MCQ Questions – Page 191

MCQ Questions for Class 12 Business Studies Chapter 10 Financial Markets

January 19, 2023January 18, 2023 by Prasanna

Financial Markets Class 12 MCQ Questions With Answers

Financial Market MCQ Class 12 Chapter 10 Question 1.

Which of the following statements is false regarding financial market?

(A) Financial markets complicate the purchase and sale of financial assets.
(B) Financial markets provide valuable information about securities being traded in the market.
(C) They provide liquidity to financial assets.
(D) None of the above.
Answer:
(A) Financial markets complicate the purchase and sale of financial assets.

Explanation:
Financial markets facilitate easy purchase and sale of financial assets. In doing so they provide liquidity to financial assets, so that they can be easily converted into cash whenever required. Folders of assets can readily sell their financial assets through the mechanism of the financial market.

Business Studies Chapter 10 MCQ Class 12 Question 2.

The money market is a market for short-term funds which deals in monetary assets whose period of maturity is:

(A) Upto one year
(B) Upto six months
(C) Upto three months
(d) None of these
Answer:
(A) Upto one year

Explanation:
The money market is a market for short-term funds which deals in monetary assets whose period of maturity is upto one year. These assets are close substitutes for money.

Question 3.

Which of the following money market instrument is also known as Zero Coupon Bonds?

(A) Call Money
(B) Treasury Bill
(C) Commercial Paper
(D) Commercial Bill
Answer:
(B) Treasury Bill

Explanation:
Treasury bill are also known as Zero Coupon Bonds issued by the Reserve Bank of India on behalf of the Central Government to meet its short-term requirement of funds.

Question 4

……………… is short-term finance repayable on demand, with a maturity period of one day to fifteen days.

(A) Call Money
(B) Treasury Bill
(C) Commercial Paper
(D) Commercial Bill
Answer:
(A) Call Money

Explanation:
Call money is a short-term finance repayable on demand, with a maturity period of one day to fifteen days, used for inter bank transactions. Commercial banks have to maintain a minimum cash balance known as cash reserve ratio.

Question 5.

Zakira Ltd. wants to invest in treasury bills issued by RBI. What will be the minimum amount to be invested in Treasury Bill?

(A) ₹ 25,000
(B) ₹ 20,000
(C) ₹ 50,000
(D) ₹ 1,00,000
Answer:
(A) ₹ 25,000

Explanation:
Treasury bills are available for a minimum amount of ₹ 25,000 and in multiples thereof.

Question 6.

Mahindra Bank wants short-term finance for only one or two days. What option should it pick?

(A) Treasury bills
(B) Call Money
(C) Commercial Paper
(D) None of the above
Answer:
(B) Call Money

Explanation:
Call money is mainly used by the banks to meet their temporary requirement of cash. They borrow and lend money from each other normally on a daily basis. It is repayable on demand and its maturity period varies between one day to a fortnight.

Question 7.

Aman had 55 shares of Vani Ltd. He wanted to sell 30 shares, so he went for a specific market to sell them through online portal. He went for which of following markets?

(A) Money Market
(B) Secondary Market
(C) Primary Market
(D) None of the above
Answer:
(B) Secondary Market

Explanation:
The secondary market is also known as the stock market or stock exchange, It is a market for the purchase and sale of existing securities. It helps existing investors to disinvest and fresh investors to enter the market.

Question 8.

Which of the following statements is incorrect regarding Financial Markets?

(A) The process by which allocation of funds is done is called financial intermediation.
(B) Money market instruments are close substitutes for money.
(C) The difference between the price at which the treasury bills are issued and their redemption value is the interest receivable on them and is maturity value.
(D) Treasury Bills are issued at a price which is lower than their face value and repaid at par.
Answer:
(C) The difference between the price at which the treasury bills are issued and their redemption value is the interest receivable on them and is maturity value.

Explanation:
The difference between the price at which the treasury bills are issued and their redemption value is the interest receivable on them and is called discount.

Question 9.

Match the FUNCTIONS of Financial Markets in Column I with their correct MEANING in Column II

Column I	Column II
(a) Allocative Function	(i) Establish a price for the financial asset through interaction between house-holds and business firms.
(b) Facilitating Price Discovery	(ii) Easy purchase and sale of financial assets.
(c) Financial Assets Liquidity	(iii) Mobilization of savings and channelising them into the most productive use.

(A) (ii), (iii), (i)
(B) (iii), (ii), (i)
(C) (ii), (i), (iii)
(D) (iii), (i), (ii)
Answer:
(D) (iii), (i), (ii)

Question 10.

Which of the following is a function of the stock exchange?

(A) Providing liquidity and marketability to existing securities
(B) Spreading of equity cult
(C) Contributing to economic growth
(D) All of the above
Answer:
(D) All of the above

Explanation:
Stock Exchange provides both liquidity and easy marketability to already existing securities in the market. In stock exchange securities of various companies are bought and sold. This process of disinvestment and reinvestment helps to invest in most productive investment proposal and this leads to capital formation and economic growth.

Question 11.

The organisation/institution which provides scope for speculation is:

(A) Stock exchange
(B) SEBI
(C) Brokers
(D) None of the above
Answer:
(A) Stock exchange

Explanation:
The stock exchange provides sufficient scope within the provisions of law for speculative activity in a restricted and controlled manner. It is generally accepted that a certain degree of healthy speculation is necessary to ensure’ liquidity and price continuity in the stock market.

Question 12.

………….. is an institution or organisation, which holds securities in electronic form, in which trading is done.

(A) Stock Exchange
(B) SEBI
(C) Depository
(D) None of the above
Answer:
(C) Depository

Explanation:
Just like a bank keeps money in safe custody for customers, a depository is also like a bank and keeps securities in electronic form on behalf of the investor. It is a technology driven electronic storage system. It has no paper work relating to share certificates, transfer, forms, etc.

Question 13.

Which of the following can be a depository participant (DP)?

(A) Bank
(B) Broker
(C) Financial Services Company
(D) All of the above
Answer:
(D) All of the above

Explanation:
A depository participant (DP), can be either a bank, broker, or financial services company. Depository Participant (DP) is an agent of the depository. Investors interact only f with DR Any financial institution can become DP after registration with SEBI. The company whose shares are to be transacted in lectronic form must be registered with a depository.

Question 14.

It has been made compulsory to settle all trades within how many days of the trade date on a rolling settlement basis?

(A) One
(B) Two
(C) Three
(D) Four
Answer:
(B) Two

Explanation:
Cash is paid or securities are delivered on pay-in day, which is before the T+2 day as the deal has to be settled and finalised on the T+2 day. The settlement cycle is on T+2 day on a rolling settlement basis.

Question 15.

Hemu’s mother gifted her shares of a large IT company. The securities were in physical form. She has a bank account but does not possess any other forms of security. She wanted to sell the shares and approached a registered broker. Which of the following is a mandatory detail which she needs to provide the broker?

(A) Permanent Account Number
(B) Educational qualification and occupation.
(C) Residential status
(D) None of the above
Answer:
(A) Permanent Account Number

Explanation:
If an investor wishes to buy or sell any security he has to first approach a registered broker or sub-broker and enter into an agreement with him. The investor has to sign a broker-client agreement and a client registration form before placing an order to buy or sell securities and also has to provide certain other details and information such as PAN number.

Question 16.

………….. is a legally enforceable document and helps to settle disputes claims between the investor and the broker. It contains details of the number of shares bought or sold, the price, the date and time of deal, and the brokerage charges.

(A) Share
(B) Contract Note
(C) Registration Form
(D) None of these
Answer:
(B) Contract Note

Explanation:
Contract note contains details of the number of shares bought or sold, the price, the date and time of deal, and the brokerage charges. This is an important document as it is legally enforceable and helps to settle disputes claims between the investor and the broker.

Question 17.

NSE and BSE are types of………….. .

(A) Depositories
(B) Depository Participants
(C) Stock Exchanges
(D) Banks
Answer:
(C) Stock Exchanges

Explanation:
BSE is type of stock exchange which provides an efficient and transparent market for trading in equity, debt instruments, derivatives, and mutual funds. NSE is also a stock exchange that establishes a nationwide trading facility for all types of securities.

Question 18.

Match the STEPS for screen-based trading for buying and selling of securities by an investor in Column I with their correct EXPLANATION in Column II.

Column I	Column II
(a) One	(i) Open a demat account
(b) Two	(ii) Place an order with the broker to buy or sell shares
(c) Three	(iii) Enter into an agreement with a registered broker or sub-broker
(d) Four	(iv) Provide necessary details and information

(A) (i), (iii), (iv), (ii)
(B) (iii), (iv), (i), (ii)
(C) (iv), (ii), (i), (iii)
(D) (iii), (i), (ii), (iv)
Answer:
(B) (iii), (iv), (i), (ii)

Question 19.

Which of the following stands for SEBI?

(A) Stock and Exchange Board of India
(B) Securities and Exchange Board of India
(C) Securities and Exchange Bank of India
(D) Stock and Exchange Bank of India
Answer:
(B) Securities and Exchange Board of India

Explanation:
SEBI stands for Securities and Exchange Board of India. SEBI regulates how the stock market and mutual funds function.

Question 20.

Which of the following is are the ‘Developmental Functions’ of Securities and Exchange Board of India?

(A) It trains the intermediaries of securities market
(B) It conducts research and publishes information useful to all market participants
(C) It undertakes measures to develop the capital markets by adapting a flexible approach.
(D) All of the above
Answer:
(D) All of the above

Explanation:
Developmental functionrefers to the steps taken by SEBI in order to provide the investors with a knowledge of f the trading and market function. It includes training of intermediaries who are a part of the security market, introduction of trading through electronic means and by making the underwriting an optional system in order to reduce cost of issue.

Question 21.

Rishu’s friend Devina works as a Finance Manager in Perfect Solutions Ltd. Devina in a meeting with the directors of the company came to know that the firm would soon be declaring a bonus issue which would lead to an increase in the price of shares. On this basis, Devina advised Rishu to purchase the shares of Perfect Solutions Ltd., who thus bought the shares. SEBI can control malpractices like these through which of the following functions:

(A) Protective functions
(B) Regulatory functions
(C) Development functions
(D) All of the above
Answer:
(A) Protective functions

Explanation:
The protective function implies the role that SEBI plays in protecting the investor interest and also that of other financial participants. Prohibition of fraudulent and unfair trade practices like making misleading statements, manipulations, price rigging, etc. is the function of SEBI.

Question 22.

Which is the apex statutory body of capital market to which customers can complain to redress their grievances ?

(A) SEBI
(B) CDSL
(C) NSE
(D) BSE
Answer:
(A) SEBI

Explanation:
SEBI was established to protect the interest of people in the stock market and provide a healthy environment for them. It is the supreme statutory body of capital market to which customers can complain to redress their grievances.

Question 23.

The basic purpose of SEBI is to create an environment to facilitate efficient mobilisation and allocation of resources through the securities markets. Who are the constituents of this market for whom SEBI aims at creating a conducive environment?

(A) Issuers of securities
(B) Investors
(C) Market intermediaries
(D)All of the above
Answer:
(D)All of the above

Explanation:
The basic purpose of SEBI is to create an environment to facilitate efficient mobil is ationandal location of resources through the securities markets. This environment aims at meeting the needs of the three groups which basically constitute the market, viz, the issuers of securities (companies), the investors and the market intermediaries

Question 24.

Which of the following is not a Protective Function performed by SEBI?

(A) Prohibition of fraudulent and unfair trade practices.
(B) Conducting research and publishing information useful to all market participants.
(C) Undertaking steps for investor protection.
(D) Promoting fair practices and code of conduct in securities market.
Answer:
(B) Conducting research and publishing information useful to all market participants.

Explanation:
Conducting research and publishing information useful to all market participants is the development function of SEBI. Developmental function refers to the steps taken by SEBI in order to provide the investors with a knowledge of the trading and market function.

Question 25.

The Securities and Exchange Board of India was established by the Government of India and was given a statutory status in…………

(A) 1988
(B) 1992
(C) 1996
(D) 1998
Answer:
(B) 1992

Explanation:
The Securities and Exchange Board of India was established by the Government of India on 12 April, 1988 as an interim administrative body to promote orderly and healthy growth of securities market and for investor protection. It was f to function under the overall administrative control of the Ministry of Finance of the Government of India. The SEBI was given a statutory status on 30 January, 1992 through an ordinance.

Question 26.

Match the FUNCTIONS of SEBI in Column I with the respective EXPLANATION in Column II:

Column I	Column II
(a) Protective	(i) Training of intermediaries of the securities market.
(b) Regulatory	(ii) Prohibition of fraudulent and unfair trade practices.
(c) Development	(iii) Registration of brokers, sub-brokers and other players of market.

(A) (iii), (i), (ii)
(B) (i), (ii), (iii)
(C) (ii), (iii), (i)
(D) (iii), (ii), (i)
Answer:
(C) (ii), (iii), (i)

Assertion and Reason Based MCQs

Directions: In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(C) (A) is true, but (R) is false.
(D) (A) is false, but (R) is true.

Question 1.

Assertion (A): Certificates of Deposit (CD) are secured, negotiable, long-term instruments in bearer form.
Reason (R): A rise in call money rates makes other sources of finance such as commercial paper and certificates of deposit cheaper in comparison as banks raise funds from these sources.

Answer:
(D) (A) is false, but (R) is true.

Explanation:
Certificates of Deposit (CD) are unsecured, negotiable, short-term instruments in bearer form, issued by commercial banks and development financial institutions.

Question 2.

Assertion (A): A commercial bill is a bill of exchange used to finance the working capital requirements of business firms.
Reason (R): Commercial bill is a short-term, negotiable, self-liquidating instrument which is used to finance the credit sales of firms.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
Commercial bills are basically negotiable instruments accepted by buyers for goods or services obtained by them on credit, Such bills being bills of exchange can be kept upto the due date and encashed by the seller or may be endorsed to a third party in payment of dues owing to the latter.

Question 3.

Assertion (A): The primary market is also known as the new issues market.
Reason (R): It deals with new securities being issued for the first time.

Explanation:
The primary market is a type of capital market that deals with the new issue of stocks and securities. The investors in this market are banks, financial institutions, insurance companies, mutual funds and individuals.

Question 4.

Assertion (A): An ideal capital market is one where finance is available at reasonable cost.
Reason (R): Capital market is a market where low risk, unsecured and short-term debt instruments that are highly liquid are issued and actively traded everyday.

Answer:
(C) (A) is true, but (R) is false.

Explanation:
The money market is a market for short-term funds which deals in monetary assets. It is a market where low risk, unsecured and short-term debt instruments that are highly liquid are issued and actively traded everyday.

Question 5.

Assertion (A): Stock exchange contributes to economic growth.
Reason (R): Through the process of disinvestment and reinvestment savings get channelised into their most productive investment avenues.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
Stock exchange offers a platform for trading of securities of the various companies. This process of trading involves continuous disinvestment and reinvestment, which offers opportunities for capital formation and subsequently, growth of the economy.

Question 6.

Assertion (A): Stock exchange is an unorganised market.
Reason (R): Stock exchange makes complete information available to public in regard to prices and volume of transactions taking place every day.

Answer:
(D) (A) is false, but (R) is true.

Explanation:
A stock exchange is generally organised as an association, a society or a company with a limited number of members.
It is open only to these members who act as brokers for the buyers and sellers.

Question 7.

Assertion (A): Stock exchange provides safety to dealings and investment.
Reason (R): Transactions on the stock exchange are conducted only amongst its members with adequate transparency.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
Stock exchange provides safety, security and equity in dealings as transactions are conducted as per well defined rules and regulations. Transactions on the stock exchange are conducted in strict conformity to its rules and regulations which include the procedure and timings of delivery and payment to be followed.

Question 8.

Assertion (A): Demat account refers to an account which an Indian citizen must open with the DPs to trade in listed securities in electronic form.
Reason (R): Depository is like a bank in which an investor can deposit and withdraw his shares.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
Investors who want to get securities in electronic form opens a Demat Account. From this account one can hold shares of various companies in the dematerialised electronic form.

Question 9.

Assertion (A): Government of India decided to set-up a separate regulatory body known as Securities and Exchange Board of India.
Reason (R): SEBI was set up to prevent trading malpractices and achieve a balance between self regulation by the securities industry and its statutory regulation.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
Many malpractices started taking place such as rigging of prices, non-adherence of provisions of the Companies Act, violation of rules and regulations of stock exchanges etc. Due to these malpractices, people started losing confidence in the stock market. The government felt a sudden need to set up an authority to regulate the working and reduce these malpractices. As a result, the Government came up with the establishment of SEBI.

Question 10.

Assertion (A): Controlling insider trading and imposing penalties for such practices is a protective function of SEBI.
Reason (R): Registration of collective investment schemes and Mutual Funds is a development function of SEBI.

Answer:
(C) (A) is true, but (R) is false.

Explanation:
Registration of collective investment schemes and Mutual Funds is a regulatory function of SEBI. Regulatory functions involve establishment of rules and regulations for the financial intermediaries along with corporates that helps in efficient management of the market.

Question 11.

Assertion (A): The objective of SEBI is to maintain a balance between statutory regulations and self regulation.
Reason (R): The objective of the Primary Market Advisory Committee is to advise SEBI on issues related to the development of primary market in India.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
The SEBI has formed two advisory committees. They are the Primary Market Advisory Committee and the Secondary Market Advisory Committee. The objectives of these two committees is to advise SEBI on issues related to the development of primary market in India.

Case-Based MCQs

I. Read the following text and answer the questions given below:

ISQAA SOLAR Limited is searching for options to raise ₹ 20,000 crores from the primary market for diversification and modernisation of existing projects. It hired the services of a renowned financial consultancy firm, DHAN LAXMI PVT. LTD. to suggest options for the same. DHAN LAXMI PVT. LTD. suggested a list of options to the Board of Directors of the company. It was decided that for the immediate requirement of ₹ 1,500 crores, the company will give a privilege to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company.

₹ 4,500 crores would be raised by allotment of securities to a consortium of financial institutions, instead of inviting subscription from the public by making a direct appeal to investors to raise capital. It was further decided to raise capital to the tune of ₹ 6,000 crores through an issuing house. All these options were accepted by the Board of Directors. The Board further decided to raise₹ 8,000 crores through the online system of the stock exchange by entering into an agreement with the exchange.

Question 1.

Identify the method of floatation of new issues in the primary market, not taken up by ISQAA SOLAR LTD.

(A) Offer for sale
(B) Rights issue
(C) E-IPO
(D) Offer through prospectus
Answer:
(D) Offer through prospectus

Explanation:
Offer through prospectus involves inviting subscription from the public through issue of prospectus.

Question 2.

” ₹4,500 crores would be raised by allotment of securities to a consortium of financial institutions, instead of inviting subscription from the public by making a direct appeal to investors to raise capital.” Identify the method of floatation of new issues in the primary market being discussed above, which the company has decided to use :

(A) Offer for sale
(B) Private placement
(C) Right issue
(D) Offer through prospectus
Answer:
(B) Private placement

Explanation:
Private placement is the allotment of securities by a company to institutional investors and some selected individuals. It helps to raise capital more quickly than a public issue.

Question 3.

Identify the reason which has made the firm raise funds from the institutional investors:

(A) It helps to raise funds quickly.
(B) It is not expensive.
(C) Both (A) and (B).
(D) None of the above.
Answer:
(C) Both (A) and (B).

Question 4.

How much money was raised by the company through E-IPO’s?

(A) ₹ 8,000 crores
(B) ₹ 4,500 crores
(C) ₹20,000 crores
(D)₹ 6,000 crores
Answer:
(A) ₹ 8,000 crores

Case-Based MCQs

I. Read the following text and answer the questions given below:

Rajesh is the CEO of a leading petrochemical company. Recently, the company issued share capital to cover some expenses. However, in order to meet the floating cost of issuing shares, the company decided to conduct Bridge Financing. Therefore, it decided to issue a money market tool. The CEO’s decision wisely met the company’s requirements. Three months later, the company decided to issue new shares in the primary market again.

According to the floating method it involves, it decided to adopt the method mainly adopted by listed companies and attract the masses by directly contacting the public. Again, success came from the company’s approach and the realization of its goals. However, when the company tried the same type again three months later, the company encountered many problems. The problem is to determine a key aspect related to the security of the new release. If the same process is carried out in the secondary market, the company will not care too much about this key aspect.

Question 1.

Which type of money market instrument was issued by the company in the earlier part ?

(A) Call money
(B) Treasury bill
(C) Commercial paper
(D) Certificate of deposit
Answer:
(C) Commercial paper

Explanation:
Commercial paper is a short term unsecured promissory note, negotiable and transferable by endorsement and delivery with a fixed maturity period. It is issued by large and creditworthy companies to raise short-term funds at lower rates of interest than market rates.

Question 2.

Which method of floatation was adopted by the company three months later ?

(A) E-IPOs
(B) Offer through prospectus
(C) Right issue
(D) Offer for sale
Answer:
(B) Offer through prospectus

Question 3.

When the company repeated the same process again after three months, it faced problem in:

(A) Primary market
(B) Money market
(C) Commodity market
(D)None of the above
Answer:
(A) Primary market

Question 4.

What key aspect the company would not have cared about in the secondary market ?

(A) Pricing of securities
(B) Regulations from the government
(C) Safety of investor’s money
(D) None of the above
Answer:
(A) Pricing of securities

II. Read the following text and answer the questions given below:

“Usually, money market funds are recommended to investors with an investment horizon of 90-365 days. These schemes can help you diversify your portfolio and help invest surplus cash while maintaining liquidity. It is a good option for retail investors with smaller investment amounts. Ensure that you invest according to your investment plan.”After reading this article in a magazine, Ramesh who needs funds for his venture decided to buy a financial asset from the RBI.

This financial asset is an instrument of short-term borrowing. He decided to buy it because he doesn’t want to take risk and wants an assured return. This instrument is a promissory note. It is highly liquid. This instrument is also known as Zero Coupon Bond. On this instrument is written T-91. Investment in this instrument started with just ₹ 25,000. For a higher value it is given in the multiples of ₹ 25,000.

Question 1.

Which financial asset is indicated in the above case?

(A) Treasury Bill
(B) Commercial Paper
(C) Commercial Bill
(D) Call Money
Answer:
(A) Treasury Bill

Explanation:
A Treasury bill is basically an instrument of short-term borrowing by the Government of India maturing in less than one year. Treasury bills are issued in the form of a promissory note. They are highly liquid and have assured yield and negligible risk of default.

Question 2.

On whose behalf does the RBI issue this instrument?

(A) Government of India
(A) Government of India
(B) Financial Institutions
(C) Banks
(D) Private Companies
Answer:
(A) Government of India

Question 3.

What does T-91 denote here?

(A) Investing period
(B) Receiving period
(C) Conversion period
(D) Maturity period
Answer:
(D) Maturity period

Question 4.

What is the minimum amount for which this instrument is available?

(A) ₹ 25,000
(B) ₹ 50,000
(C) ₹ 1,00,000
(D) ₹ 1,50,000
Answer:
(A) ₹ 25,000

III. Read the following text and answer the questions given below:

“Unicon Securities Pvt. Ltd.” was established to deal in securities. It was registered as a stockbroker with National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) to trade in securities listed at these exchanges. It is also a depository participant with CDSL and NSDL. In the first three years, it developed its business successfully. After that, the composition of Board of Directors changed. Some customers complained to the customer care centre of the company that shares purchased by them and for which the payment has been duly made, were not transferred to their Demat Accounts by “Unicon Securities Pvt. Ltd.”. The executive of customer care centre promised the aggrieved customers that their shares will be transferred to their respective Demat Accounts very soon. But the company delayed the matter and didn’t transfer the shares of the customers to their Demat Accounts. This eroded investors confidence and multiplied their grievances. On regular inspection and by conducting enquiries of the brokers involved, the Securities and Exchange Board of India (SEBI) was able to detect this irregularity.

Question 1.

Identify the step of trading procedure in a stock exchange which has not been followed by “Unicon Securities Pvt. Ltd.”.

(B) Placing the order
(C) Executing the order
(D) Settlement
Answer:
(D) Settlement

Question 2.

Which apex statutory body of capital market inspected and conducted enquiries in order to detect irregularities?

(A) NSE
(B) BSE
(C) Unicon Securities Pvt. Ltd.
(D) SEBI
Answer:
(D) SEBI

Question 3.

By not converting and transferring the shares to the investors Demat Account, i.e., electronic form, which process was not followed?

(A) Dematerialisation
(B) Settlement
(C) Registration
(D) Rematerialisation
Answer:
(A) Dematerialisation

Question 4.

Identify the function of SEBI being stated in paragraph.

(A) Development
(B) Protective
(C) Regulatory
(D) None of the above
Answer:
(C) Regulatory

Explanation:
Regulatory functions involve establishment of rules and regulations for the financial intermediaries along with corporate that helps in efficient management of the market- S

IV. Read the following text and answer the questions given below:

Rajni Auto Manufacturers has been into business for the last 30 years and have decided to give a special privilege to their existing shareholders to subscribe to the new issue of shares where they will be given shares according to the proportion of shares held by them. The company always gives special treatment to its loyal stakeholders and also ensures that they remain associated with the organization for longer durations. Last year, the company was successfully dealing through the capital market where both the buying and selling of securities were taking place. The owner of the company is a man of ethical business. He often contributes to business magazines by writing articles and editorials. He recently wrote an article about the watchdog of stock market. The article gained a lot of popularity and now is part of the curriculum of MBA students.

Question 1.

Which method of floatation was used by Rajni Auto Manufacturers?

(A) Right issue
(B) Private placement
(C) Offer for sale
(D) E-IPOs

Explanation:
Rights Issue is a privilege given to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company. The shareholders are offered the ‘right’ to buy new shares in 1 proportion to the number of shares they already possess.

Question 2

Which type of capital market was this company dealing in?

(A) Primary market
(B) Secondary market
(C) Commodity market
(D) None of these
Answer:
(B) Secondary market

Explanation:
The secondary market is also known as the stock market or stock exchange. It is a market for the purchase and sale of existing securities. It helps existing investors to disinvest and fresh investors to enter the market. It also provides liquidity and marketability to existing securities.

Question 3.

Which watchdog of the capital market has been referred to in the above case?

(A) Capital market
(B) Stock market
(C) SEBI
(D) Broker
Answer:
(C) SEBI

Question 4.

Identify regulatory functions of the organization identified above?

(A) Pricing of securities
(B) Spreading of equity cult
(C) Registration of brokers and sub-brokers
(D) Promotion of ethical and fair practices
Answer:
(C) Registration of brokers and sub-brokers

MCQ Questions for Class 12 Business Studies with Answers

MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management

January 19, 2023January 18, 2023 by Prasanna

Financial Management Class 12 MCQ Questions With Answers

Financial Management MCQ Class 12 Chapter 9 Question 1.

Which of the following statements is false regarding financial management?

(A) Aims at ensuring availability of enough funds whenever required.
(B) Aims at reducing the cost of funds procured.
(C) Is concerned with optimal procurement as well as usage of finance.
(D) Facilitates price discovery for securities of ompany.
Answer:
(D) Facilitates price discovery for securities of ompany.

Explanation:
The main objective of financial management is to maximize the wealth of shareholders. This include a proper estimation of the funds required for different purposes such as for the purchase of long term assets or to meet day-to-day expenses of business, etc.

Financial Management Class 12 MCQ Chapter 9 Question 2.

The foremost objective of financial management is:

(A) Maximisation of market share
(B) Maximisation of shareholders’ wealth
(C) Maintenance of liquidity
(D) Profit maximisation
Answer:
(B) Maximisation of shareholders’ wealth

Explanation:
The primary aim of financial management is to maximise shareholders’ wealth, which is referred to as the wealth maximisation concept.

Question 3.

For optimal procurement of manager identifies different and compares those items in terms of cost and associated risks. Identify concept highlighted in the above lines.

(A) Financial management
(B) Financial decisions
(C) Working capital
(D) None of the above
Answer:
(A) Financial management

Question 4.

Which of the financial decisions is about the quantum of finance to be raised from various long-term sources?

(A) Investment
(B) Dividend
(C) Financing
(D) None of these
Answer:
(C) Financing

Explanation:
Financing decision relates to the proportion in which funds are raised from various sources. Factors like cost of fund, risk involved, control, cash flow, etc. are considered before taking financial decision. In financing decision the firm has to decide the ratio of owned funds and borrowed funds.

Question 5.

A decision to acquire a new and modern plant to upgrade an old one is known as ………….. decision.

(A) Financing
(B) Working capital
(C) Investment
(D) Dividend
Answer:
(C) Investment

Explanation:
The investment decision relates to how the firm’s funds are invested in different g assets. These decisions are very crucial for any business since they affect its earning capacity in the long run.

Question 6.

Which of the following statements is false regarding financial management ?

(A) Money required for carrying out business activities is called business finance.
(B) For optimal procurement, different available sources of finance are identified and compared in terms of their costs and associated risks.
(C) The objective of financial management is to minimise the current price of equity shares.
(D) All of the above
Answer:
(C) The objective of financial management is to minimise the current price of equity shares.

Explanation:
The objectives of financial management is to maximize the wealth of shareholders, to provide maximum returns to the owners on their investment. To ensure continuous availability of sufficient funds at reasonable cost, etc.

Question 7.

Dilip is the finance manager of Venus Ltd. He is facing difficulty in deciding the amount of profit earned by the company that should be distributed as dividend to the shareholders. In the current year, the company earned high profit. However, Dilip thinks that it is better to declare higher dividend as he is sure about the earning potential of the company in the coming years. Which of the following factors affected Dilip’s choice regarding dividend decision.

(A) Taxation Policy
(B) Cash Flow Position
(C) Stability of Dividends
(D) Shareholders’ Preference
Answer:
(C) Stability of Dividends

Explanation:
Companies generally follow a policy of stabilising dividend per share. The increase in dividends is generally made when there is confidence that their earning potential has gone up and not just the earnings of the current year.

Question 8.

Tractors Pvt. Ltd. producing 2,00,000 trucks and generating revenue of ₹ 2,000 crores annually, has recently acquired the world’s second largest truck manufacturing company. After this acquisition, Tractors Pvt. Ltd. will become the world’s largest truck manufacturer. For financing the acquisition, the company had to arrange about ₹ 1,00,000 crores through debt and equity function is being performed by the company for arranging the funds through debt and equity.

(A) Investment
(B) Financing
(C) Dividend
(D) All of these
Answer:
(B) Financing

Explanation:
Issue of more equity may lead to dilution of management’s control over the business. Debt financing has no such implication. Companies afraid of a takeover bid would prefer debt to equity.

Question 9.

Match the FINANCIAL DECISIONS in Column I with their correct EXAMPLES in Column II.

Column I	Column II
(a) Investment Decision	(i) Profit earned by company (after paying tax) is to be distributed to the shareholders.
(b) Financing Decision	(ii) Decisions about the levels of cash, inventory and receivables.
(c) Dividend Decision	(iii) The proportion of debt, equity, preference share capital.

(A) (ii), (iii), (i)
(B) (iii), (ii), (i)
(C) (ii), (i), (iii)
(D) (iii), (i), (ii)
Answer:
(A) (ii), (iii), (i)

Question 10.

Financial planning usually begins with the preparation of a………………

(A) Sales forecast
(B) Profit forecast
(C) Business cycle
(D) None of theses
Answer:
(A) Sales forecast

Explanation:
The financial planningbegins with determination of total capital requirement. For this the finance managers do the sales forecast and if the future prospects appear to be bright and expect increase in sale, then firm needs to increase its production capacity which means more requirement of long term funds.

Question 11.

takes into consideration the growth, performance, investments and requirement of funds for a given period.

(A) Business cycle
(B) Financial planning
(C) Organising
(D) Working capital
Answer:
(B) Financial planning

Explanation:
Financial planning is essentially the preparation of a financial blueprint of an organisation’s future operations. The objective of financial planning is to ensure that enough funds are available at right time.

Question 12.

Vikrant joins his father’s business of Organic masalas, near Kotgarh in Himachal after completing his MBA. In order to capture a major share of the market, he decided to sell the product in small attractive packages by using the latest packaging technology. His father suggested that they hire financial consultants to estimate the amount of funds that would be required for the purpose and timings when it would be required. The concept being discussed by Vikrant’s father, links which financial decision with the investment decision?

(A) Dividend decision
(B) Financial planning
(C) Capital structure decision
(D) Financing decision
Answer:
(B) Financial planning

Explanation:
The financial statements are prepared keeping in mind the requirement of funds for investment in the fixed capital and working capital. Then the expected profits during the period are estimated so that an idea can be made of how much of the fund requirements can be met internally.

Question 13.

Mr. Raghav, Finance manager of Manav InfraTech Pvt. Ltd., prepared a detailed plan of financial needs of the firm in coming six months and the sources from where funds will be acquired to meet out these needs as company is planning to open a new branch in other states of India. Identify the financial concept discussed here:

(A) Business cycle
(B) Financial planning
(C) Capital structure
(D) Working capital
Answer:
(B) Financial planning

Explanation:
Financial planning is broader in scope as it does not end by raising estimated finance. It includes long term investment decision- In financial planning finance manager analyses various investments plans and selects the most appropriate.

Question 14.

Which of the following statements is incorrect?

(A) Financial planning is the process of estimating the fund requirement of a business and specifying the sources of funds.
(B) The objective of financial planning is to ensure that enough funds are available at right time.
(C) Financial planning is a substitute of Financial Management.
(D) None of the above
Answer:
(C) Financial planning is a substitute of Financial Management.

Explanation:
Financial planning is not equivalent to, or a substitute for, financial management. Financial management aims at choosing the best investment and financing alternatives by focusing on their costs and benefits. Its objective is to increase the shareholders’ wealth. Financial planning on g the other hand aims at smooth operations by focusing on fund requirements and their availability in the light of financial decisions.

Question 15.

Which of the following is not an objective of financial planning?

(A) To ensure availability of funds whenever required.
(B) To choose the best investment and financing alternatives by focusing on their costs and benefits.
(C) To see that the firm does not raise resources unnecessarily.
(D) All are the objectives of financial planning.
Answer:
(B) To choose the best investment and financing alternatives by focusing on their costs and benefits.

Explanation:
The main objectives of financial planning is to ascertain the amount of fixed capital as well as the working capital required in a given period, to determine the amount to be raised through various sources using a judicious debt-equity mix and to ensure that the required amount is raised on time at the lowest possible cost.

Question 16.

Detailed plans of action are prepared under financial planning. What benefits does this result in?

(A) Reducing waste
(B) Reducing duplication of efforts
(C) Reducing gaps in planning
(D) All of the above
Answer:
(D) All of the above

Explanation:
Financial planning helps in coordinating various business functions, e.g., sales and production functions, by providing clear policies and procedures and making detailed plans of action which reduces waste, duplication of efforts, and gaps in planning.

Question 17.

Financial planning takes into consideration which of the following:

(A) Growth
(B) Performance
(C) Investments
(D) All of these
Answer:
(D) All of these

Explanation:
Financial planning takes into consideration the growth, performance, investments and requirement of funds for a given period. Financial planning includes both short-term as well as long-term planning. Long term planning relates to long term growth and investment. It focuses on capital expenditure programmes. Short term planning covers short term financial plan called budget

Question 18.

ICR =…………….

(A) EBIT/Interest
(B) EBIT x Interest
(C) EBIT – Interest
(D) Interest/EBIT
Answer:
(A) EBIT/Interest

Explanation:
The interest coverage ratio refers to the number of times earnings before interest and taxes of a company covers the interest obligation.

Question 19.

Which component of capital structure determines the overall financial risk ?

(A) Debt
(B) Equity
(C) Both (A) and
(B) (D) None of these
Answer:
(A) Debt

Explanation:
Debt is cheaper but is more risky for a business because the payment of interest and the return of principal is obligatory for the business.

Question 20.

Samara Ltd. has Debt Equity ratio of 3:1 whereas Gehlot Ltd. has Debt Equity ratio of 1:1. Name the advantage Samara Ltd. will have over Gehlot Ltd., when the rate of interest is lower than the rate of return on investment of the company.

(A) Trading on equity
(B) Low risk
(C) Low cost of equity
(D) Greater flexibility
Answer:
(A) Trading on equity

Explanation:
If the ROI of the company is higher, it can choose to use trading on equity to increase its EPS, i.e., its ability to use debt is greater.

Question 21.

Which of the following statements is incorrect?

(A) A low Debt Service Coverage Ratio indicates better ability to meet cash commitments and consequently, the company’s potential to increase debt component in its capital structure.
(B) Use of higher debt increases the cost of equity.
(C) Low interest rates increase a firm’s capacity to employ higher debt.
(D) None of the above
Answer:
(A) A low Debt Service Coverage Ratio indicates better ability to meet cash commitments and consequently, the company’s potential to increase debt component in its capital structure.

Explanation:
A higher DSCR indicates better ability to meet cash commitments and consequently, the company’s potential to increase debt component in its capital structure.

Question 22.

When the stock market is bearish, a company must go for which of the following?

(A) More debt
(B) Less debt
(C) More equity
(D) Equal mix of debt and equity
Answer:
(A) More debt

Explanation:
During a bearish phase, a company may find raising of equity capital more difficult and it may opt for debt.

Question 23.

When the stock market is bullish, a company must go for which of the following?

(A) More debt
(B) More equity
(C) Less equity
(D) Equal mix of debt and equity
Answer:
(B) More equity

Explanation:
If the stock markets are bullish, equity shares are more easily sold even at a higher price. Use of equity is often preferred by companies in such a situation.

Question 24.

Of the following sources of funds, are Owner’s Funds.

(A) Equity share capital
(B) Preference share capital
(C) Reserves and surpluses
(D) All of the above
Answer:
(D) All of the above

Explanation:
Owners’ funds consist of equity share capital, preference share capital and reserves and surpluses or retained earnings.

Question 25.

Of the following sources of funds, are not Borrowed Funds.

(A) Loans
(B) Retained earnings
(C) Public deposits
(D) Debentures
Answer:
(B) Retained earnings

Explanation:
Borrowed funds can be in the form of loans, debentures, public deposits, etc. These may be borrowed from banks, other financial institutions, debenture holders and public.

Question 26.

Match the TERMS in Column I with their correct MEANING in Column II.

Column I	Column II
(a) Floatation Costs	(i) Comparing cash profits with the total cash required for the service of the debt and the preference share capital.
(b) ICR (Interest Coverage Ratio)	(ii) Extent to which earnings before interest and taxes of a company covers the interest obligation.
(c) DSCR (Debt Service Coverage Ratio)	(iii) Cost involved in the process of raising resources

(A) (ii), (i), (iii)
(B) (iii), (ii), (i)
(C) (i), (iii), (ii)
(D) (iii), (i), (ii)
Answer:
(B) (iii), (ii), (i)

Question 27.

Fixed capital is financed through:

(A) Equity shares
(B) Preference shares
(C) Debentures
(D) All of these
Answer:
(D) All of these

Explanation:
Fixed capital be financed through long-term sources of capital such as equity or preference shares, debentures, long-term loans and retained earnings of the business. Fixed Assets should never be financed through short-term sources.

Question 28.

Net working capital may be defined as the:

(A) Excess of current assets over current liabilities
(B) Excess of current liabilities over current assets
(C) Both (A) and (B)
(D) one of the above
Answer:
(A) Excess of current assets over current liabilities

Explanation:
Some part of current assets is usually financed through short-term sources, i.e., current liabilities. The rest is financed through long-term sources and is called net working capital. Thus, NWC = CA – CL (i.e. 1 Current Assets – Current Liabilities.)

Question 29.

………………. is the time span between the receipt of raw material and their conversion into finished goods.

(A) Production cycle
(B) Business cycle
(C) Both (A) and (B)
(D) None of these
Answer:
(A) Production cycle

Explanation:
Production cycle is the time span between the receipt of raw material and their conversion into finished goods. Some businesses have a longer production cycle while some have a shorter one. Duration and the length of production cycle, affects the amount of funds required for raw materials and expenses.

Question 30.

Which of the following statements is true?

(A) Higher competition requires larger stocks to meet urgent orders from customers which results into requirement of more working capital.
(B) The companies having growth prospects require lesser amount of working capital.
(C) If the rate of inflation is high, an organisation is required to invest less in working capital. .
(D) All of the above
Answer:
(A) Higher competition requires larger stocks to meet urgent orders from customers which results into requirement of more working capital.

Explanation:
Higher level of competitiveness may necessitate larger stocks of finished goods to meet urgent orders from customers. This increases the working capital requirement. Competition may also force the firm to extend liberal credit terms.

Question 31.

There is a boom in the demand for i-pods. How does it affect the requirement of working capital for companies manufacturing i-pods?

(A) More working capital will be needed.
(B) Less working capital will be needed.
(C) No change in working capital needed.
(D) None of the above
Answer:
(A) More working capital will be needed.

Explanation:
The basic nature of a business influences the amount of working capital required. A trading organisation usually needs a smaller amount of working capital compared to a manufacturing organisation. This is because there is usually no processing.

Question 32.

Cars Udyog Ltd. plans to manufacture solar cars in its new plant. It has an offer from Toyota for collaboration. What impact will the collaboration have on the requirement of fixed capital for Cars Udyog Ltd.?

(A) Increase the requirement for fixed capital
(B) Decrease the requirement for fixed capital
(C) No change in fixed capital needed
(D) None of these
Answer:
(B) Decrease the requirement for fixed capital

Explanation:
At times, certain business organisations share each other’s facilities. Such collaboration reduces the level of investment in fixed assets for each one of the participating organisations.

Question 33.

Bright Bulbs Pvt. Ltd., is manufacturing good quality LED bulbs and catering to the local market. The current production of the company is 1,000 bulbs a day. Anita, the marketing manager of the company, surveyed the market and decided to supply the bulbs to five-star-hotels also. She anticipated the higher demand in future and decided to buy a sophisticated machine to further improve the quality and quantity of the bulbs produced. Which factor affected the fixed capital requirements of the company?

(A) Scale of Operations
(B) Growth Prospects
(C) Diversification
(D) Choice of Techniques
Answer:
(B) Growth Prospects

Explanation:
Companies which are expanding and have higher growth plan require more fixed capital as to expand they need to expand their production capacity and to expand production capacity companies need more plant and machinery so more fixed capital.

Question 34.

Tapan, after leaving his job, wanted to start a Private Limited Company with his son. His son was keen that the company may start manufacturing of Mobile-phones with some unique features. However, Tapan felt that the mobile phones are prone to quick obsolescence and a heavy fixed capital investment would be required regularly in this business. Therefore, he convinced his son to start a furniture business factor affecting fixed capital requirements is making Tapan choose furniture business over mobile phone.

(A) Scale of operations
(B) Choice of techniques
(C) Financing alternatives
(D) Technology upgradation
Answer:
(D) Technology upgradation

Explanation:
Industries in which technology up-gradation is fast need more amount of fixed capital as when new technology is invented old machines become obsolete and they need to buy new plants and machinery whereas companies where technological up-gradation is slow they require less fixed capital as they can manage with old machines.

Question 35.

Match the TERMS in Column I with their corresponding MEANING or EXPLANATION in Column II

Column I	Column II
(a) Fixed capital	(i) Investment in current assets
(b) Working capital	(ii) Assets which get converted into cash or cash equivalents within one year
(c) Fixed assets	(iii) Assets which remains in the business for more than one year
(d) Current assets	(iv) Investment in long-term assets

(A) (ii), (i), (iii), (iv)
(B) (iii), (iv), (ii), (i)
(C) (iv), (i), (iii), (ii)
(D) (iii), (i), (ii), (iv)
Answer:
(C) (iv), (i), (iii), (ii)

Assertion and Reason Based MCQs

Question 1.

Assertion (A): Higher the flotation cost, less attractive the source.
Reason (R): The choice between the payment of dividend and retaining the earnings is, to some extent, affected by the difference in the tax treatment of dividends and capital gains.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
If the floatation cost is high, it will be more expensive for the company to raise funds, because the company ends up spending much higher money than it would if floatation cost less.

Question 2.

Assertion (A): Financial planning tries to link the present with the future.
Reason (R): Financial planning is essentially the preparation of a financial blueprint of an organisation’s future operations.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
Financial planning means deciding in advance how much to spend and on what to spend according to the funds at your disposal. It enables the management to foresee the funds requirements both the quantum as well as the timing.

Question 3.

Assertion (A): Financial planning ensures that the firm does not raise resources unnecessarily.
Reason (R): Excess funding is almost as bad as inadequate funding.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
Excess funding is almost as bad if as inadequate funding. Even if there is some surplus money, good financial planning would
put it to the best possible use so that the financial resources are not left idle and don’t unnecessarily add to the cost.

Question 4.

Assertion (A): Financial planning includes both short-term as well as long-term planning.
Reason (R): Short-term planning focuses on capital expenditure programmes.

Answer:
(C) (A) is true, but (R) is false.

Explanation:
Long-term planning relates to long term growth and investment. It focuses on capital expenditure programmes. Short term planning covers short term financial plan called budget.

Question 5.

Assertion (A): Financial planning includes determining the objectives, policies, procedures and programmes to deal with financial activities.
Reason (R): Financial planning facilitates in developing a sound capital structure which gives maximum returns to shareholders.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
Financial planning involves estimating the amount of capital to be raised determining the pattern of financing i.e., deciding on the form and proportion of capital to be raised and formulating the financial policies and procedures for procurement, 1 allocation and effective utilisation of funds.

Question 6.

Assertion (A): Debt and equity differ significantly in their cost and riskiness for the firm.
Reason (R): Debt is cheaper but is more risky for a business because the payment of interest and the return of principal is obligatory for the business.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
The cost of debt is lower than the cost of equity for a firm because the lender’s risk is lower than the equity shareholder’s
risk, since the lender earns an assured return and repayment of capital and, therefore, they should require a lower rate of return. There is no such compulsion in case of equity, which is therefore, considered risk less for the business.

Question 7.

Assertion (A): Capital structure of a company affects only the profitability.
Reason (R): A capital structure will be said to be optimal when the proportion of debt and equity is such that it results in an increase in the value of the equity share.

Answer:
(D) (A) is false, but (R) is true.

Explanation:
Capital structure of a company affects both the profitability and the financial risk as capital structure is the mix between owner’s funds and borrowed funds.

Question 8.

Assertion (A): A higher DSCR indicates better ability to meet cash commitments.
Reason (R): If a firm uses its debt potential to the full, it loses flexibility to issue further debt.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
A higher DSCR indicates better ability to meet cash commitments and consequently, the company’s potential to increase debt component in its capital structure. If a firm uses its debt potential to the full, it loses flexibility to issue further debt, To maintain flexibility, it must maintain some borrowing power to take care of unforeseen circumstances.

Question 9.

Assertion (A): The higher the ICR, lower shall be the risk of company failing to meet its interest payment obligations.
Reason (R): If the ROI of the company is higher, it can choose to use trading on equity to increase its EPS, i.e., its ability to use debt is greater.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
A higher ICR ratio indicates a better financial health. It means company is more capable to meet its interest obligations from operating earnings.

Question 10.

Assertion (A): A trading organisation usually needs a smaller amount of working capital compared to a manufacturing organisation.
Reason (R): The basic nature of a business influences the amount of working capital required. S3

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
The working capital requirement of the manufacturing companies is usually high as they require huge stock-in-trade (inventories) and the amount of their debtors is also expected to be large because of the credit sales involved.

Question 11.

Assertion (A): A labour-intensive organisation requires higher investment in plant and machinery.
Reason (R): Those manufacturing enterprises which make use of modern and automatic machines need large amount of fixed capital.

Answer:
(D) (A) is false, but (R) is true.

Explanation:
Companies using capital intensive techniques require more fixed capital whereas companies using labour-intensive techniques require less capital because capital intensive techniques make use of plant and machinery and company needs more fixed capital to buy plants and machinery.

Question 12.

Assertion (A): In peak season, because of higher level of activity, larger amount of working capital is required.
Reason (R): Most business have some seasonality in their operations.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
The seasonal enterprises, i.e., the enterprise whose operations pick up seasonally may require more working capital to meet their increased operations during the particular season.

Question 13.

Assertion (A): With rising prices, larger amounts are required even to maintain a constant volume of production and sales.
Reason (R): The working capital requirement of a business become higher with higher rate of inflation.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
Inflation leads to increase in prices of raw materials, thus more working capital is required. Changes in the price level also affect the working capital requirements. Generally, the rising prices will require the firm to maintain larger amount of working capital as more funds will be required to maintain the same current assets.

Case-Based MCQs

I. Read the following text and answer the following questions on the basis of the same:

Mr. A. Bose is running a successful business. Mr. Bose is the owner of R. K. Cement Ltd. Mr. Bose decided to expand his business by acquiring a Steel Factory. This required an investment of ? 60 crores. To seek advice in this matter, he called his financial advisor Mr. T. Ghosh who advised him about the judicious mix of equity (40%) and Debt (60%). Employ more of cheaper debt may enhance the EPS. Mr. Ghosh also suggested him to take loan from a financial institution as the cost of raising funds from financial institutions is low. Though this will increase the financial risk but will also raise the return to equity shareholders. He also apprised him that issue of debt will not dilute the control of equity shareholders. At the same time, the interest on loan is a tax-deductible expense for computation of tax liability. After due deliberations with Mr. Ghosh, Mr. Bose decided to raise funds from a financial institution.

Question 1.

Identify the concept of Financial Management as advised by Mr. Ghosh in the above situation.

(A) Capital Budgeting
(B) Capital Structure
(C) Dividend Decision
(D) Working Capital Decision
Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
Capital structure refers to the mix between owners and borrowed funds. Capital structure of a company affects both the profitability and the financial risk. A capital structure will be said to be optimal when the proportion df debt and equity is such that it results in an increase in the value of the equity share.

Question 2.

In the above case Mr. Ghosh suggested to raised more funds from debt. Higher debt-equity ratio results in:

(A) Lower financial risk
(B) Higher degree of operating risk
(C) Higher degree of financial risk
(D) Higher earning of profit
Answer:
(C) Higher degree of financial risk

Question 3.

“Mr. T. Ghosh who advised him about the judicious mix of equity (40%) and Debt (60%).” The proportion
of debt in the overall capital is called ………….

(A)Working Capital
(B) Financial Leverage
(C) Total Assets
(D) None of these
Answer:
(B) Financial Leverage

Explanation:
as the financial leverage increases, the cost of funds declines because of increased use of cheaper debt but the financial risk increases. The impact of financial leverage on the profitability of a business can be seen I through EBIT-EPS (Earning before Interest and Taxes-Earning per Share) analysi

Question 4.

Employ more of cheaper debt may enhance the EPS. Such practice is called:

(A) Equity Trading
(B) Financial Leverage
(C) Investment Decision
(D) Trading on Equity
Answer:
(D) Trading on Equity

Explanation:
Trading on Equity refers to the increase in profit earned by the equity shareholders due to the presence of fixed financial charges like interest.

II. Read the following text and answer the following questions on the basis of the same:

Sunrises Ltd. dealing in readymade garments, is planning to expand its business operations in order to cater to international market. For this purpose, the company needs additional ₹ 80,00,000 for replacing machines with modern machinery of higher production capacity. It involves committing the finance on a long-term basis. These decisions are very crucial for any business since they affect its earning capacity in the long run. The company wishes to raise the required funds by issuing debentures. The debt can be issued at an estimated cost of 10%. The EBIT for the previous year of the company was ₹ 8,00,000 and total capital investment was ₹ 1,00,00,000. Instead of issuing 10% debenture the company can issue equity shares for raising the funds. The financial manager of the company would normally opt for a source which is the cheapest.

Question 1.

What is the other name of long-term decision ?

(A) Capital budgeting
(B) Gross working capital
(C) Financial management
(D) Working capital
Answer:
(A) Capital budgeting

Explanation:
Capital budgeting decision. involves committing the finance on a long term basis. For example, making investment in a new machine to replace an existing one or acquiring a new fixed asset or opening a new branch, etc. These decisions are very crucial for any business since they affect its earning capacity in the long run.

Question 2.

A decision for replacing machines with modern machinery of higher production capacity is a:

(A) Financing decision
(B) Working capital decision
(C) Investment decision
(D) None of the above
Answer:
(C) Investment decision

Question 3.

A decision for raising fund of ₹ 80,00,000 either from 10% debenture or equity shares is a:

(A) Financing decision
(B) Dividend decision
(C) Investment decision
(D) None of these
Answer:
(A) Financing decision

Explanation:
Financing decision is about the quantum of finance to be raised from various long-term sources.

Question 4.

The financing decisions are affected by various factors. Which one of the following factor is discussed in the above case?

(A) Cash flow position of the company
(B) Cost
(C) Amount of earnings
(D) Taxation policy
Answer:
(B) Cost

Explanation:
The cost of raising funds through different sources are different. A prudent financial manager would normally opt for a source which is the cheapest.

III. Read the following text and answer the questions given below:

Charu and Arpita, who are young fashion designers, left their job with a famous fashion designer chain to set-up a company ‘Trends Pvt. Ltd’. They decided to run a boutique during the day and coaching classes for entrance examination of National Institute of Fashion Designing in the evening. For the coaching centre, they took on lease the first floor of a nearby building. Their major expense was money spent on photocopying of notes for their students. They thought of buying a photocopier knowing fully that their scale of operations was not sufficient to make full use of the photocopier.

In the basement of the building of Trends Pvt. Ltd.’, Ramesh and Suresh were carrying on a printing and stationery business in the name of ‘Fine Prints Pvt. Ltd.’ Charu approached Ramesh with the proposal to buy a photocopier jointly which could be used by both of them without making separate investment. Ramesh agreed to this.

Question 1.

‘They decided to run a boutique during the day and coaching classes for entrance examination of National Institute of Fashion Designing in the evening.’ This statement represents which factor affecting the fixed capital requirements of Trends Pvt. Ltd.?

(A) Scale of operations
(B) Choice of technique
(C) Growth prospects
(D) Diversification
Answer:
(D) Diversification

Explanation:
A firm may choose to diversify its operations for various reasons. With diversification, fixed capital requirements increase e.g., a textile company is diversifying and starting a cement manufacturing plant.

Question 2.

‘For the coaching centre, they took on lease the first floor of a nearby building.’ This statement represents which factor affecting the fixed capital requirements of Trends Pvt. Ltd.?

(A) Nature of business
(B) Financing alternatives
(C) Growth prospects
(D) Scale of operations
Answer:
(B) Financing alternatives

Question 3.

‘They thought of buying a photocopier knowing fully that their scale of operations was not sufficient to make full use of the photocopier.’ This statement represents which factor affecting the fixed capital requirements of Trends Pvt. Ltd.?

(A) Scale of operations
(B) Level of collaboration
(C) Growth prospects
(D) Choice of technique
Answer:
(A) Scale of operations

Explanation:
A larger organisation operating at a higher scale needs bigger plant, more space etc. and therefore, requires higher investment in fixed assets when compared with the small organisation.

Question 4.

‘Charu approached Ramesh with the proposal to buy a photocopier jointly which could be used by both of them without making separate investment.’ This statement represents which factor affecting the fixed capital requirements of Trends Pvt. Ltd.

(A) Technology upgradation
(B) Diversification
(C) Level of collaboration
(D) Financing alternatives
Answer:
(C) Level of collaboration

Explanation:
If companies are preferring collaborations, then companies will need less fixed capital as they can share plant and machinery with their collaborators but if company prefers to operate as independent unit then there is more requirement of fixed f capital.

IV. Read the following text and answer the questions given below:

‘Spun Ltd.’ is a company manufacturing cotton Yarn for the past 15 years. It has been consistently earning good profits for many years and is a market leader. This year too, it has been able to generate enough profits. There is availability of enough cash in the company and good prospects for growth in future as the demand for its products has been consistently increasing. It is a well-managed organisation and believes in quality, equal employment opportunities and good remuneration practices and has been able to maintain the same for the past several years.

It has many shareholders who prefer to receive a regular income from their investments. It has taken a loan of ₹ 40 lakhs from ICICI and is bound by certain restrictions on the payment of dividend according to the terms of loan agreement.
The above discussion about the company leads to various factors which decide how much of the profits should be retained and how much has to be distributed by the company.

Question 1.

‘It has been consistently earning good profits for many years’. This statement represents which factor affecting the dividend decision of Spun Ltd.?

(A) Cash flow position
(B) Stability of earnings
(C) Amount of earnings
(D) Stability of dividends
Answer:
(B) Stability of earnings

Explanation:
A company having stable earning is in a better position to declare higher dividends. As against this, a company having unstable earnings is likely to pay smaller dividend.

Question 2.

‘There is availability of enough cash in the company.’ This statement represents which factor affecting the dividend decision of Spun Ltd.?

(A) Cash flow position
(B) Stability of earnings
(C) Amount of earnings
(D) Access to capital market
Answer:
(A) Cash flow position

Explanation:
The payment of dividend involves an outflow of cash. A company may be earning profit but may be short on cash. Availability of enough cash in the company is necessary for declaration of dividend.

Question 3.

‘It has many shareholders who prefer to receive regular income from their investments.’ This statement represents which factor affecting the dividend decision of Spun Ltd.?

(A) Shareholders’ preference
(B) Legal constraints
(C) Cash flow position
(D) Access to capital market
Answer:
(A) Shareholders’ preference

Question 4.

‘It has taken a loan of ₹40 Lakhs from ICICI and is bound by certain restrictions on the payment of dividend according to the terms of loan agreement.’ This statement represents which factor affecting the dividend decision of Spun Ltd.?

(A) Shareholders’ preference
(B) Taxation policy
(C) Contractual constraints
(D) Legal constraints
Answer:
(C) Contractual constraints

Explanation:
While granting loans to a company, sometimes the lender may impose certain restrictions on the payment of dividends in future. The companies are required to ensure that the dividend does not violate the terms of the loan agreement in this regard.

MCQ Questions for Class 12 Business Studies with Answers

MCQ Questions for Class 12 Business Studies Chapter 8 Controlling

January 19, 2023January 18, 2023 by Prasanna

Controlling Class 12 MCQ Questions With Answers

Controlling MCQ Chapter 8 Class 12 Question 1.

Name the function of management which helps in the formulation of future plans, in the light of the problems that were identified and thus, helps in better planning in the future period.

(A) Planning
(B) Organising
(C) Directing
(D) Controlling
Answer:
(D) Controlling

Explanation:
Controlling means ensuring that activities in an organisation are performed as per the plAnswer: Controlling also ensures that an organisation’s resources are being used effectively and efficiently for the achievement of predetermined goals.

Question 2.

Identify an important principle of management control in which only significant deviations which go beyond the permissible limit should be brought to the notice of management.

(A) Management by control
(B) Control by exception
(C) Critical point control
(D) Both (A) and (B)
Answer:
(B) Control by exception

Explanation:
Management by exception, which is often referred to as control by exception, is ‘ an important principle of management control based on the belief that an attempt to control everything results in controlling nothing.

Question 3.

Which of the following steps in the Controlling process state that comparison becomes easier when standards are set in quantitative terms ?

(A) Analysing deviations
(B) Measurement of actual performance
(C) Comparing actual performance with standards
(D) Setting performance standards
Answer:
(C) Comparing actual performance with standards

Explanation:
This step involves comparison of actual performance with the standard. Such comparison will reveal the deviation between actual and desired results. Comparison becomes easier when standards are set in quantitative terms.

Question 4.

An important project at AMB Consultants is running behind schedule by a month. This has upset their clients and might affect the reputation of the company in the long run. No managerial action like assigning more workers, equipment or giving overtime has been able to solve the problem. What managerial action may now be taken by the company to avoid such a situation from arising in future?

(A) Revise the schedule
(B) Assigning additional workers and equipment to the project
(C) Get permission for further overtime work
(D) Both (B) and (C)
Answer:
(A) Revise the schedule

Question 5.

Controlling means ensuring that activities in an organisation are performed as per the …………. .

(A) Plans
(B) Goals
(C) Resources
(D) None of these
Answer:
(A) Plans

Explanation:
Once a plan becomes operational, controlling is necessary to monitor the progress, measure it, discover deviations and initiate corrective measures to ensure that events conform to plAnswer: Thus, controlling ensures that the activities in an organisation are performed as per the plAnswer:

Question 6.

What should be the ‘focus point’ for a manager while controlling, as controlling at each and every step is not possible?

(A) Special area
(B) Key result area
(C) Normal area
(D) None of these
Answer:
(B) Key result area

Explanation:
Control should focus on key result areas (KRAs) which are critical to the success of an organisation. These KRAs are set as the critical points.

Question 7.

An effort to control everything may end up in controlling nothing is related to:

(A) Critical Point Control ”
(B) Management by Exception
(C) Management by Information
(D) Key Result Areas
Answer:
(B) Management by Exception

Explanation:
Management by exception, which is often referred to as control by exception, is an important principle of management control based on the belief that an attempt to control everything results in controlling nothing.

Question 8.

What should be the ‘focus point’ for a manager while controlling, as controlling at each and every step is not possible?

(A) Analysing deviations
(B) Measurement of actual performance
(C) Comparing actual performance with standards
(D) Setting performance standards
Answer:
(A) Analysing deviations

Explanation:
Some degree of deviation in performance can be expected in all activities. Thus, it is essential to determine the permissible range these deviations.

Question 9.

“Employee know well in advance what they are expected to do and what are the standards of performance on the basis of which they will be appraised, which inturn help them to give better performance.”
Which importance of controlling is highlighted above?

(A) Facilitating coordination in action
(B) Making efficient use of resources
(C) Accomplishing organisational goals
(D) Improves employee motivation
Answer:
(D) Improves employee motivation

Explanation:
Controlling sets up some standard of employees and employees knows the standards against which their performance will be measured. It thus, increases employee otivation.

Question 10.

Match the FUNCTIONAL AREA in Column I with their respective STANDARDS set to gauge performance in Column II, as a part of the controlling function.

Column I	Column II
(a) Marketing	(i) Quality
(b) Production	(ii) Liquidity
(c) Human Resource Management	(iii) Advertising expenditures
(d) Finance and Accounting	(iv) Labour absenteeism

(A)(i), (iii), (iv), (ii)
(B) (iii), (i), (iv), (ii)
(C) (iv), (ii), (i), (iii)
(D) (iii), (i), (ii), (iv)
Answer:
(B) (iii), (i), (iv), (ii)

Assertion and Reason based MCQs

Question 1.

Assertion (A): Controlling ensures that resources are used in the most effective and efficient manner.
Reason (R): In controlling, each activity is performed in accordance with predetermined standards and norms.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
A good control system enables management to verify whether the standards set are accurate and objective. By exercising control, a manager seeks to reduce wastage and spoilage of resources.

Question 2.

Assertion (A): A small enterprise cannot afford to install an expensive control system.
Reason (R): Control system loses some of its effectiveness when standards cannot be defined in quantitative terms.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
Control is a costly affair as it involves a lot of expenditure, time and effort.A small enterprise cannot afford to install an expensive control system. It cannot justify the expenses involved. Managers must ensure that the costs of installing and operating a control system should not exceed the benefits derived from it.

Question 3.

Assertion (A): The controlling function measures progress towards the organisational goals.
Reason (R): Controlling guides the organisation and keeps it on the right track so that organisational goals might be achieved.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
Controlling as a function of management refers to the evaluation of actual performance of work against planned or standard performance and taking the corrective action, if necessary.

Question 4.

Assertion (A): Controlling creates an atmosphere of order and discipline in the organisation.
Reason (R): Controlling helps to minimise dishonest behaviour on the part of the employees by keeping a close check on their activities.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
Through controlling, company can track dishonest employees by using tools such as computer monitoring as a part of their control system.

Case-Based MCQs

I. Read the following text and answer the questions given below:

Vinay was the Chief Operating Officer of ‘Easy Solutions Ltd.’, a company providing advanced software solutions to Indian Defence Services. They had been carrying on business successfully for the last twelve years and earning enough profits. But from the last one year, they realised that though the business is getting big orders which are being fulfilled on time, even then the revenues kept on decreasing. Vinay was not able to find out where the problem was. He started keeping a close check on the progress of activities as he could sense that something was wrong.

He wanted to take some action before any major damage could be done to the business. Vinay appointed a cyber security expert who monitored the company’s processes and found out that the computer operator was deleting the entries from the computers and pocketing the revenues. He was caught and handed over to the police. This created an atmosphere of order and discipline in the organisation and helped in minimizing dishonest behaviour on the part of the employees.

Question 1.

Which management function proved helpful in creating an atmosphere of order and discipline in the organisation and helped in minimizing dishonest behaviour on the part of the employees?

(A) Planning
(B) Organizing
(C) Directing
(D) Controlling
Answer:
(D) Controlling

Explanation:
Controlling creates an atmosphere of order and discipline in the organisation. It helps to minimise dishonest behaviour on the part of the employees by keeping a close check on their activities.

Question 2.

What did the measurement of performance reveal?

(A) The company was earning enough profits.
(B) Declining revenues despite getting big orders which were being fulfilled on time.
(C) The company was running successfully.
(D) All of the above.
Answer:
(B) Declining revenues despite getting big orders which were being fulfilled on time.

Question 3.

What did the analysis by Vinay reveal ?

(A) Nothing was wrong.
(B) The computer operator was deleting the entries from the computers and pocketing the revenues.
(C) Vinay was not able to find out where the problem was.
(D) None of the above.
Answer:
(B) The computer operator was deleting the entries from the computers and pocketing the revenues.

Question 4.

What corrective action did Vinay take?

(A) He did not take any action as no major damage was done.
(B) Computer operator was caught and handed over to the police.
(C) Computer operator was warned with dire consequences.
(D) None of the above.
Answer:
(B) Computer operator was caught and handed over to the police.

II. Read the following text and answer the questions given below:

Sameer Sweets, a renowned name for quality sweets since 1950 had maintained its standards ever since then. It is an ancestral sweet shop and Sana, the present owner of Sameer Sweets, is the third generation entrepreneur who has taken the charge of the sweet shop from her father. Sana has been handling her responsibilities exceptionally well except that she was worried as the sales had declined during the last three months despite her best efforts and involvement in business.

When she enquired from the Sales Manager, Ajay, he reported that there were some complaints about the quality of sweets from many customers recently. Therefore, Sana ordered for sample checking of sweets by her quality control team. The team investigated and reported to Sana. She realized that during peak demand, quality was being compromised by her team to satisfy the customers. She decided to invest more capital in order to increase production to be able to meet the increasing demand especially during peak seasons like festivals and marriage catering.

Question 1.

‘…a renowned name for quality sweets since 1950 had maintained its standards ever since then.’ Which step does this represent in the controlling process?

(A) Setting performance standards
(B) Measurement of actual performance
(C) Comparison of actual performance with standards.
(D) Analysis of deviations
Answer:
(A) Setting performance standards

Explanation:
Standards are the criteria against which actual performance would be measured.Thus, standards serve as benchmarks towards which an organisation strives to work, Standards can be set in both quantitative as well as qualitative terms.

Question 2.

‘.. .sales had declined during the last three months.’ Which step does this represent in the controlling process?

(A) Measurement of actual performance
(B) Comparison of actual performance with standards
(C) Analysis of deviations
(D) Taking corrective action
Answer:
(A) Measurement of actual performance

Explanation:
Performance should be measured ’ in an objective and reliable manner. There are several techniques for measurement of performance.

Question 3.

‘…Sana ordered for sample checking of sweets by her quality control team.’ Which step does this represent in the controlling process?

(A) Measurement of actual performance
(B) Comparison of actual performance with standards
(C) Analysis of deviations
(D) Taking corrective action
Answer:
(C) Analysis of deviations

Explanation:
Some deviation in performance can be expected in all activities. It is therefore, important to determine the acceptable range of deviations. Also, deviations in key areas of business need to be attended more urgently as compared to deviations in certain insignificant areas. Critical point control and management by exception should be used by a manager in this regard.

Question 4.

‘She decided to invest more money in order to increase production to be able to meet the increasing demand….’ Which step does this represent in the controlling process?

(A) Measurement of actual performance
(B) Comparison of actual performance with standards
(C) Analysis of deviations
(D) Taking corrective action
Answer:
(D) Taking corrective action

Explanation:
No corrective action is required when the deviations are within acceptable limits. However, when the deviations go beyond the acceptable range, especially in the important areas, it demands immediate managerial attention so that deviations do not occur again and standards are accomplished,

III. Read the following text and answer the questions given below:

A critical point control (CPC) approach is followed by McDonald in the cooking and handling process so that any food safety threat can be prevented, eliminated, or reduced to an acceptable level. Hence, continuous monitoring of activities are undertaken to ensure that the process is right at each critical point control. The main principle followed for cooking at McDonald is “less amount many time” which can ensure the high quality and high fresh level of the food.

For instance, if four hamburgers have to be made, a worker cannot cook all the four hamburgers at one time. The time figured out for making one hamburger is one hundred and forty-five seconds. Moreover, nearly all foods in the McDonald have the specific holding time, the holding time for hamburgers is ten minutes and for french fries is seven minutes. If it is not sold within that time it is thrown away. Also, the temperature of the milk sent by the supplier must be under 4° C, otherwise, it will be returned.

Question 1.

Which of the following steps involved in the controlling process is discussed in the above lines?

(A) Analysing deviation
(B) Taking corrective action
(C) Both (A) and (B)
(D) Setting Performance Standards
Answer:
(C) Both (A) and (B)

Question 2.

Which of the following statements is true with respect to critical point control?

(A) Control focus on key result areas
(B) CCPs may be located at any point in the food production plant where hazards need to be prevented, eliminated, or reduced to acceptable levels.
(C) It helps in saving time, and thus manager can focus on other relevant issues.
(D) All of the above.
Answer:
(D) All of the above.

Explanation:
Critical point control means keeping focus on some key areas and if there is any deviation in these key areas, and then it must be attended urgently. Key areas are those which have impact on whole organisation.

Question 3.

Identify the point which highlights the importance of the controlling function in the above text.

(A) Accomplishing organisational goals
(B) Making efficient use of resources
(C) Judging accuracy of standards
(D) All of the above
Answer:
(D) All of the above

Question 4.

Which feature of controlling is highlighted in the above text?

(A) Control is a continuous process.
(B) Control is all pervasive.
(C) Action is the essence of control.
(D) Control is forward looking.
Answer:
(A) Control is a continuous process.

Explanation:
Controlling is an ongoing and dynamic function of management. It involves a continuous review of performance and is not a one-time exercise. The period of control normally depends upon the nature of work, the amount of work and the policies of management.

MCQ Questions for Class 12 Business Studies with Answers

MCQ Questions for Class 12 Business Studies Chapter 7 Directing

January 19, 2023January 18, 2023 by Prasanna

Directing Class 12 MCQ Questions With Answers

Directing MCQ Chapter 7 Class 12 Question 1.

Under which of the following function of management, employees are guided and inspired:

(A) Directing
(B) Planning
(C) Controlling
(D) Organizing
Answer:
(A) Directing

Explanation:
Directing guides employees to fully realise their potential and capabilities by motivating and providing effective leadership. A good leader can always identify the potential of his employees and motivate them to extract work upto their full potential.

Directing Class 12 MCQ Chapter 7 Question 2.

Directing is initiated at…………….. level of management.

(A) Lower
(B) Middle
(C) Top
(D) All of these
Answer:
(C) Top

Explanation:
Directing is first initiated at f top level and flows to the bottom through organisational hierarchy. It means that every manager can direct his immediate subordinate and take instructions from his immediate boss.

Question 3.

Which of the following is not the element of Directing?

(A) Delegation
(B) Leadership
(C) Motivation
(D) Communication
Answer:
(A) Delegation

Explanation:
The elements of directing are Supervision, Motivation, Leadership and Communication.

Question 4.

A company wants to replace manual production technique with mechanised techniques. Labour unions are resisting this change. Which function of management will help in the introduction of this change?

(A) Planning
(B) Organising
(C) Controlling
(D) Directing
Answer:
(D) Directing

Explanation:
Directing facilitates introduction of needed changes in the organisation. Generally, people have a tendency to resist changes in the organisation. Effective directing through motivation, communication and leadership helps to reduce such resistance and develop required cooperation in introducing changes in the organisation.

Question 5.

Which of the following statements is true about directing?

(A) Directing is necessary at planning stage.
(B) Directing is needed at every level of management in each department.
(C) Directing is initiated at lower level of management.
(D) Directing is the least important function of management.
Answer:
(B) Directing is needed at every level of management in each department.

Explanation:
Motivation is an internal feeling. The urge, drives, desires, aspirations, striving or needs of human being, which are internal, influence human behaviour.

Explanation:
Directing takes place at every level of management: Every manager, from top executive to supervisor performs the function of directing.

Question 6.

Directing takes place between who among the following:

(A) Superior-Superior
(B) Superior-Subordinate
(C) Subordinate-Subordinate
(D) All of the above
Answer:
(B) Superior-Subordinate

Explanation:
Every manager, from top executive to supervisor performs the function of directing. Directing takes place wherever a superior subordinate relations exist.

Question 7.

Match the ELEMENTS of Directing in Column I with their correct EXPLANATION in Column II

Column I	Column II
(a) Supervision	(i) Friendship
(b) Motivation	(ii) Recognition
(c) Leadership	(iii) Achievement of goals
(d) Communication	(iv) Stability of income

(A) (i), (iii), (iv), (ii)
(B) (ii), (iii), (i), (iv)
(C) (iv), (ii), (i), (iii)
(D) (ii), (i), (iii), (iv)
Answer:
(C) (iv), (ii), (i), (iii)

Question 8

…………………… is an inner state that energises, activates or moves and directs behaviour towards goals.

(A) Motivation
(B) Motive
(C) Motivators
(D) All of the above
Answer:
(B) Motive

Explanation:
A motive is an inner state that energises, activates or moves and directs behaviour towards goals. Motives arise out of the needs of individuals. Realisation of a it motive causes restlessness in the individual which prompts some action to reduce such restlessness.

Question 9.

Which of the following Maslow’s needs refer to affection, sense of belongingness, acceptance and friendship?

(A) Esteem Needs
(B) Self-Actualisation Needs
(C) Affiliation/Belonging Needs
(D) Safety/Security Needs
Answer:
(C) Affiliation/Belonging Needs

Explanation:
Man is a social animal. He wanted to live in the society honourably. Therefore, he wants friends and relatives with whom he can share his joys and sorrows. Social needs include need for love, affection, friendship, etc.

Question 10.

Which of the following Maslow’s needs include factors such as self-respect, autonomy status, recognition and attention?

(A) Esteem Needs
(B) Self-Actualisation Needs
(C) Affiliation/Belonging Needs
(D) Safety/Security Needs
Answer:
(A) Esteem Needs

Explanation:
Esteem needs are of two types: internal esteem needs (self-respect, confidence, competence, achievement and freedom) and external esteem needs (recognition, power, status, attention and admiration).

Question 11.

Which of the following is a financial incentive?

(A) Productivity linked wage incentive
(B) Organisational climate
(C) Status
(D) Job enrichment
Answer:
(A) Productivity linked wage incentive

Explanation:
Several wage incentive plans aims at linking payment of wages to increase in productivity at individual or group level.

Question 12.

CPA Services CEO, Abhishek Nigam’s compensation includes salary, commission and other allowances. The company also pays for his insurance and vacations. Identify one indirect payment being made by the company to the CEO.

(A) Employer paid insurance
(B) Salary
(C) Commission
(D) All of the above
Answer:
(A) Employer paid insurance

Question 13.

Which of the following statements is incorrect regarding Motivation?

(A) It is the process of stimulating subordinates to act in a desired manner to achieve certain organisational goals.
(B) It produces goal-directed behaviour.
(C) It is an external feeling of an individual
(D) It is mainly based on needs of individuals.
Answer:
(C) It is an external feeling of an individual

Question 14.

What is the effect of motivation on all the employees of an organisation?

(A) Invariable
(B) Same
(C) Variable
(D) Uniform
Answer:
(C) Variable

Question 15.

Match the NEEDS as per Maslow’s Need Hierarchy Theory of Motivation in Column I with their correct Examples in Column II

Column I	Column II
(a) Security Needs	(i) Friendship
(b) Self Actualisation Needs	(ii) Recognition
(c) Esteem Needs	(iii) Achievement of goals
(d) Belonging Needs	(iv) Stability of income

(A) (i), (iii), (iv), (ii)
(B) (iv), (iii), (ii), (i)
(C) (iv), (ii), (i), (iii)
(D) (ii), (i), (iii), (iv)
Answer:
(B) (iv), (iii), (ii), (i)

Question 16.

Which of the following qualities of a leader states that he should have the capacity to clearly explain his ideas and make the people understand his ideas?

(A) Knowledge
(B) Motivation skills
(C) Initiative
(D) Communication skills
Answer:
(D) Communication skills

Explanation:
A leader should be a good communicator He should have the capacity to clearly explain his ideas and make the people to understand his ideas. He should not only be a good speaker but a good listener, teacher, counsellor and persuader.

Question 17.

Which of the following statements is false with respect to a leader?

(A) Leader provides training to his subordinates.
(B) A leader maintains personal relations and helps followers in fulfilling their needs.
(C) Leader plays a key role in introducing required changes in the organisation.
(D) None of the above
Answer:
(D) None of the above

Explanation:
A leader maintains personal relations and helps followers in fulfilling their needs. He provides needed confidence, support and encouragement and thereby creates congenial work environment. Leader plays a key role in introducing required. changes in the organisation. He persuades, clarifies and inspires people to accept changes whole-heartedly.

Question 18.

Mr. Prateek Goyal, the Ex-chairman of India Original Ltd., built up his successor before retiring. Following the norms set up by himself, he handed over the reins of the company to the co-founder Mr. Arvind Mishra, who had the potential to bring about change in the behaviour of others. Name the concept of management which was the reason, why Mr. Prateek Goyal choose Mr. Arvind Mishra to be his successor.

(A) Motivation
(B) Leadership
(C) Communication
(D) Staffing
Answer:
(B) Leadership

Explanation:
Leadership influences the behaviour of people and makes them to positively contribute their energies for the benefit of the organisation. Good leaders always produce goods results through their followers.

Question 19.

Which of the following statements is not true regarding Democratic Style of Leadership?

(A) The leader exercises more control by using forces within the group.
(B) The leader encourages subordinates to participate in decision making.
(C) The leader gives orders and insists that they are obeyed.
(D) The leader supports and respects the ubordinates’ opinion.
Answer:
(C) The leader gives orders and insists that they are obeyed.

Explanation:
An autocratic leader gives orders and expects his subordinates to obey those orders. If a manager is following this style, then communication is only one-way with the subordinate only acting according to the command given by the manager.

Question 20.

Which of the following statements is true regarding Laissez Faire Style of Leadership?

(A) The leader gives complete freedom to the subordinates.
(B) The leader gives orders and insists that they are obeyed.
(C) The leader does not change or wish to be contradicted.
(D) All are true.
Answer:
(A) The leader gives complete freedom to the subordinates.

Explanation:
It refers to a style where the leader gives his subordinates complete freedom to take the decisions. Such a leader does not believe in the use of power unless it is absolutely essential. The followers are given a high degree of independence to formulate their own objectives and ways to achieve them.

Question 21.

Mr. Saxam, production manager of Creative Concepts, discusses with his staff about the new export order. All the staff members unanimously agree that they all will work together to do overtime to complete the order and meet the deadline.
Mr. Saxam is following ……………… Leadership Style.

(A) Democratic
(B) Autocratic
(C) Authoritative
(D) LaissezFaire
Answer:
(A) Democratic

Explanation:
A democratic leader will develop action plans and makes decisions in consultation with his subordinates. He will encourage them to participate in decision-making.

Question 22.

When a leader is a role model to others regarding ethics and values, he is said to possess the quality of………………

(A) Initiative
(B) Integrity
(C) Self-confidence
(D) Decisiveness
Answer:
(B) Integrity

Question 23.

Match the QUALITIES of a good leader in Column I with their correct EXPLANATIONS in Column II

Column I	Column II
(a) Initiative	(i) Being firm and not changing opinions frequently.
(b) Social skills	(ii) Not waiting for opportunities to come but rather grabbing the opportunity and using it to the advantage of the organisation.
(c) Decisiveness	(iii) Capacity to clearly explain the ideas and make the people understand them.
(d) Communication skills	(iv) Being friendly with his colleagues and followers.

(A) (i), (iii), (iv), (ii)
(B) (iv), (hi), (ii), (i)
(C) (iv), (ii), (i), (iii)
(D) (ii), (iv), (i), (iii)
Answer:
(D) (ii), (iv), (i), (iii)

Question 24.

…………………… is the process of converting encoded symbols of the sender.

(A) Encoding
(B) Decoding
(C) Media
(D) All of these
Answer:
(B) Decoding

Explanation:
It is the process of converting the f symbols encoded by the sender. After decoding the message is received by the receiver.

Question 25.

……………… communication takes place between one division and another.

(A) Horizontal
(B) Vertical
(C) Informal
(D) None of these
Answer:
(A) Horizontal

Explanation:

Horizontal or lateral communication takes place between one division and another. For example, a production manager may contact marketing manager to discuss about schedule of product delivery, product design, quality, etc.

Question 26.

Which of the following statements is true regarding ‘Communication?

(A) Communication acts as a basis for coordination.
(B) Communication is basis to an organisation’s existence, right from its birth through its continuing life.
(C) It is a process by which people create and share information with one another in order to reach at a common understanding.
(D) All of the above
Answer:
(D) All of the above

Assertion and Reason Based MCQs

Question 1.

Assertion (A): Directing is a key managerial function.
Reason (R): Directing is a continuous activity.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
Directing is a key managerial function. A manager has to perform this function along with planning, organising, staffing and controlling while discharging his duties in the organisation. While other functions prepare a setting for action, directing initiates actions in the organisation. Directing is a continuous! activity. It takes place throughout the life of the organisation irrespective of people occupying managerial positions.

Question 2.

Assertion (A): Supervisor acts as a link between workers and management.
Reason (R): Supervisor plays a key role in maintaining group unity among workers placed under his control.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
Supervisor acts as a link between workers and management. He conveys management ideas to the workers on one hand land workers problems to the management on the other. This role played by supervisor helps to avoid misunderstandings and conflicts between management and workers/employees.

Question 3.

Assertion (A): Motivation is the technique used to motivate people in an organisation.
Reason (R): Negative motivation provides positive rewards like increase in pay, promotion, recognition, etc.

Answer:
(C) (A) is true, but (R) is false.

Explanation:
Motivator is the technique used to motivate people in an organisation. Managers use diverse motivators like pay, bonus, promotion, recognition, praise, responsibility, etc., in the organisation to influence people to contribute their best. Positive motivation provides positive rewards like increase in pay, promotion, recognition, etc.

Question 4.

Assertion (A): Motivation helps to change negative or indifferent attitudes of employee to positive attitudes so as to achieve organisational goals.
Reason (R): Motivation helps to improve performance levels of employees as well as the organisation.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
Good and positive motivation in the organisation helps to achieve higher levels of performance as motivated employees contribute their maximum efforts for organisational goals.

Question 5.

Assertion (A): Maslow’s Theory focuses on the needs as the basis for motivation.
Reason (R): Motivation theory helps managers to realise that need level of employee should be identified to provide motivation to them.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
Maslow’s hierarchy of needs is a theory by Abraham Maslow, which puts forward that people are motivated by five basic categories of needs: physiological, safety, love, esteem, and self-actualization.

Question 6.

Assertion (A): A leader maintains personal relations and helps followers in fulfilling their needs.
Reason (R): A leader handles conflicts effectively and does not allow adverse effects resulting from the conflicts.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:

A good leader always allows his followers to ventilate their feelings and disagreement but persuades them by giving suitable clarifications.

Question 7.

Assertion (A): Communication provides needed information for decision making.
Reason (R): Communication acts as basis of planning.

Answer:
(C) (A) is true, but (R) is false.

Explanation:
Communication acts as basis off coordination. It provides coordination among departments, activities and persons in the organisation. Such coordination is provided by explaining about organisational goals, the mode I of their achievement and inter relationships between different individuals, etc.

Case-Bassd MCQs

I. Read the following text and answer the following questions on the basis of the same:

Mr. Sunil Diali is a safety officer in a reputed PSU sector ECL. He supervises the workers towards the predetermined goals of the organisation and directs how to eradicate unsafe practices of inundation, fire breakouts, existence of inflammable gases, etc. On one such instances there was huge fire breakout in the underground mines and the workers morale was down and demotivated because of several risk hazards.

Mr. Diali observed the whole situation and consulted with all his workers and constantly monitored, guided and inspired them to integrate their efforts and accept the situation as a challenge and take adequate safety measures for fire extinguish and subsidizing its effects. Thereby, production turnover was outstanding and outperformed other subsidiaries. Mr. Diali was recognized with Bravery Award from CIL.

Question 1.

Mr. Diali worked towards predetermined goals of the organization. Which important function of directing is addressed here?

(A) Means of motivation
(B) Initiates action
(C) Facilitate change
(D) Brings stability
Answer:`
(C) Facilitate change

Explanation:
Directing is the starting point of action. It initiates action based on planning,organising and staffing. Action is initiated when the managers provide direction to their subordinates for carrying out the task. Therefore, the directing function provides a set of guidelines to the employees on how to start working towards achieving the goals of the organisation.

Question 2.

Mr. Diali consulted with all his workers, he listened to their opinions. Which form of leadership is identified here?

(A) Laissez-faire
(B) Autocratic
(C) Democratic
(D) Free-rein
Answer:
(C) (A) is true, but (R) is false.

Explanation:
It refers to a style where the leader consults its subordinates before taking the final decision.

Question 3.

Bravery award is………………………………….. form of non-financial incentive.

(A) Status
(B) Job security
(C) Career advancement
(D) Employee recognition
Answer:
(C) (A) is true, but (R) is false.

Explanation:
Recognition means acknowledge-ment with a show of appreciation. When such appreciation is given to the work performed by employees, they feel motivated to perform at higher level.

Question 4.

Under Maslow’s hierarchy need theory which need of Mr. Diali has been met through respect and recognition among other employees?

(A) Self-Actualization need
(B) Safety and security needs
(C) Esteem needs
(D) Physiological needs
Answer:
(C) (A) is true, but (R) is false.

Explanation:
At the fourth level in Maslow’s hierarchy is the need for appreciation and respect. When the needs at the bottom three levels have been satisfied, the esteem needs begin to play a more prominent role in motivating behaviour.

II. Read the following text and answer the questions given below:

Hema is a permanent employee of a very large company called Global Pvt. Ltd. She has been working with the company for the last 5 years and is now eligible for retirement benefits as well. She likes her work and performs her responsibilities with due diligence. She has always displayed utmost dedication while being at work. As per the job agreement, she had to work for 40 hours per week and was free to work overtime. Hema worked overtime during the weekdays and on some occasions, she also used to work on weekends for 8 to 10 hours. On account of which she fell sick and had to take leave from her work as she got hospitalized for a fairly long period of time.

The company did not show any concern and neither did it enquire about her health. She realised that on one hand, she was able to fulfill only some of her needs as she only had the stability of income and pension plans since she had completed 5 years already with the organization. On the other hand some other needs still remained unfulfilled which she realized on account of the indifferent attitude of the company during her sickness. Thus, Hema felt that though her most basic needs are being met as per Maslow’s need hierarchy theory, she has a long way to go before her highest level needs are met.

Question 1.

Which of the following need of Hema is being fulfilled?

(A) Security needs
(B) Belongingness needs
(C) Esteem needs
(D) All of the above
Answer:
(A) Security needs

Explanation:
Once an individual’s physiological needs are satisfied, the needs for security and safety become salient. People want to experience order, predictability and control in their lives. These needs can be fulfilled by the family and society (e.g. police, schools, business and medical care).

Question 2.

Which need of Hema is not being fulfilled ?

(A) Belongingness Needs
(B) Esteem Needs
(C) Both (A) and (B)
(D) Neither (A) nor (B)
Answer:
(C) Both (A) and (B)

Question 3.

In the light of the above case, what are the most basic needs of Hema known as?

(A) Safety needs
(B) Affiliation needs
(C) Physiological needs
(D) Self-actualization Needs
Answer:
(C) Physiological needs

Explanation:
These refer to basic physical needs like drinking when thirsty or eating when hungry.

Question 4.

In the light of the above case, which is the highest level of needs of Hema which she believes will take a fairly long time to fulfill?

(A) Security needs
(B) Belongingness needs
(C) Esteem needs
(D) Self-actualization needs
Answer:
(D) Self-actualization needs

Explanation:
Self actualisation needs are concerned with becoming what a person is capable of becoming. These needs include need for growth, self fulfillment, etc.

III. Read the following text and answer the questions given below:

Zeba Ltd., an e-commerce company operating for the past 10 years, is a company which strongly believes in motivating its employees by offering them various incentives. It is so because they are very focused on their goals and objectives and want their people to improve their performance because there is a lot of competition in the market and Zeba Ltd. has the vision to become the market leader in the next 5 years. Aman, who is an alumnus of IIM Ahmedabad and has done his specialization in Marketing, is a marketing employee employed with the company for the last 3 years has often been rewarded with a pay hike for his growing performance.

Samay, who is a Chartered Accountant and has been working in the company for the last 7 years, is from the finance department and has been allotted some shares by the management in lieu of various incentives payable in cash for his continuous efforts towards ensuring timely availability of funds and their effective utilization at all times. Aadvika, who recently graduated from FMS Delhi, is working in the Human Resources department of the company and joined as a contractual employee but is now on the payrolls of the company.The company also organizes annual functions to provide public appreciation to its high performers as it strongly believes in uplifting their spirits towards working for the company as well as preventing them from joining their competitors.

Question 1.

What type of incentive has been provided to Aman?

(A) Profit sharing
(B) Bonus
(C) Pay and allowances
(D) Stock option
Answer:
(C) Pay and allowances

Explanation:
For every employee, salary is the basic monetary incentive. It includes basic pay, dearness allowance and other allowances. Salary system consists of regular increments in the pay every year and enhancement of allowances from time-to-time.

Question 2.

What type of incentive has been provided to Samay?

(A) Retirement benefits
(B) Perquisites
(C) Pay and allowances
(D) Co-partnership
Answer:
(D) Co-partnership

Explanation:
Under these incentive schemes, employees are offered company shares at a set price which is lower than market price. Sometimes, management may allot shares in line of various incentives payable in cash.

Question 3.

What type of incentive has been provided to Aadvika?

(A) Job enrichment
(B) Job security
(C) Employee participation
(D) Employee empowerment
Answer:
(B) Job security

Explanation:
Employees want their job to be secure. They want certain stability about future income and work so that they do not feel worried on these aspects and work with greater zeal.

Question 4.

What type of incentive does the company provide by organizing annual functions to provide public appreciation to its high performers?

(A) Employee recognition programmes
(B) Job security
(C) Career advancement opportunity
(D) Employee empowerment .
Answer:
(A) Employee recognition programmes

Explanation:
Every employee wants to be considered as an important part of the organisation. Work of an organisation should be distributed in such a way that every employee feels that his work is yield and he is capable to do that work. This motivates the worker and he works hard and in a responsible manner.

IV. Read the following text and answer the questions given below:

ABC Ltd. is a company which is successfully running in the insurance sector for the past 15 years. It is one of the leading companies and Mr. Ghosh, the Zonal Sales Head has been working in the company for the past 8 years spearheading its sales continuously. He has a wide and rich experience in the insurance sector and has worked with two other major insurance companies previously. In the company, the employees always feel that they are under enormous unnecessary stress, as their manager Mr. Ghosh does not provide any information about future plans but simply instructs them what to do. He also does not listen to any of the suggestions given by the subordinates.

Mr. Ghosh does not provide any flexibility to his subordinates; he is extremely rigid while taking decisions and does not like to be interrupted. Thus, he is extremely unpopular as a manager due to his leadership style. But Mr. Ghosh strongly believes in his style of leadership and has seen effective results on account of this. He has been able to increase the sales number of insurance policies in the last quarter of the financial year for the past three years in a row and thus has been able to meet the annual sales targets successfully. On account of this, he has been awarded the ‘Best Employee’ Trophy for two years by the management.

Question 1.

What is the leadership style of the manager, Mr. Ghosh?

(A) Autocratic
(B) Democratic
(C) Laissezfaire
(D) Participative
Answer:
(A) Autocratic

Question 2.

Citing from the above paragraph, which of the following features does Mr. Ghosh depict in his leadership style identified in Question l. above ?

(A) Such a leader does not change or wish to be contradicted.
(B) Such a leader respects the other’s opinion and supports his subordinates.
(C) Such a leader gives a high degree of independence to his followers.
(D) All of the above
Answer:
(A) Such a leader does not change or wish to be contradicted.

Question 3.

Quoting lines from the paragraph, in which circumstances has Mr. Ghosh’s leadership style proved effective?

(A) In meeting the annual sales target.
(B) In increasing his team’s productivity in the last quarter.
(C) Both (A) and (B)
(D) Neither (A) nor (B)
Answer:
(C) Both (A) and (B)

Question 4.

What is the nature of communication in the leadership style of Mr. Ghosh identified in Q 1. above?

(A) Informal and Two-way
(B) Informal and One-way
(C) Formal and Two-way
(D) Formal and One-way
Answer:
(D) Formal and One-way

MCQ Questions for Class 12 Business Studies with Answers

MCQ Questions for Class 12 History Chapter 13 Mahatma Gandhi and the Nationalist Movement: Civil Disobedience and Beyond with Answers

January 19, 2023January 18, 2023 by Prasanna

Check the below NCERT MCQ Questions for Class 12 History Chapter 13 Mahatma Gandhi and the Nationalist Movement: Civil Disobedience and Beyond with Answers Pdf free download. MCQ Questions for Class 12 History with Answers were prepared based on the latest exam pattern. We have provided Mahatma Gandhi and the Nationalist Movement Class 12 History MCQs Questions with Answers to help students understand the concept very well. https://mcqquestions.guru/mcq-questions-for-class-12-history-chapter-13/

Mahatma Gandhi and the Nationalist Movement Class 12 MCQs Questions with Answers

MCQ On Mahatma Gandhi And The National Movement Chapter 13 Question 1.
Where did Gandhi use Satyagraha for the first time?
(a) India
(b) South Africa
(c) South America
(d) England

Answer

Answer: (b) South Africa

Mahatma Gandhi And The National Movement MCQ Class 12 Question 2.
_______ was the moderate leader of Congress
(a) Lala Lajpat Rai
(b) Bipin Chandra Pal
(c) Bal Gangadhar Tilak
(d) Gopal Krishna Gokhale

Answer

Answer: (d) Gopal Krishna Gokhale

Mahatma Gandhi And National Movement MCQ Chapter 13 Question 3.
Gandhiji took back Non Cooperation movement in __________
(a) January 1921
(b) February 1922
(c) February 1921
(d) January 1922

Answer

Answer: (b) February 1922

Civil Disobedience Movement MCQ Chapter 13 Question 4.
Peasant Satyagraha at Bardoli was hold in ___________
(a) 1928
(b) 1929
(c) 1930
(d) 1931

Answer

Answer: (a) 1928

Class 12 History Chapter 13 MCQ Question 5.
________ was the congress President at its Lahora Session.
(a) Mahatma Gandhi
(b) Jawahar Lai Nehru
(c) Sardar Patel
(d) Subhash Chandra Bose

Answer

Answer: (b) Jawahar Lal Nehru

MCQ Questions For Class 6 History Chapter 13 Question 6.
Dandi March brought forward _________
(a) Non-Cooperation Movement
(b) Civil Disobedience Movement
(c) Quit India Movement
(d) Rowlatt Satyagraha

Answer

Answer: (b) Civil Disobedience Movement.

Mahatma Gandhi And The National Movement MCQ Class 12 Question 7.
Congress Ministries resigned in _________
(a) Oct. 1937
(b) Sept. 1938
(c) Sept 1940
(d) Oct. 1939

Answer

Answer: (d) Oct. 1939

MCQs On Civil Disobedience Movement Chapter 13 Question 8.
Consider the following events:
1. Jallianwala Bagh Massacre
2. Khilafat Movement
3. Formation of Swaraj Party
4. Arrival of Simon Commission
The correct chronological order of these events is:
(a) 1, 2, 3, 4
(b) 4, 3, 2, 1
(c) 2, 3, 4, 1
(d) 3, 4, 2, 1

Answer

Answer: (a) 1, 2, 3, 4

Mahatma Gandhi And The National Movement MCQs Chapter 13 Question 9.
Indicate which of the following options is not correct:
(a) Muslim League demanded Pakistan in 1946.
(b) Gandhi ji started Quit India Mission in 1942.
(c) Cripps Mission failed to achieve its objective.
(d) Cabinet Mission arrived in India in 1946.

Answer

Answer: (a) Muslim League demanded Pakistan in 1946.

MCQ On Civil Disobedience Movement Chapter 13 Question 10.
Consider the following statements regarding the Indian freedom struggle:
(a) Gandhi Ji withdrew from the non-cooperation movement due to the chauri chaura incident.
(b) Gandhi Ji gave his first public speech at BHU.
(c) Mahatma Gandhi was arrested in 1921 A.D.
(d) Nehru was the congress President at the Lahore session.
Which of the given statements is false?

Answer

Answer: (c) Mahatma Gandhi was arrested in 1921 A.D.

Question 11.
Consider the following events:
(1) Formation of Swaraj Party
(2) Second round Table conference
(3) Arrival of Simon Commission
(4) Gandhi-Irwin Pact
Their correct chronological order is:
(a) 1, 2, 3, 4
(b) 1, 3, 2, 4
(c) 1, 3, 4, 2
(d) 1, 4, 3, 2

Answer

Answer: (c) 1, 3, 4, 2

Question 12.
Consider the following events:
1. Jallianwala Bagh Massacre
2. Withdrawl of Non-Cooperation Movement
3. Beginning of Khilafat Movement
4. Formation of Swaraj Party
Their correct Chronological order is:
(a) 1, 2, 3, 4
(b) 1, 3, 4, 2
(c) 1, 3, 2, 4
(d) 3, 2, 4, 1

Answer

Answer: (c) 1, 3, 2, 4

We hope the given NCERT MCQ Questions for Class 12 History Chapter 13 Mahatma Gandhi and the Nationalist Movement: Civil Disobedience and Beyond with Answers Pdf free download will help you. If you have any queries regarding CBSE Class 12 History Mahatma Gandhi and the Nationalist Movement MCQs Multiple Choice Questions with Answers, drop a comment below and we will get back to you soon.

Financial Markets Class 12 MCQ Questions With Answers

Which of the following statements is false regarding financial market?

The money market is a market for short-term funds which deals in monetary assets whose period of maturity is:

Which of the following money market instrument is also known as Zero Coupon Bonds?

……………… is short-term finance repayable on demand, with a maturity period of one day to fifteen days.

Zakira Ltd. wants to invest in treasury bills issued by RBI. What will be the minimum amount to be invested in Treasury Bill?

Mahindra Bank wants short-term finance for only one or two days. What option should it pick?

Aman had 55 shares of Vani Ltd. He wanted to sell 30 shares, so he went for a specific market to sell them through online portal. He went for which of following markets?

Which of the following statements is incorrect regarding Financial Markets?

Match the FUNCTIONS of Financial Markets in Column I with their correct MEANING in Column II

Which of the following is a function of the stock exchange?

The organisation/institution which provides scope for speculation is:

………….. is an institution or organisation, which holds securities in electronic form, in which trading is done.

Which of the following can be a depository participant (DP)?

It has been made compulsory to settle all trades within how many days of the trade date on a rolling settlement basis?

………….. is a legally enforceable document and helps to settle disputes claims between the investor and the broker. It contains details of the number of shares bought or sold, the price, the date and time of deal, and the brokerage charges.

NSE and BSE are types of………….. .

Match the STEPS for screen-based trading for buying and selling of securities by an investor in Column I with their correct EXPLANATION in Column II.

Which of the following stands for SEBI?

Which of the following is are the ‘Developmental Functions’ of Securities and Exchange Board of India?

Which is the apex statutory body of capital market to which customers can complain to redress their grievances ?

The basic purpose of SEBI is to create an environment to facilitate efficient mobilisation and allocation of resources through the securities markets. Who are the constituents of this market for whom SEBI aims at creating a conducive environment?

Which of the following is not a Protective Function performed by SEBI?

The Securities and Exchange Board of India was established by the Government of India and was given a statutory status in…………

Match the FUNCTIONS of SEBI in Column I with the respective EXPLANATION in Column II:

Assertion (A): Certificates of Deposit (CD) are secured, negotiable, long-term instruments in bearer form. Reason (R): A rise in call money rates makes other sources of finance such as commercial paper and certificates of deposit cheaper in comparison as banks raise funds from these sources.

Assertion (A): A commercial bill is a bill of exchange used to finance the working capital requirements of business firms. Reason (R): Commercial bill is a short-term, negotiable, self-liquidating instrument which is used to finance the credit sales of firms.

Assertion (A): The primary market is also known as the new issues market. Reason (R): It deals with new securities being issued for the first time.

Assertion (A): An ideal capital market is one where finance is available at reasonable cost. Reason (R): Capital market is a market where low risk, unsecured and short-term debt instruments that are highly liquid are issued and actively traded everyday.

Assertion (A): Stock exchange contributes to economic growth. Reason (R): Through the process of disinvestment and reinvestment savings get channelised into their most productive investment avenues.

Assertion (A): Stock exchange is an unorganised market. Reason (R): Stock exchange makes complete information available to public in regard to prices and volume of transactions taking place every day.

Assertion (A): Stock exchange provides safety to dealings and investment. Reason (R): Transactions on the stock exchange are conducted only amongst its members with adequate transparency.

Assertion (A): Demat account refers to an account which an Indian citizen must open with the DPs to trade in listed securities in electronic form. Reason (R): Depository is like a bank in which an investor can deposit and withdraw his shares.

Assertion (A): Government of India decided to set-up a separate regulatory body known as Securities and Exchange Board of India. Reason (R): SEBI was set up to prevent trading malpractices and achieve a balance between self regulation by the securities industry and its statutory regulation.

Assertion (A): Controlling insider trading and imposing penalties for such practices is a protective function of SEBI. Reason (R): Registration of collective investment schemes and Mutual Funds is a development function of SEBI.

Assertion (A): The objective of SEBI is to maintain a balance between statutory regulations and self regulation. Reason (R): The objective of the Primary Market Advisory Committee is to advise SEBI on issues related to the development of primary market in India.

Identify the method of floatation of new issues in the primary market, not taken up by ISQAA SOLAR LTD.

Identify the reason which has made the firm raise funds from the institutional investors:

How much money was raised by the company through E-IPO’s?

Which type of money market instrument was issued by the company in the earlier part ?

Which method of floatation was adopted by the company three months later ?

When the company repeated the same process again after three months, it faced problem in:

What key aspect the company would not have cared about in the secondary market ?

Which financial asset is indicated in the above case?

On whose behalf does the RBI issue this instrument?

What does T-91 denote here?

What is the minimum amount for which this instrument is available?

Identify the step of trading procedure in a stock exchange which has not been followed by “Unicon Securities Pvt. Ltd.”.

Which apex statutory body of capital market inspected and conducted enquiries in order to detect irregularities?

By not converting and transferring the shares to the investors Demat Account, i.e., electronic form, which process was not followed?

Identify the function of SEBI being stated in paragraph.

Which method of floatation was used by Rajni Auto Manufacturers?

Which type of capital market was this company dealing in?

Which watchdog of the capital market has been referred to in the above case?

Identify regulatory functions of the organization identified above?

MCQ Questions for Class 12 Business Studies with Answers

Financial Management Class 12 MCQ Questions With Answers

Which of the following statements is false regarding financial management?

The foremost objective of financial management is:

For optimal procurement of manager identifies different and compares those items in terms of cost and associated risks. Identify concept highlighted in the above lines.

Which of the financial decisions is about the quantum of finance to be raised from various long-term sources?

A decision to acquire a new and modern plant to upgrade an old one is known as ………….. decision.

Which of the following statements is false regarding financial management ?

Match the FINANCIAL DECISIONS in Column I with their correct EXAMPLES in Column II.

Financial planning usually begins with the preparation of a………………

takes into consideration the growth, performance, investments and requirement of funds for a given period.

Which of the following statements is incorrect?

Which of the following is not an objective of financial planning?

Detailed plans of action are prepared under financial planning. What benefits does this result in?

Financial planning takes into consideration which of the following:

ICR =…………….

Which component of capital structure determines the overall financial risk ?

Samara Ltd. has Debt Equity ratio of 3:1 whereas Gehlot Ltd. has Debt Equity ratio of 1:1. Name the advantage Samara Ltd. will have over Gehlot Ltd., when the rate of interest is lower than the rate of return on investment of the company.

Which of the following statements is incorrect?

When the stock market is bearish, a company must go for which of the following?

When the stock market is bullish, a company must go for which of the following?

Of the following sources of funds, are Owner’s Funds.

Of the following sources of funds, are not Borrowed Funds.

Match the TERMS in Column I with their correct MEANING in Column II.

Fixed capital is financed through:

Assertion (A): Certificates of Deposit (CD) are secured, negotiable, long-term instruments in bearer form.
Reason (R): A rise in call money rates makes other sources of finance such as commercial paper and certificates of deposit cheaper in comparison as banks raise funds from these sources.

Assertion (A): A commercial bill is a bill of exchange used to finance the working capital requirements of business firms.
Reason (R): Commercial bill is a short-term, negotiable, self-liquidating instrument which is used to finance the credit sales of firms.

Assertion (A): The primary market is also known as the new issues market.
Reason (R): It deals with new securities being issued for the first time.

Assertion (A): An ideal capital market is one where finance is available at reasonable cost.
Reason (R): Capital market is a market where low risk, unsecured and short-term debt instruments that are highly liquid are issued and actively traded everyday.

Assertion (A): Stock exchange contributes to economic growth.
Reason (R): Through the process of disinvestment and reinvestment savings get channelised into their most productive investment avenues.

Assertion (A): Stock exchange is an unorganised market.
Reason (R): Stock exchange makes complete information available to public in regard to prices and volume of transactions taking place every day.

Assertion (A): Stock exchange provides safety to dealings and investment.
Reason (R): Transactions on the stock exchange are conducted only amongst its members with adequate transparency.

Assertion (A): Demat account refers to an account which an Indian citizen must open with the DPs to trade in listed securities in electronic form.
Reason (R): Depository is like a bank in which an investor can deposit and withdraw his shares.

Assertion (A): Government of India decided to set-up a separate regulatory body known as Securities and Exchange Board of India.
Reason (R): SEBI was set up to prevent trading malpractices and achieve a balance between self regulation by the securities industry and its statutory regulation.

Assertion (A): Controlling insider trading and imposing penalties for such practices is a protective function of SEBI.
Reason (R): Registration of collective investment schemes and Mutual Funds is a development function of SEBI.

Assertion (A): The objective of SEBI is to maintain a balance between statutory regulations and self regulation.
Reason (R): The objective of the Primary Market Advisory Committee is to advise SEBI on issues related to the development of primary market in India.

Assertion (A): Higher the flotation cost, less attractive the source.
Reason (R): The choice between the payment of dividend and retaining the earnings is, to some extent, affected by the difference in the tax treatment of dividends and capital gains.

Assertion (A): Financial planning tries to link the present with the future.
Reason (R): Financial planning is essentially the preparation of a financial blueprint of an organisation’s future operations.

Assertion (A): Financial planning ensures that the firm does not raise resources unnecessarily.
Reason (R): Excess funding is almost as bad as inadequate funding.

Assertion (A): Financial planning includes both short-term as well as long-term planning.
Reason (R): Short-term planning focuses on capital expenditure programmes.

Assertion (A): Financial planning includes determining the objectives, policies, procedures and programmes to deal with financial activities.
Reason (R): Financial planning facilitates in developing a sound capital structure which gives maximum returns to shareholders.

Assertion (A): Debt and equity differ significantly in their cost and riskiness for the firm.
Reason (R): Debt is cheaper but is more risky for a business because the payment of interest and the return of principal is obligatory for the business.

Assertion (A): Capital structure of a company affects only the profitability.
Reason (R): A capital structure will be said to be optimal when the proportion of debt and equity is such that it results in an increase in the value of the equity share.

Assertion (A): A higher DSCR indicates better ability to meet cash commitments.
Reason (R): If a firm uses its debt potential to the full, it loses flexibility to issue further debt.

Assertion (A): The higher the ICR, lower shall be the risk of company failing to meet its interest payment obligations.
Reason (R): If the ROI of the company is higher, it can choose to use trading on equity to increase its EPS, i.e., its ability to use debt is greater.

Assertion (A): A trading organisation usually needs a smaller amount of working capital compared to a manufacturing organisation.
Reason (R): The basic nature of a business influences the amount of working capital required. S3

Assertion (A): A labour-intensive organisation requires higher investment in plant and machinery.
Reason (R): Those manufacturing enterprises which make use of modern and automatic machines need large amount of fixed capital.

Assertion (A): In peak season, because of higher level of activity, larger amount of working capital is required.
Reason (R): Most business have some seasonality in their operations.

Assertion (A): With rising prices, larger amounts are required even to maintain a constant volume of production and sales.
Reason (R): The working capital requirement of a business become higher with higher rate of inflation.

“Mr. T. Ghosh who advised him about the judicious mix of equity (40%) and Debt (60%).” The proportion
of debt in the overall capital is called ………….

“Employee know well in advance what they are expected to do and what are the standards of performance on the basis of which they will be appraised, which inturn help them to give better performance.”
Which importance of controlling is highlighted above?

Assertion (A): Controlling ensures that resources are used in the most effective and efficient manner.
Reason (R): In controlling, each activity is performed in accordance with predetermined standards and norms.

Assertion (A): A small enterprise cannot afford to install an expensive control system.
Reason (R): Control system loses some of its effectiveness when standards cannot be defined in quantitative terms.

Assertion (A): The controlling function measures progress towards the organisational goals.
Reason (R): Controlling guides the organisation and keeps it on the right track so that organisational goals might be achieved.

Assertion (A): Controlling creates an atmosphere of order and discipline in the organisation.
Reason (R): Controlling helps to minimise dishonest behaviour on the part of the employees by keeping a close check on their activities.