CAIIB – ABFM – Mock Test- 10

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What factors influence the return and risk of foreign investment? A) The type of asset, including liquid, growth, or long-term investments. B) The stability of a country's foreign exchange rate performance. C) The form of country governance and social goals. D) Investments in countries with strong foreign exchange rates provide lower returns.

B, C, D

A, B, C

A, C, D

A, B, D

What is the primary purpose of benchmarking in the context of retaining employees?

To identify the most common challenges faced by employees

To examine the results of the retention strategy

To compare employee turnover rates to those of competitors

To establish appropriate benchmarks, both external and internal

What essential skill is emphasized for executives when considering divestitures?

Analyzing potential buyers.

Being aware of the value of their organization.

Raising capital through acquisitions.

Creating new business divisions.

What drives the need for reorganizational restructuring in modern business operations?

Globalization and increased controls

Economic stability and less competition

Globalization, competition, and free trade

Decreased market conditions

As per KPMG study, What is the impact of mergers and acquisitions on creation of shareholder value?

The majority have no impact on shareholder value.

More than fifty percent end up decreasing shareholder value.

They always lead to increased shareholder value.

Over seventy percent result in significant value gains.

Why is it deceptive to use the current year's results as the base year earnings for cyclical companies and commodity companies?

It’s not deceptive; it provides the most accurate valuation.

These companies have inherent earnings instability due to economic and price cycles.

Current year results are often skewed by one-time expenses.

They are unaffected by changes in the economic status and commodity prices.

What causes a discrepancy between book values and market values when using the book value approach for valuation?

Reserve values

Market trends

Inflation

Historical cost of assets

Why is the application of the P/E multiple recommended?

Earnings potential is irrelevant in determining investment value.

Earnings per share (EPS) is the most important variable in valuing securities.

P/E multiples have no empirical basis for valuation.

Empirical data shows that high P/E stocks consistently outperform the market.

What was the key impact of the modernization of the system for incorporating a company in India in February 2020?

Lengthened the process from 4 to 18 days

Increased the number of steps from 5 to 10

Increased the number of procedures from 3 to 10

Reduced the time required to incorporate a company from 18 days to 4 days

10.

What is the primary form of contribution made by investors in the context of venture capital?

Monetary compensation

All of the above

Managerial experience

Specialized knowledge

11.

Which role does AI predominantly play in the application of predictive analytics in banking?

Identifying hidden patterns and correlations within data

Creating credit scores for potential clients

Automating portfolio management tasks

Detecting fraudulent activities

12.

Why might acquirers prefer using convertible instruments for payment in M&A transactions?

To dilute ownership of existing shareholders.

To indicate their belief in the target company’s shares.

To avoid accumulating interest payments.

To provide potential buyers with a floor equal to the value of the debt at maturity.

13.

What characteristics should a good leader possess?

Being a friend, philosopher, and guide to subordinates

Ignoring employees’ complaints and not providing solutions

Dictatorial control over employees’ emotions and desires

Strictness, secrecy, and detachment from subordinates

14.

What is one of the main benefits of the ABC method?

Simplification of cost attribution

Increased production efficiency

It provides transparent information on the cost ramifications of decisions, including product and customer profitability.

Greater transparency in financial data

15.

What is a challenge for organizations utilizing business analytics?

Resistance or lack of buy-in from all levels of the organization

Inability to communicate findings to upper management

Difficulty in predicting changes in user behavior

Lack of integration with existing strategies

16.

What is the primary advantage of secured debentures for investors?

Higher interest rates

Voting rights in company decisions

security over company assets

Convertibility into equity shares

17.

As per the concept of intangible assets, including those that can generate cash flows and those that might generate them in the future. What are examples of intangible assets that can generate cash flows and are shown on a company's balance sheet? A) Patents B) Copyrights C) Brand name D) Spectrum

None of the above

A, B, C, and D

Only C and D

Only A and B

18.

When is the Discounted Cash Flow (DCF) Value method a good choice for determining the worth of the combined company?

When there are no strong business plans

When both companies have no cash flows

When you want to include the value of possibilities built into the firm

When fairly solid business plans and cash flow estimates are provided for the merging companies

19.

What distinguishes "Externally Oriented (Strategic) Planning" from other planning phases?

It emphasizes short-term planning.

It relies primarily on internal sources of data.

It centralizes the strategic planning process at the apex level.

It involves a lot of internal politics.

20.

How does organizing contribute to promoting effective communication within an organization?

By eliminating job descriptions

By reducing the number of departments

By defining structured relationships and communication channels

By creating barriers between functions

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