluation of Indian
currency in comparison to reserve currencies.
Commercial transactions between the different parts of the multinational groups may not be
subject to the same market forces shaping relations between the two independent firms. One party
transfers to another goods or services, for a price. That price is known as “transfer price”. It is
mainly done for tax-dodging in a country.

26 Consider the following statements about MUDRA Bank Loan scheme:


1. There is no fix Interest rate in MUDRA loan.
2. MUDRA Bank loan is refinanced only through SIDBI.
Which of the above statements is/are correct?
1 only Yes
2 only
Both 1 and 2
Neither 1 nor 2
Mudra Bank stands for Micro Units Development Refinance Agency. It has been established as a
subsidiary of SIDBI to refinance small business loans under the Pradhan Mantri Mudra Yojana
(PMMY). MUDRA Bank is refinancing through State level institutions, MUDRA will deliver the
loan through NBFCs, MFIs, Rural Banks, District Banks, Nationalize Banks, Private Banks,
Primary Lending Institutions and other intermediaries.Currently, MUDRA operates as an NBFC
registered under RBI. However, MUDRA Bill is proposed to be tabled in parliament, which is
likely to enable its conversion into MUDRA Bank. Every bank branch is advised to fund at least
one SC/ST and one women entrepreneur.

27 Strategic Debt Restructuring Scheme 2015:


1. allows lenders to collectively hold 51% or more of the equity shares in the
borrower company
2. brings the acquired shares outside the SEBI Regulations
3. mandates a lock-in of 1 year for acquired shares
Which of the above statements is/are correct?
1 and 2
1 and 3 Yes
2 and 3
1,2 and 3
Third statement is incorrect because there are some relaxations from SEBI regulations, but it does
not bring the acquired shares outside SEBI regulations. The scheme allows creditor banks to
convert their unpaid loans to equity of troubled firms.

28 Consider the following bodies:


1. NABARD
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2. NHB
3. SIDBI
4. EXIM
5. MUDRA
Which of the above are refinancing institutions in India?
1,2 and 3
3,4 and 5
1,2,3 and 5
1,2,3,4 and 5 Yes
Financial Institutions (FIs) are classified into three categories:
First are Term-lending institutions, whose main activity is direct lending by way of term loans and
investments; Second are Refinance institutions, such as the National Bank for Agriculture and Rural
Development (NABARD), Small Industries Development Bank of India (SIDBI) and National
Housing Bank (NHB), which mainly extend refinance to banks as well as non-banking financial
institutions and;
Third are Investment institutions such as Life Insurance Corporation (LIC), which deploy their
assets largely in marketable securities. State/ regional level institutions form another distinct
group.

29 Effective communication is essentially a:


one-way process
two-way process Yes
three-way process
both a one-way and a two-way process
It is a two way process-speaking and listening

Section 4: Question 30 to 42 are of 1 marks each

30 Speakers usually experience difficulty in ensuring that the message is:


acted upon promptly and as desired
conveyed precisely, understood correctly, and acted upon promptly and Yes
as desired
conveyed precisely
understood correctly
Self explanatory

31 Which of the following does the most to reduce default risk for futures contracts?
a) High liquidity
Flexible delivery arrangements
Marking to market Yes
Credit checks for both buyers and sellers
Marking to maket safeguards the counterparty risk as the receivable are transfer each day

32 A call option with a strike price of $55 can be bought for $4. What will be your net profit
if you sell the call and the stock price is $52 when the call expires?
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-7
0
3
4 Yes
Call will expire as strike price is higher than spot price. Therefor, the seller will gain the premium

33 An OTC forward contract is


an option to call
a forward contract for which the payback is outside the contract period
a customized agreement that is not traded on an exchange Yes
a standardized agreement that is traded on an exchange
Definition of forward OTC

34 Operational Risk does not arise from


Inadequate or failed internal processes
People and systems
External Events
Defaults by own customers Yes

35 Premature payment of a term loan will result in interest rate risk of type
Basis risk
Yield curve risk
Embedded option risk Yes
Mismatch risk

36 Which of the following best describes Maslow's hierarchy of needs?


It is a perfect model of workplace motivation
It was devised by Maslow after meticulous research in workplace
settings.
It has been proven empirically to be accurate in workplace settings.
It is a highly flawed model, although it does recognize that people are Yes
motivated differently.
Maslow's hierarchy is a flawed model, which has never been proven to apply in workplace settings,
indeed Maslow himself saw no evidence that it worked in a workplace setting (Maslow, 2000). It should
thus be treated with caution. However it does at least indicate that people are motivated differently, for
example pay motivated differently depending on which the level of hierarchy people worked in.

37 According to expectancy theory, why might you be answering this question now?
Because it will help you to self-actualize.
Because it will help you to understand the subject, get better module Yes
marks and ultimately a better degree.
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Because you have been told to do it by a tutor.
Because you gain intrinsic satisfaction from answering the question
correctly.
Expectancy theory would suggest that we are motivated by linking actions with desired outcomes. If
your desired outcome is to get a good degree, you may link answering this question with helping you to
get better marks and thus a better degree.

38 Which of the following is one of Drucker's seven tasks for managers?


Build integrated teams.
Take strategic decisions
Manage by objectives.
All of the above Yes
"manage by objectives
-take risks and allow risk-taking decisions to take place at lower levels in the organisation
-be able to make strategic decisions
-be able to build an integrated team with team members capable of managing and measuring their own
performance and results in relation to overall objectives
-be able to communicate information quickly and clearly, and motivate employees -to gain commitment
and participation
-be able to see the business as a whole and to integrate their function within it
-be able to relate the product and industry to the total environment, to find out what is important and
what needs to be taken into account."

39 Transactional leadership has which of the following characteristics?


Seeks to pick up the mood of the audience
Takes the view that rewards and punishment motivate staff. Yes
Seeks to involve staff in the decision making process.
Believe success arises from leaders and staff working together.
He is based on transactions of rewards and punishment

40 Which of the following would not be an accurate depiction of the differences between
strategic and tactical planning?
Strategic planning is developed mainly by upper-level management and
tactical planning is generally developed by lower-level management
Facts for strategic planning are generally easier to gather than facts for Yes
tactical planning
Strategic plans generally contain less details than tactical plans
Strategic plans generally cover a longer period of time than tactical
plans
Managers who are engaged in the development of strategic plans tend to work in more uncertainty than
those managers engaged in the development of tactical plans.

41 Identify the sequence of different steps in controlling.


I. Measurement of performance.
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II. Comparison of actual and standard.
III. Analysis of causes of deviation.
IV. Actual performance.
V. Corrective action plan.
(III), (IV), (V), (I), (II)
(II), (III), (IV), (V), (I)
(I), (II), (IV), (III), (V)
(IV), (I), (II), (III), (V) yes
(V), (IV), (III), (II), (I).

42 Management By Objectives (MBO) is a system for achieving organizational


objectives, enhancement of employee commitment and participation. Which of the
following is not an advantage of MBO?
Role clarity
Clarity in organizational action
Personnel satisfaction
Flexibility yes
MBO helps in better managing the organizational resources and activities through clarity of objectives,
role clarity, periodic feedback on performance, and participation by managers. It provides the key result
areas (KRAs) where organizational efforts are needed, which leads to clarity in organizational action.
Since MBO allows participation of employees in objective setting and a rational performance appraisal, it
provides the greatest opportunity for personnel satisfaction. Also, MBO stimulates organizational change
and provides a framework and guidelines for planned change, enabling the top management to initiate,
plan, direct, and control the direction and speed of change. However, MBO has some limitations also,
which include inflexibility in the organization, particularly when the objectives need to be changed

Section 5: Each question is of 5 marks.

43 We consider the following zero-coupon curve:


Maturity (years) Zero-Coupon Rate (%)
1 4.00
2 4.50
3 4.75
4 4.90
5 5.00

A) What is the price of a 5-year bond with a $100 face value, which delivers a 5% annual
coupon rate?
a) 105
b) 99.23
c) 100.13
d) 101.23

B) What is the yield to maturity of this bond?

e) 5%
https://rbigradeb.com/
f) 3.82%
g) 4.96%
f) 4.53%
a&e
C&g Yes
C&f
D&g

44

These are the components of which of the management processes?


Performance appraisal Yes
Recruitment
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Rewards
Motivation

45 In 1980s, India saw a sharp deterioration of the fiscal situation, which ultimately
culminated in the balance of payments crisis of 1991. Within a decade of economic
liberalisation, the fiscal deficit and debt situation again seemed to head towards
unsustainable levels around 2000. At that time, a need to institutionalize a new fiscal
discipline framework. The FRBM Bill 2000 was introduced by previous NDA government
in the parliament to institutionalize the fiscal discipline at both the centre and state
level. However, the bill took three years to become an act and during this process, it lost
most of its teeth.

Choose the correct statement regarding FRBM act 2003 :


a) To reduce fiscal deficit to 3% of the budget by 31st March 2009
b) To reduce revenue deficit to 0% of the budget by 31st March 2008
c) Both of the above
d) None of the above

Which of the following events will help government reach FRBM targets :

e) Increase in crude oil prices in the global market


f) Social sector expenditure
g) Govt. loan from IBRD
h) None of these

A five member FRBM review committee is formed recently. Who is the chairman of the
FRBM review committee :

i) Bimal Jalan
j) N.K. Singh
k) Vijay Kelkar
l) Urijit Patel
A, H, J
D, H, J Yes
D, G, I
A, H, J
For Q1: Both statements are wrong as the target is to reduce FD to 3% and RD to 0 % of GDP not budget
For q2: All of the above will increase govt. fiscal deficit rather than decreasing it
For q3: The committee would examine whether the government can have a fiscal deficit range as the
target, instead of the current practice of the fixed numbers as targets.
FRBM review committee deadline for submission of report is 31st October 2016.

46 What is the full form of SEDF :


a) Small enterprise development fund
https://rbigradeb.com/
b) SIDBI enterprise development fund
c) Small enterprise development federation
d) SIDBI enterprise development

Arrange the following institution by their year of formation :


e) NHB > NABARD > SIDBI > EXIM
f) EXIM > NABARD > NHB> SIDBI
g) NABARD > SIDBI > EXIM > NHB
h) EXIM>NABARD >SIDBI>NHB

Which of the following organisation publishes RESIDEX :


i) RBI
j) NABARD
k) SIDBI
l) NHB

A, H, L Yes
A, G, i
B, H, i
B, H, L
Q2: EXIM – Jan 1982
NABARD – July 1982
NHB – July 1988
SIDBI – April 1990

Q3: NHB RESIDEX tracks the housing prices in the select 15 cities.

The Residex has been constructed for 15 cities and has taken into account the price trends for residential
properties in different locations and zones in each city as per classification devised for the purpose. The
classification has been designed so as to give the most representative Index for each city based on the
transactions in the market and data collected from various sources. The data are put through a Model that
depicts the actual behaviour of the market and throws up the Index. This initiative seeks to provide a
better understanding of the trends in the Residential property market and its various nuances. The trends
also seek to bring greater transparency in the property market. As the Residex evolves, it is expected to
bring greater uniformity and standardisation in the valuation of properties across the industry.

Link : http://www.nhb.org.in/Press%20Release/Quarterly_Update_April_June_2011.php