BUSINESS QUIZ

Dr. T.K. Jain.

AFTERSCHOOOL
M: 9414430763
tkjainbkn@yahoo.co.in
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 WHICH IS BETTER 12000 AVAILABLE
AFTER 12 YEARS OR 109000 AVAILABLE
ATER 40 YEARS, YOUR DISCOUNT RATE
IS 18%?

• The present value of 12000 is 1648,

but present value of 109000 is only
145. so first option is better.

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 Which is better investment – Rs. 100000, in
which you receive 30000 every year for 10
years or Rs. 500000, on which you receive 5
lacks every seventh year for four times? Bank
charges 18% per annum?

• On first option, present value of all money

received is 2.37 lakhs approx. , in second option,
your present value of all cash inflows is 9.81 lahs.
Thus in terms of quantum of returns, the second
scheme is better. (net returns are 1.37 lakhs in
first scheme, but it is 4.81 lakhs in second
scheme).

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Calculate break even point with the following
information:
salary Rs. 40 lakhs, other fixed expenses:
20 Lakhs, contribution per unit: 18000?

• The break even point is achieved at

34 units only.

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 What is EVA?
• Economic value analysis

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What will be impact on total
sales, if price of salt is
increased?
• Since it is essential commodity, the
total sales will increase.

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What is the net balance of
payment of India (approx.)?
• Zero
• As the balance of payment is always
balanced. (for any country).

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If we have two markets, one with elasticity
of .2 and other with elasticity of .8, and
we have two options for price – Rs. 8 and
Rs. 12, what will you do?

• Ans: you should charge price of 12 in

the market where elasticity is .2 and
charge price of 8 in the market
where elasticity is .8.

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What is common in ABC Analysis, min-max
plan, two bin system, order cyclic system
and FSN analysis?

• All these are inventory control

techniques.

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 Which is better investment, 3%
compounded monthly or 3.5% simple
interest, (analyse over 5 years
period)?
• After 5 years, the first amount is
117.9, and second amount is 117.5
• Thus first option is better.

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 How much money is to be invested
every year, so as to accumulate Rs.
300000 at the end of 10 years.
Interest rate: 10%compound
• You have to invest 18823 per annum.
Solution is as under:
• (300000*.1)/[(1+0.1)^10 -1]

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 A bond gives 10% return, face value is Rs 1000, it
has a life of 7 years, at what price would you like to
buy it? Your own discount rate is 18%, what will
happen if your friend wants to buy it and he has
discount rate of 14%?

• Present value of their return is Rs.

695.

• Your friend will buy it at 907.

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 What is SDLC
• System development life cycle

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 What is inflation?
• General increase in price
• Generally it is measured in terms of
WPI or CPI
WPI – WHOLESALE PRICE INDEX
CPI – CONSUMER PRICE INDEX.

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 What is CRR?
• CASH RESERVE RATIO

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 What is kaizen award?
• Japanese management award for
best innovation.

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 What is BPR?
• BUSINESS PROCESS
REENGINEERING – completely
transforming the processes of
business – not just minor changes –
but major changes.

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 What is FEMA?
• FOREIGN EXCHANGE
MANAGEMENT ACT.
• It has replaced FERA 1973.

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 What is DSS?
• DECISION SUPPORT SYSTEM – it
uses models and decision tools to aid
middle management in taking decsion.

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 What is TPS?
• Transactional processing system. It
processes day to day routine
transactions.

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 What is EIS?
• EXECUTIVE INFORMATION
SYSTEM – SUPPOSED TO HELP TOP
MANAGEMENT WITH GRAPHICS,
AND OTHER TOOLS

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 WHAT IS EXPERT
SYSTEM?
• It is a system that integrates
advanced softwares, huge data bank
to take difficult decision with the
help of its own logic and artificial
intelligence.

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 What is LC?
• LETTER OF CREDIT – it is a type of
credit facility available in
international trade.

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 What is FOB?
• FREE ON BOARD – here the seller
bears all the expenses till the goods
reach port of the buyer.

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 What is HYPER
MARKET?
• It is a type of retail market – where
we can find wider variety of
assortment.

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 What is vending
machine?
• In retail stores, you will find
machines, which will give you goods,
when you enter the currency.

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 There are two machines – first will cost you
Rs. 10000, the second will cost you Rs. 8000.
the annual saving from these will be Rs. 1900
(for 7 years) and 2200(for 5 years)
respectively. Which is better – assume that
you have discount factor of 10%

• Present value of net savings from

first machine is Rs. 9250, but the
savings from second machine is Rs.
8339, so second machine is better.

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 What is bridge loan?
• It is a type of temporary loan for
short period of time – till you start
production and get loans from other
sources.

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 What is synergy?
• 2+2 may be 5 or more than 5 – is positive
synergy – the sum of individuals is greater
then their individual strenght. It is the
basic principle of team work. Have you
heard story of 5 bulls and one lion and
have you heard a story of four sons and
one farmer – these are all on synergy. You
are also harnessing it by collective efforts
at AFTERSCHOOOL – read in a group.

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 What is group think?
• Tendency of the group to think alike.
• It is the propensity of a group to
start thinking in same direction –
without proper reasoning – it is
harmful to group and will cause
negative synergy.

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 Calculate EMI for a loan of Rs.
500000 payable in 20 instalments
in 20 years, interest =10%
• [500000*i*(1+i)^20]/(1+i)^20-1
• Rs. 58729.84 ans.

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 If I am paying instalment of Rs. 5000
every year for 10 year, interst rate is
14%, what is my loan amount?
• [5000*{(1+i)^10-1}] /i*(1+i)^10

• Thus my loan amount is Rs. 26000

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 What is the difference
in FDI , FII, DII?
FDI is foreign direct inestment
FII is foreign institutional investor
DII is domestic institutional investor

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 What is your expected return and std.
deviation, if you invest 1/3rd money in risk free
and remainging in market portfolio. You get 9%
in risk free and 15% in market portfolio (std
dev. Is 21%?

• 1/3 of 9% = 3
• 2/3 of 15% = 10
• So your expected return is 13%.
• Your standard deviation is 2/3 of
21% = 14%. Ans.

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RIL has beta of 1.45, risk free rate 6%,
expected return 10%, what is required
return from RIL?
• 6+ (1.45(10-6)) = 11.8 % Ans.

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Dividend is 2%, growth rate is 7%,what
should be market price, expected
returns are 10%?
• [2*(1.07)] / (.1-.07) = 71.3

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Present rate of interest on 4 year zero
coupon securit is 8% and on 5 year it is
7.8%. What is implied forward rate on 1
year loan 4 years in future?
• Implied growth rate:
• [(1.078)^5/(1.08)^4] -1 = 7%

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 What is factoring?
• Sale of accounts receivables to third
party is called factoring.

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 What is revolvers?
• It is a legal obligation on bank to
provide loans.

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 What is sustainable
growth modeling?
• In finance, it is the maximum growth rate
which is possible in sales, given that all
target financial and operating ratios are
fulfilled.
• In general parlance, sustainable growth
means, adopting fair technology and
growth model – which doesn’t harm
enviornment.

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 Thanks
Afterschoool conducts three year integrated PGPSE
(after class 12 along with CA & CS) and 18 month
PGPSE (Post Graduate Programme in Social
Entrepreneurship) along with preparation for CS /
CFP / CFA /CMA / FRM. This course is also available
online also. It also conducts workshops on social
entrepreneurship in schools and colleges all over
India – start social entrepreneurship club in your
institution today with the help from afterschoool and
help us in developing society.

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social entrepreneurship for
better society

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