428: 1 :

QUESTION PAPER BOOKLET CODE :

A
428
Question Paper Booklet No.

Roll No. :

Time allowed : 3 hours Maximum marks : 100

Total number of questions : 100 Total number of printed pages : 20
Instructions :
1. Candidates should use blue/black ball point pen ONLY to fill-in all the required information in
OMR Answer Sheet and this Question Paper Booklet.
2. OMR Answer Sheet cannot be taken out from the Examination Hall by the examinees and the
same is required to be properly handed over to the Invigilator/Supervisory staff on duty and
acknowledgement be obtained for doing so on the Admit Card before leaving the Examination
Hall.
3. Candidates are required to correctly fill-in the Question Paper Booklet Code and the Question
Paper Booklet No. (as mentioned on the top of this booklet) in the OMR Answer Sheet, as
the same will be taken as final for result computation. Institute shall not undertake any responsibility
for making correction(s) at later stage.
4. This Question Paper Booklet contains 100 questions. All questions are compulsory and carry ONE
mark each. There will be negative marking for wrong answers in the ratio of 1 : 4, i.e., deduction
of 1 mark for every four wrong answers.
5. Seal of this Question Paper Booklet MUST NOT be opened before the specified time of examination.
6. Immediately on opening of Question Paper Booklet, candidates should ensure that it contains 100
questions in total and none of its page is missing/misprinted. In case of any discrepancy, the booklet
shall be replaced at once.
7. Each question is followed by four alternative answers marked as A, B, C and D. For answering
the questions including those requiring filling-in the blank spaces, candidates shall choose one most
appropriate answer to each question and mark the same in the OMR Answer Sheet by darkening
the appropriate circle only in the manner as prescribed in the OMR Answer Sheet.
8. Darkening of more than one circle corresponding to any question or overwriting/cutting any answer(s)
shall be taken as wrong answer for computation of result. Ticking/marking/writing of answer(s)
in the Question Paper Booklet shall not be considered in any circumstance for award of marks.
The Institute shall neither entertain any claim nor be liable to respond to any of the query in the
aforesaid matter.
9. Rough work, if any, should be done only on the space provided in this Question Paper Booklet.
10. The Copyright of this Question Paper Booklet and Multiple Choice Questions (MCQs) contained
therein solely vests with the Institute.
.......................................................
(SIGNATURE OF CANDIDATE)

2/2023/FSM ANSWERS MARKED IN THE OMR ANSWER SHEET SHALL ONLY BE EXAMINED P.T.O.
A
428 : 2 :
PART—I
1. The market value of each share of X Ltd 4. The shareholder value maximisation model
company is ` 40, and its equity share capital
is ` 400 crores comprising of shares of face holds that the primary goal of the firm is
value of ` 100 each. The market value of to maximise :
the company is ................. .
(A) Accounting profit
(A) 16000 lakh
(B) 1600 lakh (B) Liquidity
(C) 1 lakh (C) Market value
(D) 16 lakh
(D) Working capital
2. Which among the following is not true ?
(A) Capital budgeting is the process of 5. The project planning activities and goals
evaluating and selecting long-term include defining :
investments that are in line with the goal
of investors’ wealth maximization (1) The specific work to be performed and
(B) The common traditional capital goals that define and bind the project
budgeting techniques are Payback
Period and Accounting Rate of Return (2) Estimates to be documented for
(C) Modified Internal Rate of Return planning, tracking, and controlling the
(MIRR) is the discount rate that project
equates the present value of the
expected cash inflows with the initial (3) Commitments that are planned,
cash outflow documented, and agreed to by affected
(D) All the above statements are true groups
3. A project has net cash flows of ` 11,000
per annum for four years. The Initial cash (4) Project alternatives, assumptions, and
outflow is ` 34,000. Which of the following constraints
statement is correct concerning the project’s
internal rate of return (IRR) ? Select the correct answer from the options
(A) The IRR is less than 10% given below :
(B) The IRR is greater than 10%, but less (A) (1), (2) and (3) only
than 13%
(C) The IRR is greater than 13%, but less (B) (2), (3) and (4) only
than 15%
(C) (1), (2), (3) and (4)
(D) The IRR is greater than or equal
to 15% (D) (1), (3) and (4) only

2/2023/FSM ANSWERS MARKED IN THE OMR ANSWER SHEET SHALL ONLY BE EXAMINED Contd. .....
A
 : 3 : 428
6. Y Ltd. is considering a project which requires 8. A dividend policy that helps in creating
initial investment of ` 20,000. Cost of capital confidence among the investors, stabilizes the
is 10%. Estimated cash flows after tax are market price of shares and helps in marinating

as follows : the goodwill of the company is :

(A) Regular dividend policy

Year 1 8000
(B) Stable dividend policy
Year 2 5000
(C) Both (A) and (B)
Year 3 6000
(D) Neither (A) nor (B)
Year 4 7000
9. Which of the following would be consistent
Year 5 5000
with a more aggressive approach to financing
What is the project’s discounted payback working capital ?
period ? (A) Financing short-term needs with short-
(A) 3 years & 6.52 months term funds.

(B) 4 years & 2.32 months (B) Financing permanent inventory buildup
with long-term debt.
(C) 3 years & 10.27 months
(C) Financing some long-term needs with
(D) 4 years & 8.25 months
short-term funds.
7. According to ..................., the movements
(D) Financing seasonal needs with short-
of the market are divided into three
term funds.
classifications, the primary movement, the
10. .................. are usually taken as proxy for
secondary movement, and the daily/minor
risk-free return as it is issued by the
fluctuations.
Government and duration is not very long.
(A) The Dow Theory (A) Commercial Papers
(B) The Elliot Wave Theory (B) Commercial Bills
(C) Random Walk Theory (C) Treasury Bills
(D) Efficient Market Hypothesis (D) Certificate of Deposits

2/2023/FSM ANSWERS MARKED IN THE OMR ANSWER SHEET SHALL ONLY BE EXAMINED P.T.O.
A
428 : 4 :
11. The venture capital financing is a .............. 14. ................. is the rate of return associated
financing of new high risky venture promoted with the best investment opportunity for the
by skilled entrepreneurs who lack ..............
firm and its shareholders that will be forgone
and funds but have .................... .
if the projects presently under consideration
(A) Debt, Experience, Skill
by the firm were accepted.
(B) Equity, Experience, Idea
(C) Debt, Experience, Idea (A) Explicit Cost

(D) Equity, Skill, Idea (B) Future Cost

12. A company has an existing EPS of ` 7.5; (C) Opportunity Cost
it makes an FPO of 15000 shares (Face
value ` 10) issued at a price of ` 25 per (D) None of the above
share. The additional funds thus raised are 15. CC Industries Ltd. has net assets of
expected to earn a post-tax return of 28%.
` 1,70,000 which have been financed with
What will be the expected impact on EPS
considering the EPS on existing shares to ` 58,000 of debt, ` 1,00,000 of equity and
be constant ? a general reserve of ` 12,000. The firm’s
(A) EPS will remain 7.5 total profits after interest and taxes for the
(B) EPS will be greater than 7.5 year ended 31st March 2022 were ` 15,000.
(C) EPS will be below than 7.5 It pays 10% interest on borrowed funds and
(D) Information not sufficient for is in the 30% tax bracket. It has 1000 equity
calculation shares of ` 100 each, selling price at a market
13. Commercial paper is a ................. issued price of ` 130 per share. What is the
by .................. interest rate of which is weighted average cost of capital using book
linked to .................. .
value weights if Earnings-price Ratio
(A) Debenture, Corporates, 1 Yr Gov.
approach is followed and growth rate of EPS
Securities Yield
is zero ?
(B) Promissory Note, Corporates, 1 Yr
Gov. Securities Yield (A) 7.68%
(C) Promissory Note, Banks, 1 Yr Gov. (B) 9.97%
Securities Yield
(C) 8.72%
(D) Promissory Note, Banks, RBI Repo
rate (D) 10.11%
2/2023/FSM ANSWERS MARKED IN THE OMR ANSWER SHEET SHALL ONLY BE EXAMINED Contd. .....
A
 : 5 : 428
16. Gamma Ltd. has furnished the following 18. Ranu & Co. has issued 10% debenture of
information : face value 100 for ` 10 lakh. The debenture
is expected to be sold at 5% discount. It
Earnings Per Share (EPS) ` 4
will also involve floatation costs of ` 10 per
Dividend payout ratio 25% debenture. The debentures are redeemable

Market price per share ` 50 at a premium of 10% after 10 years.

Calculate the cost of debenture if the tax
Rate of tax 30%
rate is 30%.
Growth rate of dividend 10% (A) 8.97%
The company wants to raise additional capital (B) 9.56%
of ` 12 lakhs including debt of ` 6 lakhs. (C) 8.25%
The cost of debt (before tax) is 10% up
(D) 10.12%
to ` 3 lakhs and 15% beyond that. The
19. A company has a cost of equity of 10%
weighted average cost of capital of additional
and an interest rate of 6%. The company’s
funds raised by the company on the basis
debt-to-equity ratio is 1.5, and the corporate
of dividend growth model is approx. : tax rate is 40%. What is the company’s
(A) 9.35% weighted average cost of capital ?

(B) 11.35% (A) 7.2%

(B) 6.16%
(C) 10.45%
(C) 7.6%
(D) 12.25%
(D) 8.4%
17. Retention ratio is 0.60 and return on equity
20. Which of the following actions will not
is 15.5%, D0 = 10, P0 = 70 then Ke = ?
generally cause an increase in WACC ?
(A) 14.9%
(A) Increase in proportion of equity
(B) 25.84%
(B) Increase in proportion of debt
(C) 16.1% (C) Both (A) and (B)
(D) 24.91% (D) Neither (A) nor (B)
2/2023/FSM ANSWERS MARKED IN THE OMR ANSWER SHEET SHALL ONLY BE EXAMINED P.T.O.
A
428 : 6 :
21. A company’s beta is 1.5. The market return 23. A Factoring firm has credit sales of ` 300
is 15% and the risk-free rate is 10%. What lakhs and its average collection period is
is the expected return of the company’s stock 36 days. The financial controller estimates
based on CAPM ? bad debt losses are around 2% of credit
(A) 17.5% sales. The firm spends ` 1,50,000 annually
on debtor’s administration. This cost
(B) 15%
comprises of telephonic and fax bills along
(C) 11.5%
with salaries of staff members. These are the
(D) 25%
avoidable costs. A Factoring firm has offered
22. Following information is provided by the Lake to buy the firm’s receivables. The factor will
Ltd. for the year ending 31 March 2023 : charge 1% commission and will pay an
Raw material storage period — 60 days advance against receivables on an interest
@ 12% p.a. after withholding 10% as
WIP conversion period — 22 days
reserve. What is the approx. Net annual
Finished goods storage period — 29 days
benefit of factoring to the firm in rupees ?
Debt collection period — 40 days
Ignore capital cost.
Creditor’s payment period — 60 days
(A) (1,73,400)
Annual operating cost including depreciation
(B) 1,73,400
of ` 2,00,000 was ` 20,00,000.
(C) (1,56,000)
[1 Year = 360 days]
(D) 1,26,000
You are required to calculate working
capital on cash cost basis, assuming no cost 24. Which of the following is a factor that affects

classification is available. the optimal level of working capital ?

(A) 4,66,667 (A) Sales revenue

(B) 4,55,000 (B) Competitive position of firm

(C) 5,05,555 (C) Fixed assets

(D) 10,55,000 (D) Management style

2/2023/FSM ANSWERS MARKED IN THE OMR ANSWER SHEET SHALL ONLY BE EXAMINED Contd. .....
A
 : 7 : 428
25. Which among the following is not a systematic 29. Maximum permissible bank finance as per
risk ? the first method of Tandon Committee norms
(A) Interest Rate Risk was ` 57,41,813 while current liabilities are
reported at ` 32,50,000. Current assets = ?
(B) Purchasing Power Risk
(A) 10905750
(C) Market Risk
(B) 9905720
(D) Business Risk
(C) 10907550
26. Which of the following indicates aggressive
working capital policy ? (D) 10509750

(A) Higher liquidity and poor risk 30. Which of the following is the most important
determinants of a firm’s cash reserve
(B) Higher risk and higher liquidity
requirements ?
(C) Higher risk and poor liquidity
(A) Size of the firm
(D) Lower risk with lower liquidity
(B) Industry type
27. Which of the following is a technique used
(C) Sales and profitability
to manage working capital ?
(D) Seasonal fluctuations in sales
(A) Factoring
31. Which of the following is not a stage in
(B) IPO
evolving plan of a project ?
(C) Mergers and Acquisitions
(A) Concept Planning
(D) Divestment
(B) Concept Definition
28. Which of the following statements is not
(C) Project Start-up
covered in Credit Monitoring Arrangements
report ? (D) Project Close-out

(A) Particulars of current and proposed 32. Which of the following dividend types is not
limits prevalent in India ?

(B) Comparative statement of current (A) Cash Dividend

assets and current liabilities (B) Bond Dividend
(C) Statement of contingent liabilities (C) Property Dividend
(D) Ratio Analysis (D) Stock Dividend
2/2023/FSM ANSWERS MARKED IN THE OMR ANSWER SHEET SHALL ONLY BE EXAMINED P.T.O.
A
428 : 8 :
33. Bharat Ltd is an all-equity firm that has 36. Mr. Dashan recently came back from a
projected earnings before interest and taxes
conference titled Capital Structure Theory
of ` 5,50,000 forever. The current cost of
equity is 15% and tax rate 30%. The and was extremely excited about what he
company is in the process of issuing learned concerning Modigliani and Miller’s
` 17,00,000 of bonds at par that carry an
capital structure propositions. He has been
8% annual coupon. What is the value of the
firm after issuing bonds if the EBIT increases trying to choose between three potential
by 50% after bond issue ?
capital structures for his firm, Dashmart
(A) 45,60,133
Corporation, and believes that Modigliani and
(B) 49,15,333
Miller’s work may guide him in the right
(C) 39,16,667
direction. The capital structures Mr. Dashan
(D) 42,25,600
is considering are :
34. ............ assumes that co-movement between
stocks is due to change or movement in the CS I : 100% equity.
market index.
CS II : 50% equity and 50% debt.
(A) Single Index Model
(B) Multi Index Model CS III : 100% debt.

(C) Markowitz model of Risk-Return If he uses Modigliani and Miller’s propositions

Optimization
and includes all their assumptions including
(D) Capital Assets Pricing Model
the assumption of no taxes, which capital
35. Which one of the following approaches of
the capital structure pleads that debt financing structure is he most likely to choose ?
initially increases the value of the firm; Which capital structure would be chosen in
however excess debt financing beyond a
case of tax regime ?
particular point reduces the value of the
firm ? (A) CS I and CS II
(A) Net income approach
(B) CS I and CS III
(B) Net operating income approach
(C) CS II and CS III
(C) Traditional approach
(D) M&M approach (D) Any of the above CS I, II and III

2/2023/FSM ANSWERS MARKED IN THE OMR ANSWER SHEET SHALL ONLY BE EXAMINED Contd. .....
A
 : 9 : 428
37. Tarmarind Ltd. wants to implement a project 39. One-fourth of the total market value of
for which ` 25 lakhs is required. Following X Ltd. consists of loan stock, which has a
financing options are at hand : cost of 11%. Another company, Y Ltd., is
Option 1 : identical in every respect to X Ltd., except
that its capital structure is all-equity, and its
Equity Shares 25,000@` 100
cost of equity is 15%. According to
Option 2 :
Modigliani and Miller, if we ignored taxation
Equity Shares 10,000@` 100 and tax relief on debt capital, what would
12% Preference Shares 5,000@` 100 be the cost of equity of X Ltd. ?
10% Debentures 10,000@` 100 (A) 16.33%
Calculate the indifference point & EPS at (B) 15.50%
that level of EBIT assuming corporate tax
(C) 17.00%
to be 35%.
(D) 14.83%
(A) ` 2,94,872; ` 11.80
40. According to the residual dividend theory,
(B) ` 3,20,513; ` 8.33
dividend payment is determined on the
(C) ` 2,94,872; ` 7.67
basis of :
(D) ` 3,20,513; ` 12.82
(A) The availability of excess funds after
38. Assertion (A) : The capital structure should all investment opportunities with positive
involve minimum risk of financial insolvency. net present value are undertaken.
Reason (R) : The use of excessive debt (B) The preference of shareholder for a
threatens the solvency of the company. consistent dividend payout ratio
(A) Both (A) and (R) are true and (R) is
(C) The desire to maintain a stable dividend
correct explanation of (A)
payout ratio regardless of investment
(B) Both (A) and (R) are true but (R) is opportunity
not correct explanation of (A)
(D) The goal of maximizing shareholder
(C) (A) is true, but (R) is false wealth by paying out all available
(D) (A) is false, but (R) is true earning as dividend

2/2023/FSM ANSWERS MARKED IN THE OMR ANSWER SHEET SHALL ONLY BE EXAMINED P.T.O.
A
428 : 10 :
41. Determine the market price of share of XYZ 44. Ram Ltd is a listed company. Its ` 1 ordinary
Ltd as per Gordon’s model, given that equity shares are quoted on the stock exchange.
capitalisation rate = 11%, expected earning The Board of Ram Ltd. is aware that the
market is expecting Ram Ltd. to pay a
= ` 20, rate of return on investment = 10%
dividend of ` 90 lakh to be paid at the year
& retention ratio = 30%.
end, but in order to fund the investment in
(A) 165 an important new project, the Board is
considering offering a scrip dividend of
(B) 175
1 share for every 10 shares held instead of
(C) 185 a cash dividend. Profit after tax and interest
(D) 195 is forecast to be ` 250 lakh in the current
financial year, and Ram Ltd. equity comprises
42. Following information is available in respect of :
of Rama Ltd. :
Ordinary share capital (` 1 shares) ` 1,000
No. of shares outstanding : 4 lakh lakh
Net profit : ` 20 lakh Reserves ` 350 lakh
Equity capitalization rate : 15% Ram Ltd’s share price is ` 1.5 per share.
Rate of return on investment : 20% What is the approx. expected share price
of Ram Ltd after the scrip dividend has been
You are required to calculate Dividend payout
issued ?
ratio to keep share price at ` 40.
(A) ` 1.42
(A) 30%
(B) ` 1.28
(B) 40%
(C) ` 1.36
(C) 45% (D) ` 1.45
(D) 50% 45. When IRR is greater than ............, the price
43. The repurchase of stock is considered per share ............. and dividend pay-out is
............... decision rather than ............... expected to ......... .
decision. (A) Cost of equity capital, increases,
decrease
(A) financing; an investment
(B) Cost of debt capital, decreases,
(B) an investment; a financing
increase
(C) a dividend; a financing (C) Cost of capital, increases, decrease
(D) an investment; a dividend (D) Cost of capital, decreases, increase
2/2023/FSM ANSWERS MARKED IN THE OMR ANSWER SHEET SHALL ONLY BE EXAMINED Contd. .....
A
 : 11 : 428
46. According to “Bird-in-hand Theory”, 48. .............. helps to analyze the level of fixed
investors are ................ . cost which is invested in day-today activities
(A) Risk Averse and Put premium on of business firm.
certain return and discount on certain
return (A) Operating Leverage

(B) Risk takers and Put premium on (B) Financial Leverage

uncertain return and discount on certain
(C) Combined Leverage
return
(D) Profit Volume relationship
(C) Risk neutral and put no premium or
discount on return 49. When EBIT is less than Finance Break-even
(D) Risk Averse and put premium on point, the result is ................. .
uncertain return and discount on certain
(A) Positive Financial leverage
return
47. The MM hypothesis of the irrelevance of (B) Negative Financial leverage
dividends is based on which of the critical (C) Higher Financial Leverage
assumption ?
(D) No Financial leverage
(i) Investors can forecast future prices &
dividends with certainty. 50. If the combined leverage and operating
(ii) The firm has a given investment policy leverage figures of a company are 2.5 and
which does not change. 1.25 respectively, find the financial leverage
(iii) All financing is done only through and P/V ratio, given that the equity dividend
retained earnings. per share is ` 2, interest payable per year
(iv) There are no taxes. is ` 1 lakh, total fixed cost ` 0.5 lakh and
(v) Perfect capital market in which all sales ` 10 lakhs.
investors are rational.
(A) 3.125; 25%
(A) (i), (ii) and (iii) only
(B) 2.00; 40%
(B) (iii), (iv) and (v) only
(C) (i), (ii), (iv) and (v) only (C) 2.00; 25%

(D) (ii), (iii), (iv) and (v) only (D) 3.00; 40%

2/2023/FSM ANSWERS MARKED IN THE OMR ANSWER SHEET SHALL ONLY BE EXAMINED P.T.O.
A
428 : 12 :

51. Trading on equity represents : 54. Following data is available for A Ltd.

Financial Leverage - 3 : 1, Interest - ` 2,000,

(A) high volume of equity shares traded on
Operating Leverage - 4 : 1, Variable cost
stock market.
(% to sales) - 66.67%, Income Tax Rate -
(B) use of equity trading to enhance the 45%. Amount of contribution will be :

returns of long-term interest bearing (A) ` 6,000

funds. (B) ` 12,000

(C) use of equity trading to enhance the (C) ` 36,000

returns of preferred funds. (D) ` 18,000

55. Operating leverage is 8 and financial leverage

(D) use of long-term interest bearing funds
is 2.2769. How much change in sales
to enhance return on equity. will be required to bring 80% change in
52. .................. is also known as double edged EBIT ?

sword. (A) 10%

(B) 80%
(A) Operating leverage
(C) 11.429%
(B) Financial leverage
(D) 30%
(C) Combined leverage
56. Profitability index of Project ` is 1.50 when
(D) Financial break-even point its cash flow is discounted at 12%. Initial
investment on project was ` 1,44,200. This
53. Which of the following is a modern technique
project generates equal cash flow over the
of capital budgeting ? five year’s time. How much cash flow will
be generated by the project each year ?
(A) Accounting Rate of Return
(A) 50,000
(B) Internal Rate of Return
(B) 60,000
(C) Modified Internal Rate of Return
(C) 52,615
(D) Discounted Pay-back Period (D) 71,220
2/2023/FSM ANSWERS MARKED IN THE OMR ANSWER SHEET SHALL ONLY BE EXAMINED Contd. .....
A
 : 13 : 428
57. A professional kitchen is attempting to choose 59. A project under consideration whose useful
between gas and electricity for its main heat
source. Once a choice is made, the kitchen life is 4 years, will have no change in revenue
intends to keep to that source indefinitely.
but will save cost of ` 1,60,000 annually.
Each gas oven has a net present value (NPV)
of ` 60,000 over its useful life of 5 years. It has IRR of 15%. What is the project cost
Each electric oven has an NPV of ` 75,000
over its useful life of 7 years. The cost of i.e., initial investment ?
capital is 8%. Which should the kitchen
(A) ` 10,66,667
choose and why ?
(A) Gas because its average NPV per year (B) ` 4,80,200
is higher than electric
(B) Electric because its NPV is higher than (C) ` 5,32,800
gas
(D) ` 4,56,800
(C) Gas because its equivalent annual
benefit is higher 60. Initial capital cost ` 100 crores, Annual unit
(D) Electric because its equivalent annual
benefit is higher sales 1.25 crores, Selling Price ` 100 per

58. The following data is available for Project unit. Variable cost ` 50 per unit, Fixed Cost
A whose initial investment is ` 80,000 and
12.50 crores per year, Cost of capital is
salvage value after 5 years are ` 4,500.
Year CFAT (`) 6%. What will be approx. % change in NPV
1 35,000 for 5% reduction in Sale Price per unit
2 30,000 considering duration of the project is
3 20,000
3 years ? Ignore taxation and depreciation
4 20,000
and assume no interest cost.
5 2,500
What is the NPV of Project A if the Ke (A) 49.66%
of the company is 10% ? Ignore taxation.
(A) ` 9,622 (B) 24.81%
(B) ` 6,827.5
(C) 4.96%
(C) ` 7,500
(D) ` 8,500 (D) 12.58%

2/2023/FSM ANSWERS MARKED IN THE OMR ANSWER SHEET SHALL ONLY BE EXAMINED P.T.O.
A
428 : 14 :
PART—II
61. Scalar chain indicates : 64. Ranu, a top-level manager of a large
(A) Employees should have complementary manufacturing plant, tries to ensure that the
skill sets that allow them to specialize material spoilage is not more than 5%. She
in certain areas. is performing the management process of :
(B) There has to be unity of command for (A) Organizing
each employee. (B) Controlling
(C) The team comes before the individual. (C) Planning
(D) Each company should have clear (D) Leading
hierarchical structures and that should
be known to employees. 65. In projects like Civil Construction and Ship
building, which of the following is more
62. Koontz and O’Donnell believed that there
suitable ?
ought to be five key functions of management.
Which one is not part of those five functions ? (A) PERT
(A) Planning (B) CPM
(B) Organizing (C) Both
(C) Staffing (D) Neither CPM nor PERT
(D) Motivating 66. Which of the following signifies Attractive
63. Y is a clothing brand that also offers Industry as per Porter’s five forces model ?
consumers washable diaper products. (A) High Barrier to enter
According to Porter’s Five Forces model,
(B) Strong buyers bargaining power
which one of the following indicates that the
power of buyers in Y’s industry is high ? (C) Strong supplier bargaining power
(A) Y has few rivals in the diaper products (D) Intense Competition
(B) Y’s diaper products have a number 67. Which of the following is about
of special features, differentiating them communication with the employees and other
from those offered by its rivals. stakeholders of the ogranisation, which let
(C) Their products are crucial to the buyer them see where the organization is aspiring
and substitutes to the material required to head in the future ?
for production are not available. (A) Mission statement
(D) Y’s customer typically uses comparison (B) Vision statement
websites to see how much their diapers
are costlier from a number of different (C) Goals
sellers (D) Objectives

2/2023/FSM ANSWERS MARKED IN THE OMR ANSWER SHEET SHALL ONLY BE EXAMINED Contd. .....
A
 : 15 : 428
68. Strategic Planning process is modelled in 70. Which of the following is not an advantage
of GE matrix ?
cyclical framing of various steps. Which one
(A) It helps to prioritize the limited
of the following is not part of the cycle ?
resources in order to achieve the best
(A) Deliberating mission of the Organisation returns.

(B) Developing goals based on Vision (B) It provides synergy benefit that could
exist between two or more business
statement
units.
(C) Examining internal environment (C) Managers become more aware of how
(strengths and weaknesses) their products or business units
perform.
(D) Examine external environment
(D) Identifies the strategic steps the
(opportunities and threats) company needs to make to improve
69. Following are the components of Six Sigma the performance of its business
portfolio.
process :
71. Following is based on the participation of
(a) Analyse all members of an organization to improving
processes, products, services, and the culture
(b) Define
they work in :
(c) Measure (A) TQM
(d) Control (B) BPR

(e) Improve (C) Benchmarking

(D) Six Sigma
Identify the correct flow of Six Sigma
72. ...................... is the essence of strategic
process :
planning process, and occupies highest level
(A) (a), (b), (c), (d), (e) of strategic decision-making.
(A) Corporate Level Strategy
(B) (b), (c), (a), (e), (d)
(B) Business Level Strategy
(C) (a), (b), (c), (e), (d)
(C) Functional Level Strategy
(D) (b), (a), (c), (e), (d) (D) Operational Level Strategy

2/2023/FSM ANSWERS MARKED IN THE OMR ANSWER SHEET SHALL ONLY BE EXAMINED P.T.O.
A
428 : 16 :
73. Business Policy also includes dealing with : 76. Which of the following is not a stage in
implementing HR strategies ?
(A) Acquisition of resources with which
organizational goals can be achieved (A) Assessing the current HR capacity
(B) Forecasting HR requirements
(B) The process that is conducted
periodically to keep the strategies up (C) Developing organizational strategies to
to date support the HR strategies
(D) Gap Analysis
(C) Process of improving product or
77. Which of the following is not an exclusively
services being offered by the business
production strategy under Competitive
at present. Priorities category ?
(D) Research and its operating environment (A) Price strategy
74. Which of the following is not a parameter (B) Quality strategy
considered in “Competitive Positioning (C) Low cost strategy
and Value Creation Frontier” by Hill and
(D) Eco-friendly products strategy
Jones ? 78. Which of the following is not an element of
(A) Sustainability Logistics Strategy plan ?

(B) Innovation (A) Customer service policy

(B) Inventory location policy
(C) Responsiveness
(C) Logistics organisation structure
(D) Efficiency
(D) Delivery policy
75. Which of the following is not regarding an 79. AB Ltd. currently sells its products in US
organization’s Mission statement ? and China. While it is a market leader in
(A) It talks about how you will get to where US, AB Ltd has struggled to maintain its
you want to be. market share in China. It has decided to pull
out of China entirely and focus on its US
(B) It describes where the company wants markets. Which is the following level of
to be. strategy does AB’s decision relate to ?
(C) It describes what an organization does (A) Operational
and what makes it different. (B) Functional
(D) It talks about the present leading to (C) Corporate
its future. (D) Business

2/2023/FSM ANSWERS MARKED IN THE OMR ANSWER SHEET SHALL ONLY BE EXAMINED Contd. .....
A
 : 17 : 428
80. Following is the means by which a firm is 84. Which of the following is/are tools of
effectively able to differentiate itself from its BPR ?
competitors by capitalising on its strengths (A) Visualization for end process and
(both existing as well as potential) to provide benchmarking
consistently better value to its customers than
(B) Change management
its competitors :
(C) Business process mapping
(A) Marketing strategy
(D) All of the above
(B) Business policy
85. Profitability of a company depends on
(C) Corporate strategy which of the following factor as per value
(D) Finance strategy creation ?
(A) The value customer places on the
81. Working Capital Management is a part
company’s products
of :
(B) The price that a company charges for
(A) Investment decision
its products
(B) Financing decision
(C) The costs of creating those products
(C) Dividend decision
(D) All of the above
(D) Asset management 86. Which of the following is the ‘Mini-Maxi’
82. Which of the following is not a core focus strategy in TOWS analysis ?
area of complete situation analysis ? (A) Conservative strategy
(A) The Problem (B) Competitive strategy
(B) The Product (C) Aggressive strategy
(C) The People (D) Defensive strategy
87. ABC Ltd has updated the packaging of its
(D) The Broad Context
products as well as slightly reducing its selling
83. Benchmarking against external organisations price. According to Ansoff ’s product/market
that do not compete directly with the matrix, which of the following strategies has
competitors inside its industry is called : ABC Ltd adopted ?
(A) Competitive benchmarking (A) Market development
(B) Collaborative benchmarking (B) Product development
(C) Non-competitive benchmarking (C) Market penetration
(D) Generic benchmarking (D) Diversification

2/2023/FSM ANSWERS MARKED IN THE OMR ANSWER SHEET SHALL ONLY BE EXAMINED P.T.O.
A
428 : 18 :
88. Rate relating to Sky Ltd. is shown below, 91. The ADL Matrix is technique that is based
which product is cash cows among the
on the :
following ?
(A) Market Growth Strategy
Product Percentage Market

Market Share Growth rate (B) Market Relative Share

Alpha 65 High (C) Strategic Business Units (SBU)

Beta 30 High
(D) Product Life Cycle
Gamma 50 Low
92. Identify steps that are involved in using the
Delta 15 Low
ADL Matrix :
(A) Gamma
(A) Identify the industry maturity category
(B) Beta
(C) Delta (B) Determining competitive position

(D) Alpha (C) Plot the position of the matrix

89. With which of the four perspectives of a (D) All of the above
balanced scorecard, is the objective ‘reduce
93. Which of the following is a strategic alternative
employee turnover’ is associated with ?
according to Glueck and Jauch ?
(A) Financial
(B) Internal processes (a) Internal Growth

(C) Learning and growth (b) Retrenchment

(D) Customer (c) Differentiation
90. If Industry Attractiveness is ‘Low’ and
(d) Cost Focus
Business Strength is ‘Average’ , then which
of the following strategy should be followed Options :
as per GE Matrix ?
(A) Both (c) and (d)
(A) Invest/Expand
(B) Both (a) and (b)
(B) Select/Earn
(C) Harvest/Divest (C) (b) only

(D) Hold/Selective (D) All of the above

2/2023/FSM ANSWERS MARKED IN THE OMR ANSWER SHEET SHALL ONLY BE EXAMINED Contd. .....
A
 : 19 : 428
94. Which of the following is not a certification 98. Which of the following is a soft factor
of six sigma ?
identified by McKinsey’s 7 S Model ?
(A) Champion
(A) Skills
(B) Black belt
(B) System
(C) Blue belt

(D) Master Black belt (C) Structure

95. As per Porter’s five force theory, low raw (D) Strategy
materials substitute is a factor of :
99. What is meant by the element of “style” in
(A) Buyer Power
the 7-S framework ?
(B) Supplier Power
(A) Why customers should buy from them.
(C) Threat of new entry

(D) Threat of substitutes entry (B) Whether a business is doing ethical

96. Which of the following is not a commonly Commerce.
known style of leadership ?
(C) What are the capabilities of employees.
(A) Transactional Leadership
(D) How is the behavioral patterns and of
(B) Charismatic Leadership
managerial styles of Managers.
(C) Transformational Leadership

(D) Independent Leadership 100. Balanced Score Card was developed for :

97. Which of the following is not a type of a (A) evaluating financial performance of
Strategic Control techniques ?
business organization
(A) Premise control
(B) addressing customer concerns
(B) Strategic surveillance
(C) optimizing business process
(C) Monitoring control

(D) Special alert control (D) all the above

2/2023/FSM ANSWERS MARKED IN THE OMR ANSWER SHEET SHALL ONLY BE EXAMINED P.T.O.
A
428 : 20 :
Space for Rough Work

2/2023/FSM ANSWERS MARKED IN THE OMR ANSWER SHEET SHALL ONLY BE EXAMINED Contd. .....
A