Q 1.

Which of these items appear in a company’s statement of cash flows? 1.

Issue of bonus shares 2. Repayment of loans 3. Issue of Rights shares 4.
Proposed dividends
1, 2 and 3
1, 2 and 4
2,3 and 4
1 and 4
2 and 3

UnAttempted

CORRECT ANSWER:

2,3 and 4

Explanation:

Cash flow Statement is additional information to user of financial statement in

additional to balance sheet, Profit & Loss Account and Revenue Accounts. Under
this statement, the cash flow from operating, investing and financing activities are
recorded. Bonus issue of shares do not involve any cash flow, the remaining items
would appear in the company’s statement of cash flows statements.

Q 2.
Out of the following mediclaim expenses, which will be allowed as
deductions from income of an Employer under section 80D ? 1. Mediclaim
premium paid for self 2. Mediclaim premium paid for wife 3. Mediclaim
premium paid for mother in law
Only 1 will be allowed
Only 2 will be allowed
Only 1 and 2 will be allowed
All 1, 2 and 3 will be allowed
None will be allowed

UnAttempted

CORRECT ANSWER:

Only 1 and 2 will be allowed

 Explanation:

Mediclaim insurance premium paid for self, spouse and children are allowed as
deduction from the income of the employee (up to certain limits).

Mediclaim insurance premium paid for mother-in-law or father-in-law are not

included.

Q 3.
Sometimes subsequent premiums are not sufficient to cover the required
installments for a life insurance policy, then the amounts are credited to
which account ?
Long remittance account
Short remittance account
Policy deposit account
Proposal deposit account
First year premium account

UnAttempted

CORRECT ANSWER:

Proposal deposit account

Q 4.
Which of the below listed model involves determining the value of human
resources as the present value of estimated future earnings of employees
(in the form of wages, salaries etc.) discounted by the rate of return on
investment.
Black Scholes model
Economic value model
Discounted wages and salaries approach model
Replacement cost model
Opportunity cost model

UnAttempted

CORRECT ANSWER:

Discounted wages and salaries approach model

Explanation:
 Discounted wages and salaries approach model was conceived by Lev and Schwartz
in 1971. This model involves determining the value of human resources as the
present value of estimated future earnings of employees (in the form of wages,
salaries etc.) discounted by the rate of return on investment (cost of capital).

Q 5.
With respect to Endowment Policy, which of these statement(s) is/are
TRUE ? 1. The Sum Assured is payable at the end of fixed time or at death
if it occurs earlier 2. NAV of outstanding units paid at the time of maturity
3. Two lives simultaneously insured 4. Ideal combination of investment and
life insurance
1 and 4
1 and 2
1, 2 and 3
1, 3 and 4
1, 2, 3 and 4

UnAttempted

CORRECT ANSWER:

1, 3 and 4

Explanation:

Endowment policy is an ideal combination of investment and life insurance, two lives
can be simultaneously insured & the sum assured is payable at the end of fixed
time or at death if it occurs earlier. Since it is not a ULIP plan, there is no NAV.

Q 6.
What type of error has been committed by Anil when he had to make entry
on the debit side of ledger, but instead ended up making an entry on the
credit side of the correct ledger account ?
Posting on the wrong side of the current account
Omission error
Undercasting error
Overcasting error
Principle error

UnAttempted

CORRECT ANSWER:
 Principle error

Explanation:

Anil had to make an entry on the debit side of ledger, but instead ended up
making an entry on the credit side of the correct ledger account. This error would
fall under Principle error.

Q 7.
What is Advance deposit ?
It is a minimum amount that needs to be paid by the proposer along with the
Single premium
It is a minimum amount that needs to be paid by the proposer along with the
Renewal premium
It is a minimum amount that needs to be paid by the proposer along with the
Proposal form
It is a minimum amount that needs to be paid by the proposer along with the
Salary saving scheme premium
It is a minimum amount that needs to be paid by the proposer along with the
First installment premium

UnAttempted

CORRECT ANSWER:

It is a minimum amount that needs to be paid by the proposer along with the
Proposal form

Explanation:

Advance deposit is a minimum amount that needs to be paid by the proposer along
with the first installment premium. It is collected by the agent along with the
proposal form.

Q 8.
When the accounting is done for loan against insurance policies, the policy
loan ledger sheets are prepared ________ .
for each portfolio
for each loan
 on a monthly basis
on a six monthly basis
on a yearly basis

UnAttempted

CORRECT ANSWER:

for each loan

Explanation:

When the accounting is done for loan against insurance policies, the policy loan
ledger sheets are prepared for each loan & would contain the amount of loan
disbursed, interest due and paid and policy loan repayments.

Q 9.
Renewal commission should be provided on the outstanding premiums at
____ for a life insurance company.
2%
5%
7.5%
10%
12.5%

UnAttempted

CORRECT ANSWER:

5%

Q 10.
The formula for calculating Quick Ratio is -
Current assets+ Equity / Current liabilities + Liabilities
Current assets / Current liabilities
Current assets – cash / Current liabilities
Current assets – stock / Current liabilities – Bank overdraft
(Cash and bank balances + Current investment) / Current liabilities

UnAttempted

CORRECT ANSWER:

Current assets / Current liabilities

 Explanation:

This ratio illustrates how the companies’ liquid current assets can cover its current
liabilities. It excludes stocks & inventory. Quick ratio of 1:1 is considered
reasonable.

Q 11.
With respect to CLAIM PAYMENTS, insurance companies follow _______
for recording accounting entries.
Deferral method
Accrual method
FIFO method
Netting of claims method
Grossing of claim method

UnAttempted

CORRECT ANSWER:

Netting of claims method

Explanation:

Under ‘Netting of claims method’, as soon as a claim arises, the total payable
amount less all deductions i.e. policy loan, interest on policy loan, due premium
etc. is treated as outstanding claim.

Q 12.
How should the acquisition costs be treated in the financial statements of a
life insurance company ? 1. It should be expensed in the period in which
paid 2. It should be expensed in the period in which incurred 3. It can be
deferred till maximum of 10 years
Only 1
Only 2
Only 3
Both 1 and 3
Both 1 and 2

UnAttempted

CORRECT ANSWER:
 Only 2

Explanation:

Under statutory accounting, all acquisition costs are 100 percent earned and
expensed at inception of the policy, creating an immediate reduction in surplus.
Thus, acquisition costs have to be expensed in the period in which incurred.

Q 13.
The purpose of special instruction register maintained at branch offices of
insurance companies is to _______ . 1. note the special requests as
received from customers 2. calculate the commissions accurately 3. note
important information regarding stoppage of commission
Only 1 is correct
Only 2 is correct
Only 3 is correct
Both 1 and 2 are correct
Both 1 and 3 are correct

UnAttempted

CORRECT ANSWER:

Only 3 is correct

Explanation:

Special instruction register maintained at branch offices of insurance companies to

note down important information regarding stoppage of commission.

Q 14.
Which are the basic principles of cash management which insurers need to
follow to determine the solvency margin ? 1. Profitability 2. Liquidity 3.
Safety
Both 1 and 2
Both 1 and 3
Both 2 and 3
 Only 3
All 1, 2 and 3

UnAttempted

CORRECT ANSWER:

Both 1 and 2

Explanation:

Financial ratios can predict up to 5 yrs. in advance that a company may ultimately
fail. Solvency margin can be determined by following the basic principle of liquidity
& profitability.

Q 15.
With respect to a Term Insurance policy, which of the following statement
(s) is/are INCORRECT ? 1. The policy term can be for a maximum 10 years
2. Term insurance provides protection only for a specific period of time 3.
When the insured dies during the policy term, no benefit is payable to him /
her 4. In case the insured lives beyond the policy term he had selected, no
benefit is payable to him / her
1 and 3 are INCORRECT
2 and 4 are INCORRECT
3 and 4 are INCORRECT
1, 2 and 3 are INCORRECT
All 1, 2 ,3 and 4 are INCORRECT

UnAttempted

CORRECT ANSWER:

1 and 3 are INCORRECT

Explanation:

Term insurance is the oldest form of insurance plan. The sum insured is payable
only if the insured dies during the policy term & the policy term can be from few
months to a number of years even exceeding 10 years. Thus the policy term
cannot exceed 10 years and if the insured dies during the policy term, no benefit
is payable to him, are wrong.
Q 16.
Areas in which different accounting policies can be adopted include - 1.
Valuation of investments 2. Reserve creation for unexpired risks 3.
Provision of depreciation
Only 1
Only 2
Both 1 and 2
Both 2 and 3
All 1, 2 and 3

UnAttempted

CORRECT ANSWER:

All 1, 2 and 3

Explanation:

As per AS 6, the areas wherein different accounting policies can be adopted may
be followed by different companies include all of the above i.e. Providing
depreciation i.e. methods of depreciation, amortization, Creation of reserve for
unexpired risk, revenue recognition and Valuation of investments.

Q 17.
Monu has decided to apply for an insurance policy under the Micro
insurance plans. What are the minimum and maximum term for life
insurance under this plan ?
Minimum 5 years and maximum 15 years
Minimum 5 years and maximum 10 years
Minimum 3 years and maximum 5 years
Minimum 3 years and maximum 10 years
Minimum 2 years and maximum 8 years

UnAttempted

CORRECT ANSWER:

Minimum 5 years and maximum 15 years

Q 18.
 When is an asset classified as a non-performing asset ?
If the interest installment and / or installment of principal remain overdue for
30 days
If the interest installment and / or installment of principal remain overdue for
60 days
If the interest installment and / or installment of principal remain overdue for
90 days
If the interest installment and / or installment of principal remain overdue for
180 days
If the interest installment and / or installment of principal remain overdue for
365 days

UnAttempted

CORRECT ANSWER:

If the interest installment and / or installment of principal remain overdue for 90

days

Explanation:

An asset is classified as a non-performing asset (NPA) if the interest and / or

installment and / or installment of principal remain overdue for more than 90 days
(i.e. one quarter).

Q 19.
Which of the below mentioned ratio, if abnormally high, will mean that the
company's solvency is in danger especially if it accompanied by low
profitability.
PE Ratio
Debt service coverage
Return on capital invested
Turnover
Debt – Equity

UnAttempted

CORRECT ANSWER:

Debt – Equity

Explanation:
 The debt equity ratio is the indicator of the proportion of debt fund in relation to
equity. If the ratio is high, which means the company has big debts and it has to
pay lots of interest on these debts. If the company has low profits, than it will
find it very difficult to pay the interest and principal and may become insolvent.

Q 20.
What type of error is this - 'Goods returned by Meeta worth Rs 4000 not
entered' ?
Compounding
Omission
Commission
Prime entry
Casting

UnAttempted

CORRECT ANSWER:

Omission

Explanation:

Goods returned by Meeta worth Rs 4000 not entered would amount to omission
error.

Q 21.
From the listed options below which factor affects the Gross Value Added -
1. CSR activities 2. Extra ordinary income 3. Advertising spend
Only 1
Only 2
Only 3
Both 2 and 3
All 1, 2 and 3

UnAttempted

CORRECT ANSWER:

Only 2
 Explanation:

Practically GVA includes direct income, extra ordinary income, investment income
in addition to sales revenue. GVA is thus arrived at by deducting the cost of all
materials & services from outside suppliers from the sales revenue.

Q 22.
Among the below listed statements all are true with regards to Capital
Receipts except - 1. Regular revenue income 2. Irregular revenue income 3.
Long term benefits
Both 1 and 3
Both 2 and 3
Only 1
Only 2
Only 3

UnAttempted

CORRECT ANSWER:

Both 1 and 3

Explanation:

Capital items are of two types i.e. Capital expenditure & Capital receipt. When an
item of capital expenditure is sold, the receipt generated is known as capital
receipt. The capital receipt decreases the value of non-current asset. Therefore
capital receipt is not a regular business income.

Q 23.
The prime difference between a fixed budget and a flexible budget is
________
A flexible budget is devised for a range of activities but a fixed budget is
devised for only one level of activity
A fixed budget includes only fixed costs and a flexible budget includes only
variable costs
A fixed budget is devised for only a part of the budget period but a flexible
budget is for the entire budget period
Both 1 and 2
Both 2 and 3
 UnAttempted

CORRECT ANSWER:

A flexible budget is devised for a range of activities but a fixed budget is devised
for only one level of activity

Explanation:

Flexible budget is prepared when it is difficult to forecast the future or it is

difficult to make a firm decision. It is prepared keeping in view that there could
be circumstances which are beyond the control of the management. It is devised
for a range of activities.

Q 24.
Select from the given options which perfectly fits the description of the
layering stage of money laundering ?
Hiding the origin of funds
Removing clean money from the system
Provision of apparent legitimacy to the funds
Actual physical disposal of cash
Separation of proceeds from their source

UnAttempted

CORRECT ANSWER:

Separation of proceeds from their source

Explanation:

Money laundering process can be broadly divided into three stages & under the
layering stage, the separation of proceeds from their source or origin i.e. criminal
activities are defined.

Q 25.
What is the main function of investment committee (as per the guidelines
issued by IRDA) ?
Approving the investment policy
To observer and check the investment activities of all insurance companies
To ensure that investment of insurance companies earn good interest / profits
so that good returns and bonus can be given to policy holders
 To do the accounting for all investments
To take decisions on investments with respect to the exposure and prudential
norms and investment criteria laid down by IRDA

UnAttempted

CORRECT ANSWER:

To take decisions on investments with respect to the exposure and prudential

norms and investment criteria laid down by IRDA

Explanation:

As per guidelines issued by IRDA, main function of investment committee is to

take decisions regarding investments keeping in view the exposure norms /
prudential norms and investment criteria laid down by IRDA. Their decisions shall
be recorded & be open for inspection by officers of the authority.

Q 26.
What percent of total value outstanding remaining sub-standard is required
to be made as a general provision ?
1%
5%
10%
20%
30%

UnAttempted

CORRECT ANSWER:

10%

Explanation:

Sub-standard asset is an asset which has been classified as non-performing asset

(NPA) for a period of not exceeding 12 months. As per IRDAI guidelines, general
provision of 10% of total value outstanding remaining sub-standard is required to
be made.

Q 27.
 Rohit eats some sweets of Welcome Sweets Co. and falls ill. He is
hospitalised and all the tests indicate that he has suffered food poisoning
due to the sweets. Rohit plans to take legal action against Welcome Sweets
for claiming the hospital bills etc. The lawyers of Welcome Sweets have
informed that its certain that the case will be lost by them. So Welcome
Sweets decides to put an additional legal expense in the financial
statements, to cover the potential cost of losing the legal case. This is the
application of -
Accrual Concept
Prudence Concept
Claim Safety Concept
Consistency concept
Going concern assumption

UnAttempted

CORRECT ANSWER:

Prudence Concept

Explanation:

Prudence concept implies that ‘Profit should not be over-stated but all anticipated
losses should be recognized’. It refers to the situation where all anticipated losses
should be recognized & recorded immediately. The profits however should be
recognized & recorded in the books of accounts only on realization.

Q 28.
Select the correct match for the given transaction with the source
document : -- Transaction – 'Purchase of Goods'
Entity’s sales invoice
Debit note raised by the customer and credit note raised by the entity
accepting the return
Debit note raised by the entity and credit note issued by the seller accepting
the return
Receipts issued by the entity for cash sales
Supplier's Invoice

UnAttempted

CORRECT ANSWER:

Supplier's Invoice
 Explanation:

The accounting process requires some kind of proof or data source for any
transactions of an entity. The source document relevant to the transaction:
Purchase of Goods is Supplier’s invoice.

Q 29.
________ is a mutual fund scheme in which a investor can purchase or sell
units at any time at the current net asset value (NAV).
ELSS Scheme
Gilt scheme
Open ended scheme
Close ended scheme
Balanced scheme

UnAttempted

CORRECT ANSWER:

Open ended scheme

Explanation:

A mutual fund is a collective investment scheme where the returns earned are
shared with the investors. The mutual fund scheme in which an investor can
purchase units from or sell units to the fund house at any time at the prevailing
net asset value (NAV) is ‘Open ended scheme’.

Q 30.
In Life Insurance business, the investments in Government Securities as
per IRDAI Investment regulations should be ________ .
not less than 10% of fund
not less than 15% of fund
not less than 25% of fund
not less than 40% of fund
not less than 50% of fund

UnAttempted

CORRECT ANSWER:
 not less than 25% of fund

Explanation:

As per Life insurance business (Regulation 4), investments in Government Securities

as per IRDAI Investment regulations, cannot be less than 25% of fund.

Q 31.
With respect to KYC norms which of the given below statements holds true
-
Policy beneficiary has to be anonymous
Contracts can be anonymous
The KYC norms are for new customers only
Contracts cannot be anonymous
Policy Beneficiary is not subject to KYC norms

UnAttempted

CORRECT ANSWER:

Contracts cannot be anonymous

Explanation:

To rule out illegitimate and bad customers, KYC is important. KYC norms make it
mandatory that the contracts should not be anonymous & it must also satisfy the
legal requirements.

Q 32.
In case of a General Insurance company, the debt securities and
redeemable preference shares share be considered to be __________ .
held at cost
held to maturity
at amortised cost
at fair value
held at sale value

UnAttempted

CORRECT ANSWER:

held to maturity
 Explanation:

Debt securities including government securities and redeemable preference shares

for a general insurance company shall be considered to be held to maturity
securities & shall be measured at historical cost subject to amortization.

Q 33.
It is ________ for insurance companies to comply with the accounting
standards as issued by ICAI.
Obligatory
Preferred
Mandatory
Recommended
Not necessary

UnAttempted

CORRECT ANSWER:

Mandatory

Explanation:

The Institute of Chartered Accountants of India (ICAI) has set up an Accounting

Standard Board to formulate Accounting Standards. For insurance companies,
compliance with accounting standards issued by ICAI is mandatory.

Q 34.
The focus of Capital Structure ratios is primarily on the _____ position of
the business.
Long term capital appreciation
Long term solvency
Short term solvency
Long term debt
Short term debt

UnAttempted

CORRECT ANSWER:

Long term solvency

 Explanation:

Capital structure ratios normally focus on the long term solvency position of the
business & one of the important ratios among this is Debt – Equity Ratio.

It is calculated as: Debt Equity Ratio = Total Liabilities / Shareholders Equity.

Q 35.
While identifying 'geographical segments' the factors that should be
considered include -
The nature of the processes relating to production
The nature of the products / services
The procedures used to distribute the products or provide the services
Exchange control regulations
The class of customers for the products or services

UnAttempted

CORRECT ANSWER:

Exchange control regulations

Explanation:

Accounting Standard 17 refers to segment reporting. It has divided standard in to

two segments i.e. Business Segment & Geographical Segment. Under geographical
segment, factors that should be considered in identifying geographical segments
include ‘Exchange control regulations’.

Q 36.
The primary purpose of collecting KYC information is - 1. To find out good
as well as bad customers 2. As per legal requirement and also for good
customer relationship 3. To investigate the customers
Only 1
Only 2
Only 3
Both 1 and 2
Both 2 and 3

UnAttempted
 CORRECT ANSWER:

Only 2

Explanation:

KYC norms makes it mandatory that the contracts should not be anonymous & it
must also satisfy the legal requirements for better customer relationship.

Q 37.
Which of the given schemes invest a major portion of their money in fixed
income securities like fixed deposits, bonds, debentures, etc.
ELSS Tax Saving Schemes
Money Market Schemes
Balance Schemes
Debt Schemes
Gilt Schemes

UnAttempted

CORRECT ANSWER:

Debt Schemes

Explanation:

Under the mutual fund, the investors’ money is utilized in money market
instruments as notified by the SEBI. The returns earned are shared with the
investors according to the scheme. Debt schemes invest a major portion of their
money in fixed income securities like bonds, debentures, fixed deposits etc.

Q 38.
The policyholder has the right to apply for loan against his insurance
policy in Loan Against Policy (LAP). The loan amount in such cases
depends upon :
Policy holders age
The surrender value of the policy
Whether the insurance provider is Govt. owned or Private
Duration of the policy
All of the above
 UnAttempted

CORRECT ANSWER:

The surrender value of the policy

Explanation:

In Loan against policy (LAP), policyholder can apply for loan against his insurance
policy. The loan amount depends upon the Surrender value of policy.

Surrender value is the value which is the amount payable to the policy holder
should he decide to discontinue the policy and encash the same.

Q 39.
Which of the following deduction(s) is/are allowed as per section 80G of
the Income Tax act ? 1. Payments for life insurance premiums 2. Donations
which are made to approved institutions 3. Deductions for interest which is
paid on the loan taken for Higher Education
Only option 1
Only option 2
Only option 3
Both options 1 and 2
Both options 2 and 3

UnAttempted

CORRECT ANSWER:

Only option 2

Explanation:

Under Chapter VI of the IT Act, the provisions for deductions from income are
explained.

Section 80G of Income tax allows deduction with respect to ‘Donations made to
approved institutions’

Q 40.
The 'Gross Value Added' is affected by - 1. Annual corporate tax 2.
Corporate Social Responsibility activities 3. Spending on advertisement
 Only 1
Only 2
Only 3
Both 1 and 2
All 1, 2 and 3

UnAttempted

CORRECT ANSWER:

Only 1

Explanation:

GVA is arrived at by deducting the cost of all materials & services from outside
suppliers from the sales revenue. Annual corporate tax is an important element
which effects the GVA calculations.

Q 41.
From the given below options identify which mutual fund schemes invest
their money in a mix of equities and debt instruments -
Equity Linked Saving Schemes (ELSS)
Gilt Schemes
Open ended schemes
Tax saving schemes
Balanced schemes

UnAttempted

CORRECT ANSWER:

Balanced schemes

Explanation:

Balanced schemes of mutual fund schemes invest a major portion of their money in
a mix of equities and debt instruments.

Q 42.
A person wishes to settle a transaction with cash rather than by bank
cheque. In terms of money laundering this can be can be classified as the
stage of -
 Placement
Layering
Siphoning
Integration
Black transaction

UnAttempted

CORRECT ANSWER:

Placement

Explanation:

This is generally the 1 stage of money laundering wherein the launderer inserts
st

the illegitimate money into legitimate financial institution through various means
like through purchase of art, jewellery etc. & by depositing cash in the bank.

Q 43.
In order to prepare the bank reconciliation statement we can take the help
of -- 1. Bank column of cash book and cash column of bank book 2. Bank
column of cash book and bank statement 3. Cash column of cash book and
bank statement
Only statement 1
Only statement 2
Only statement 3
Both statement 1 and 3
Both statement 1 and 2

UnAttempted

CORRECT ANSWER:

Only statement 2

Explanation:

A bank reconciliation statement is prepared to reconcile any difference that may

exist between the cash book & the pass book. It is done by; Bank column of cash
book and bank statement.
Q 44. Based on AS 3 cash flow statement, which of the given activities can be
categorized under an operating activity? 1. Claim receipts from reinsurers
2. Loan to companies and its repayments 3. Repayment of policy loan from
policy holders
Only statement 2 is correct
Only statements 2 and 3 are correct
Only statements 1 and 3 are correct
Only statements 1 and 2 are correct
All statements are correct

UnAttempted

CORRECT ANSWER:

Only statements 1 and 3 are correct

Explanation:

Cash flow Statement is additional information to user of financial statement in

additional to balance sheet, Profit & Loss Account and Revenue Accounts. Under
this statement, the cash flow from operating activity includes: Claim receipts from
reinsurers & Repayment of policy loan from policy holders.

Q 45.
'Depreciation amount in case of revaluation of assets' - This disclosure is
found in ______ .
Balance Sheet
Master report
AOA
P & L A/c and notes to accounts
Form 26AS

UnAttempted

CORRECT ANSWER:

P & L A/c and notes to accounts

Explanation:

As per disclosure requirements (Accounting Standard 6 dealing with depreciation &

Depreciable Assets), depreciation amount in case of revaluation of assets has to
be disclosed under P & L A/c and notes to accounts.
Q 46.
The Average first premium per thousand sum assured can be computed as
______ .
(Total FP / Total SA ) * 1000
(Total FYP / Total SA ) * 1000
(Total FP / Total SA ) * 10
(Total SA / Total FP ) * 1000
(Total FYP / Total SA ) * 100

UnAttempted

CORRECT ANSWER:

(Total FP / Total SA ) * 1000

Explanation:

Average first premium per 1000 Sum Assured =

Total First Premium (Only First installment) (Individual Business-Ordinary and

SSS) / Sum assured under Individual Business X 1000

Q 47.
Which guidelines prevent the anti social elements from sending funds
through illegal channels for use against public interest ?
Anti-black money guidelines
Anti-money laundering guidelines
Underwriting guidelines
Insurance guidelines
Investment guidelines

UnAttempted

CORRECT ANSWER:

Anti-money laundering guidelines

Explanation:
 Anti-money laundering guidelines prevent the anti-social elements from routing
funds through illegal channels for use against public interest. The Prevention of
Money Laundering Act (PMLA) guidelines were introduced on 1 July 2005.
st

Q 48.
From the enlisted options identify a valid statement in relation to KYC
norms -
No KYC norms are required for the beneficiary of a policy
Contracts should be anonymous
The beneficiary of a policy can be anonymous
The KYC norms are compulsory for new customers only
Correct and effective measure have be taken in order to obtain mandatory
details for accurate identification of new customers

UnAttempted

CORRECT ANSWER:

Correct and effective measure have be taken in order to obtain mandatory

details for accurate identification of new customers

Explanation:

To rule out illegitimate and bad customers, KYC is important. KYC norms make it
mandatory that the contracts should not be anonymous & it must also satisfy the
legal requirements.

Q 49.
Given the case that a firm XYZ Ltd. has very high Current Ratio. What does
the situation indicate ?
XYZ Ltd. has a high operating efficiency
XYZ Ltd. has a low operating efficiency
XYZ Ltd. is inefficient in fund management for optimum returns
XYZ Ltd. is able to discharge all its obligations effectively
XYZ. Ltd is performing much better than the competitors

UnAttempted

CORRECT ANSWER:

XYZ Ltd. has a high operating efficiency

 Explanation:

A firm having a very high Current Ratio indicates that it will generate sufficient
cash to pay off the current liabilities. It is an indicator of the firms high
operating efficiency.

Q 50.
Identify from the given facts which holds true with respect to Unit Linked
Insurance Plans - 1. The risk of market fluctuations and its effect on NAV of
the fund is borne by the Insurer 2. ULIPs are generally for longer terms
with a lock in period of 3 to 5 years 3. On maturity, NAV of outstanding
units are paid and in case of death, sum assured is paid in addition to NAV
of outstanding units
Both 1 and 2 are correct
Both 2 and 3 are correct
All 1, 2 and 3 are correct
Only 1 is correct
Only 3 is correct

UnAttempted

CORRECT ANSWER:

Both 2 and 3 are correct

Explanation:

Unit Linked Insurance Plans are for a longer duration with a lock in period of
around 5 years and at the time of maturity, NAV of outstanding units are paid
and in case of death, sum assured is paid in addition to NAV of outstanding units.
Insurer does not carry the risk of market fluctuations in NAV of the fund

Out of 50 questions 50 are un attempted.