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.

A, B, C

A, C, D

A, B, D

B, C, D

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.

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

By creating barriers between functions

By eliminating job descriptions

By reducing the number of departments

By defining structured relationships and communication channels

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

To identify the most common challenges faced by employees

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

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.

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

What essential skill is emphasized for executives when considering divestitures?

Being aware of the value of their organization.

Creating new business divisions.

Analyzing potential buyers.

Raising capital through acquisitions.

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

Economic stability and less competition

Globalization and increased controls

Decreased market conditions

Globalization, competition, and free trade

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

It emphasizes short-term planning.

It involves a lot of internal politics.

It centralizes the strategic planning process at the apex level.

It relies primarily on internal sources of data.

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

Increased production efficiency

Simplification of cost attribution

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

Greater transparency in financial data

10.

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

Detecting fraudulent activities

Automating portfolio management tasks

Identifying hidden patterns and correlations within data

Creating credit scores for potential clients

11.

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

Increased the number of procedures from 3 to 10

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

Lengthened the process from 4 to 18 days

Increased the number of steps from 5 to 10

12.

What characteristics should a good leader possess?

Ignoring employees’ complaints and not providing solutions

Strictness, secrecy, and detachment from subordinates

Being a friend, philosopher, and guide to subordinates

Dictatorial control over employees’ emotions and desires

13.

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

P/E multiples have no empirical basis for valuation.

Earnings potential is irrelevant in determining investment value.

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

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

14.

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

Reserve values

Inflation

Historical cost of assets

Market trends

15.

What is the primary advantage of secured debentures for investors?

Higher interest rates

security over company assets

Convertibility into equity shares

Voting rights in company decisions

16.

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

When both companies have no cash flows

When there are no strong business plans

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

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

17.

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

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.

To dilute ownership of existing shareholders.

18.

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

Only A and B

Only C and D

None of the above

A, B, C, and D

19.

What is a challenge for organizations utilizing business analytics?

Inability to communicate findings to upper management

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

Lack of integration with existing strategies

Difficulty in predicting changes in user behavior

20.

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

Specialized knowledge

Managerial experience

All of the above

Monetary compensation

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