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ABFM MODULE - D
Top MCQs

What we will study?

*High priority MCQs of Module D?
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Q1. Two of the three schools of thought on Al and Morality are _________?
i) Al is more of a curse than a boon.
ii) There are many poor people who need work.
iii) Al requires dependency on foreign technology.
iv) Civilisation cannot advance without using advanced technology.

a) (i) and (ii) only. b) (ii) and (iii) only.

c) (ii) and (iv) only. d) (iii) and (iv) only.

Answer: C
Refer Page: 529, Topic: 22.12.
Explanation: Artificial Intelligence and Morality:
The implications of artificial intelligences in terms of morality and ethics are evident
and debatable, and there are several distinct schools of thought coming out with
various points of view.
While one faction contends that currently there are a large number of people living in
extreme poverty without work, another contends that there is very little to no reason
to create mechanical laborers (that can think independently).
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And the fact that we should by no means attempt to build machines that are capable
of debating us on such topics.
One group of people contend that human civilization cannot advance or make use of
available resources without the assistance of machines that are capable of at least
some degree of independent thought.
And finally, the third school, which is representative of human society in general, has
absolutely no interest in the matter at all.

Q2. Your bank proposes to issue perpetual non-cumulative preference shares

(PNCPS). Which of the following feature is in violation of the law?
a) The PNCPS have no maturity date, step-ups, or other redemption incentives.
b) PNCPS will not have a "call option"
c) Principal of the instruments may be repaid only with prior approval of RBI.
d) The bank must have full discretion at all times to cancel distributions/payments.
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Answer: B
Refer Page: 437, Topic: 19.4.6.
Explanation: Perpetual Non-Cumulative Preference Shares:
This type of Preference Shares is issued by Indian banks as part of Additional Tier 1
Capital, subject to extant legal provisions, only in Indian rupees and should meet the
following terms and conditions to qualify for inclusion in Additional Tier 1 Capital for
capital adequacy purposes:
1. The instruments should be issued by the bank (not a bank-created SPV) and fully
paid up.
2. Bank boards may decide how much PNCPS to raise.
3. Perpetual Non-Cumulative Preference Shares (PNCPS) in Additional Tier 1 Capital
cannot exceed 1.5% of risk-weighted assets.
Once this minimum total Tier 1 capital is met, any additional PNCPS issued by the
bank can be added.
Excess PNCPS can be considered Tier 2 capital if less than 2% of RWAS, while meeting
minimum Total Capital of 9% of RWAS.
4. The PNCPS have no maturity date, step-ups, or other redemption incentives.
5. Investor dividends may be fixed or floating, based on a market-determined rupee
interest benchmark rate.
6. PNCPS shouldn't have a "put option."
However, banks may issue instruments with a call option at a specific date.
7. Principal of the instruments may be repaid (e.g., through purchase or redemption)
only with prior approval of RBI.
8. The bank must have full discretion at all times to cancel distributions/payments.
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Q3. The Technology Development Fund established by the Ministry of Defence
provides benefits identified under “Make in India” plan which include funding support
as grant-in-aid for projects costing up to Rs. ________ crore subject to a maximum
funding of 90% of the overall cost of the project?

Answer: 50 Crore.
Refer Page: 474, Topic: 20.11.10.
Explanation: As part of the "Make in India” plan, a fund for the development of
technology has been established so that India can become more self-sufficient in its
defense technologies.
It is a programme that is being carried out by DRDO on behalf of the Ministry of
Defence to meet the requirements of the Tri-services, Defence production, and DRDO.
To the extent that it does not exceed 90% of the overall cost of the project, funding
will be considered for projects with costs of up to Rs. 50 crores. (Old 10 Cr)
The industry will be awarded grants in order to assist it in meeting its financial
obligations.
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Q4. A startup firm has grown using only one's own resources and refusing any outside
investment. The kind of funding that the startup firm resorted to is known as
_______?
a) Bootstrapping. b) Scaling.
c) Seed funding. d) Crowd funding.

Answer: A
Refer Page: 468, Topic: [Link].
Explanation: Growing a company using only one's own resources and refusing any
outside investment is an example of "bootstrapping."
It involves basing both the operation of the firm and its growth on the profits and
savings generated by it.
Because there is no obligation to pay back the cash or to dilute control of the firm,
this is the first choice that the vast majority of entrepreneurs choose.
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Q5. The Startup India Single Use Plastic International Challenge has been launched
with the following alternatives to select from?
a) Help reduce the amount of single-use plastic used in the food and beverage
industry.
b) Innovative solutions for Animal Husbandry and increase milk production.
c) Develop design solutions for higher carbon emissions in manufacture of plastic.
d) Develop innovative solutions for Ayushman Bharat Jan Aarogya Yojana.

Answer: A
Refer Page: 459, Topic: 20.7.19.
Explanation: Startup India Single Use Plastic International Challenge:
Because single-use plastics, also known as disposable plastics, are only used a single
time before being thrown away or recycled, government of India has created the
Startup India Single use plastic International Challenge in order to encourage
inventors and startups to develop design solutions.
To help reduce the amount of single-use plastic used in the food and beverage
industry, The SUP Challenge-Goa is calling for the participation of innovative startup
companies.
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Q6. Which ISO has its description accurately connected to it?
i) ISO 32210 with sustainable finance framework.
ii) ISO 14007 with environmental costs and benefits.
iii) ISO 14008 with monetary evaluation of environmental impacts.
iv) ISO 14097 with assessing & reporting investments related climate change.

a) (i) and (ii) only. b) (i) and (ii) only.

c) (iii) and (iv) only. d) All of the above.

Answer: D
Refer Page: 565, Topic: 24.2.
Explanation: The various ISOs are:
1. ISO 32210: Framework for Sustainable Finance.
2. ISO 14007: Environmental costs and Benefits.
3. ISO 14008: Monetary valuation of environmental impacts.
4. ISO 14097: Assessing and reporting investments related to climate change.
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Q7. Typically, international foundations and non-governmental organizations fund
green finance initiatives through?
a) Bank guarantees.
b) Underwriting.
c) Equity.
d) Project-specific grants.

Answer: D
Refer Page: 568, Topic: 24.3.1.
Explanation: Governments, charities, banks, and private investors can finance "green"
initiatives using a variety of methods.
They can be divided into four categories: loan, equity, and risk-mitigation products.
Global foundations and NGOs typically provide project-specific grants, such as for
decentralized solar mini-grids for rural electrification.
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Q8. One of the components of Startup India Yatra is?
a) To upskill the entrepreneurs with knowledge of Power Point or Keynote slides.
b) A boot camp, which is held to include idea validation, awareness workshops and
pitching sessions.
c) Creating competitive environment for Start Ups to export.
d) Having a target group in tier I cities.

Answer: B
Refer Page: 455, Topic: 20.7.2.
Explanation: The following is a list of the important elements that are included in
Startup India Yatra:
1. The mobile van for the Startup India travels across the states and records ideas
2. The Startup Yatra has been carried out in 23 states and 220 districts, having an
effect on about 780,000 people interested in starting their own businesses.
3. A total of approximately 1,450opportunities for entrepreneurs to participate in an
incubator programme have been made available.
4. Throughout the course of the day, a boot camp will be held, which will include idea
validation, awareness workshops, and pitching sessions.
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Q9. As per the guidelines of the Alternate Investment Fund Regulations, an individual
investor who possesses net tangible assets worth at least Rs. ------- (given in whole
numbers) crore, is considered an angel investor?

Answer: Rs. 2 crores

Refer Page: 506, Topic: 21.24.
Explanation: Angel fund:
is a sub-category of Venture Capital Fund under Category 1 Alternative Investment
Fund that raises funds from angel investors and invests in accordance with the
provisions of Chapter III-A of AIF Regulations.
In case of an angel fund, it shall only raise funds by way of issue of units to angel
investors. "Angel investor" means any person who proposes to invest in an angel fund
and satisfies one of the following conditions, namely.
An individual investor who has net tangible assets of at least two crore rupees
excluding value of his principal residence, and who:
1. Has early-stage investment experience.
2. Has experience as a serial entrepreneur.
3. Is a senior management professional with at least ten years of experience.
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Q10. One of the disadvantages of green bond is costs associated with?
a) Lower number of subscriptions of green bond by public.
b) Issue, conversion, recapitalization expenses.
c) Labelling, certification, administrative, verification, monitoring costs.
d) Recapitalization expenses.

Answer: C
Refer Page: 575, Topic: [Link].
Explanation: The disadvantages of issuing green bonds are:
1. The one-time and continuing transaction costs associated with labelling and the
accompanying administrative, certification, reporting, verification, and monitoring
requirements.
2. The risk to a bond's reputation if its "green credentials" are called into question.
have the right to claim for damages in the event of a "green default," which occurs
when
3. Investors an issuer violates the terms of an agreement even though the bond was
paid in full.
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Q11. Stakeholders of a SPAC are__________?
i) Investors.
ii) Vendors.
iii) Targets.
iv) Lenders.
v) Company.

a) (i) and (iv) only. b) (i) and (iii) only.

c) (i), (iii) and (iv) only. d) (i), (ii), (iii) and (iv).

Answer: B
Refer Page: 602, Topic: 25.6.
Explanation: Stakeholders of a SPAC are:
1. Targets.
[Link].
3. Investors.
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Q12. Identify the role associates play in a VC Fund?
a) Inexperienced attends conferences look for business opportunities.
b) Fairly junior member, makes investment choices but not control.
c) Junior or senior with financial background, creates relationships.
d) Primary role for generating new business opportunity.

Answer: C
Refer Page: 486, Topic: 21.9.
Explanation: ROLES AT A VC:
Venture capital companies employ a wide variety of people with specialized skills and
backgrounds. The primary responsibility of analysts is to attend conferences and to
look for business opportunities that might fit inside the framework of the investment
thesis of the fund being managed by the venture capital firm.
The associate role is the one that comes immediately following the analyst post. An
associate may either be junior or senior depending on their experience.
People who arrive with a financial background and significant skills in creating
relationships are typically the types of people who are considered associates.
Associates at a company do not participate in the decision-making process, but they
may surely make a good first impression on those who are responsible for making
decisions.
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Q13. In VC structure and funding terms, a hurdle rate signifies?
a) Bonus share in addition to base compensation.
b) Minimum annual IRR to be guaranteed to a Limited Partner (LP).
c) Voting rights clauses and interest rate clauses.
d) Allocated rate of interest for distributing capital back to LP.

Answer: B
Refer Page: 488, Topic: 21.11.3.
Explanation: Hurdle Rate:
This is the minimum annual return, measured as an internal rate of return (IRR), that
Rajan is required to guarantee for LPs.
If the fund is unable to achieve this rate of return, it is considered to be unsuccessful
(and a lot of VC funds fail).
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Q14. When SPAC obtains funds through IPO, the money can be placed in_______?
i) Long-term Bank Deposits.
ii) Debt Instruments.
iii) Long-term Government Bonds.
iv) A trust for a predetermined time or until the acquisition is completed, whichever
comes first.

a) (ii) and (iii) only. b) (ii) only.

c) (iv) only. d) (i) and (ii) only.

Answer: C
Refer Page: 603, Topic: 25.8.
Explanation: When the SPAC obtains the funds through the IPO, the money is placed
in a trust and kept there for a predetermined amount of time or until the acquisition
is completed, whichever comes first.
The Special Purpose Acquisition Company (SPAC) is obligated to repay the funds to
investors after deducting bank and broker costs in the event that the planned
acquisition is not completed or the legal requirements are not yet complete.
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Q15. Which of the under-noted organizations has been formed by the Govt. of India
to support development of startups?
a) Department of Promotion of Industry and Internal Trade.
b) Department of Trade and Industry.
c) Department of Foreign Trade and New Industries.
d) Ministry of MSME.

Answer: A
Refer Page: 453, Topic: 20.5.
Explanation: Department for Promotion of Industry and Internal Trade (DPIIT) look
after Start up India program.
There is at least one startup that has been recognized by the DPIIT operating in each
of the 36 states and Union Territories.
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Q16. SEBI circular 10th May, 2021 containing format of BRSR (Business Responsibility
and Sustainability Report) is mandatory for the?
a) Top 10 listed companies to provide an overview of entity's Economic Social and
Governance risks and opportunities.
b) Top 1000 listed companies to provide an overview of entity's Environmental Social
and Governance risks and opportunities.
c) Top 100 companies to provide an overview of entity's Economic, Social and
Governance risks and opportunities.
d) All listed companies to provide an overview of entity's Economic, Social and
Governance risks and opportunities.

Answer: B
Refer Page: 583, Topic: 24.6.2.
Explanation: SEBI issued a Circular on 10th May, 2021 containing the format of the
Business Responsibility and Sustainability Report ("BRSR").
Under BRSR, the top 1,000 listed entities need to provide an overview of the entity's
material ESG risks and opportunities, approach to mitigate or adapt to the risks along
with financial implications of the same.
BRSR was introduced with the aim of making it mandatory for the top 1000 listed
companies to report their sustainability performance in order to maintain
transparency with stakeholders.
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Q17. The purpose of the Green Bond principle of International Capital Market
Association (ICMA) is to?
a) Increase the investment for GDP.
b) Increase the transparency and integrity of the market.
c) Increase the amount of foreign Investment.
d) Increase the high cost of issuance of green bond market.

Answer: B
Refer Page: 572, Topic: [Link].
Explanation: Framework for Green Bond Issuance:
The Green Bond Principles (GBP) are a collection of optional process principles that
were established by the International Capital Market Association.
Their purpose is to increase the transparency and integrity of the green bond market
around the world.
They advise the issuers to construct a framework for the process of issuing green
bonds, which should include four essential components.
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The first of these is the usage of profits in situations when the GBP has established
criteria for determining which types of initiatives are qualified to be labelled as
"green." The second approach is a technique of evaluating and selecting projects, in
which the issuers are required to describe the environmental objectives of the project
as well as the risks that are expected to be incurred and the strategies that will be
used to mitigate those risks. The third component is the management of the
proceeds, which requires the issuers to store the money in a sub-account or a
separately managed account and to keep the lenders updated on the movement of
the money. Last but not least, the GBP discusses different techniques for providing
transparent reports to the lenders, including the impact that the project will have.

Q18. Black Scholes Model approach is used for valuation of?

a) Bonds. b) Share.
c) Warrant. d) Debenture.
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Answer: C
Refer Page: 5440 Topic: 19.8.
Explanation: Applying the Black Scholes Model:
If one is willing to disregard the complexities brought about by dividends and/or
dilution, it is possible to assess the value of a warrant by following this approach.
Black Scholes model is used for valuation of options.
As warrant is like a call option, this model can be used for its valuation also.
This model takes into consideration five variables viz., volatility, underlying stock
price, time, strike price, and risk-free interest rate.

Q19. ------- of the Companies Act, 2013, states that issue of irredeemable shares is
prohibited and puts an outer limit for redemption of a period not exceeding 20 years
from the date of their issue but permits issue of preference shares for a period
exceeding 20 years for infrastructure projects, subject to the redemption of such % of
shares as may be prescribed on an annual basis at the option of such preferential
shareholders?
a) Section 43. b) Section 55.
c) Section 47. d) Section 62.
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Answer: B
Refer Page: 434, Topic: 19.4.1.
Explanation: Section 55 relating to the issue and redemption of preference shares by
a company limited by shares, further states that issue of irredeemable shares is
prohibited and puts an outer limit of a period not exceeding 20 years from the date of
their issue but permits issue of preference shares for a period exceeding twenty years
for infrastructure projects, subject to the redemption of such % of shares as may be
prescribed on an annual basis at the option of such preferential shareholders.

Q20. Which statement is correct?

a) Public equity markets generate (25-35%) and debt markets give return of (12-15%),
while venture capital generates a return in the range of (8-10%) annually.
b) Public equity markets generate (8-10%) and debt markets give return of (12-15%),
while venture capital generates a return in the range of (25-35%) annually.
c) Public equity markets generate (12-15%) and debt markets give return of (8-10%),
while venture capital generates a return in the range of (25-35%) annually.
d) None.
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Answer: C
Refer Page: 489, Topic: 21.12.
Explanation: RETURNS FOR VENTURE CAPITAL:
There is a correlation between high risk and high rewards. When compared to the
return that public equity markets generate (12-15%) and far greater than the return
that debt markets give (8-10%), venture capital is predicted to generate a return in
the range of 25-35% annually.
Venture capital > Equity > Debt market.

Q21.
LIST I AI tools LIST II Service application

x) Predictive analytics. i) Al uses traditional and non-traditional databases

estimating credit worthiness for automated financial
products.

y) Chatbot. ii) Monitor internal risks or breaches and advise remedial

steps.

z) Scoring credit and iii) Recognise specific patterns and co-relations hidden in
direct lending. data.

t) Cyber security. iv) A computer program that uses Al understand customer

questions simulating human conversation.

a) (x)-(iv), (y)-(i), (z)-(ii), (t)-(iii). b) (x)-(iii), (y)-(iv), (z)-(i), (t)-(ii).

c) (x)-(i), (y)-(ii), (z)-(iii), (t)-(iv). d) (x) -(iv), (y)-(iii), (z)-(ii), (t)-(i).
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Answer: B
Refer Page: 519, Topic: 22.5.
Explanation:
1. Predictive Analytics with a General-Purpose Focus: General-purpose semantic and
natural language applications as well as extensively applicable predictive analytics are
examples of one of the most prevalent use cases for artificial intelligence. Artificial
intelligence has the ability to recognise specific patterns and correlations hidden
within the data that older technologies were unable to recognise.
2. Customer service/engagement (Chatbot): Chatbots offer a very high return on
investment (ROI) in terms of cost savings, which is one of the reasons why they are
one of the most widely employed applications of AI across all sectors. Chatbots are
able to efficiently handle the majority of the tasks that are frequently accessible, such
as checking account balances, viewing micro statements, making fund transfers, and
so on.
3. Scoring Credit and Direct Lending for Customers: Analysing data from a wide
variety of traditional and non-traditional data sources is one of the most important
roles that Al plays in the process of assisting alternative lenders estimate the
creditworthiness of clients. Even for those people or companies with a low credit
history, this makes it easier for lenders to design new systems for lending that are
supported by a comprehensive credit rating model.
4. Cybersecurity: Al has the potential to dramatically increase the efficiency of
cybersecurity systems by utilising data from previously experienced threats and
learning the patterns and signs that might initially appear to be unconnected in order
to forecast and thwart assaults.
Al may monitor internal risks or breaches and advise remedial steps, which can result
in the prevention of data theft or abuse. This can be done in addition to preventing
external threats from occurring.
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Q22. "Angel investor" means any person who proposes to invest in an angel fund and
if it is a body corporate then the net worth should be at least ----?
a) 5 crore rupees. b) 10 crore rupees.
c) 3 crore rupees. d) 2 crore rupees.

Answer: B
Refer Page: 506, Topic: 21.12.
Explanation: Angel fund:
is a sub-category of Venture Capital Fund under Category 1 Alternative Investment
Fund that raises funds from angel investors and invests in accordance with the
provisions of Chapter III-A of AIF Regulations.
(a) an individual investor who has net tangible assets of at least two crore rupees
excluding value of his principal residence, and who:
1. Has early-stage investment experience.
2. Has experience as a serial entrepreneur.
3. Is a senior management professional with at least ten years of experience.
(b) a body corporate with a net worth of at least ten crore rupees.
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Q23. A company issued convertible debentures at a price of Rs.1000 at conversion
rate of 40. What is the conversion price?
a) ₹ 25. b) ₹ 250.
c) ₹ 4,000. d) ₹ 40,000.

Answer: A
𝐃𝐞𝐛𝐞𝐧𝐭𝐮𝐫𝐞 𝐩𝐫𝐢𝐜𝐞 𝟏𝟎𝟎𝟎
Explanation: Conversion price = = = 25.
𝐜𝐨𝐧𝐯𝐞𝐫𝐬𝐢𝐨𝐧 𝐫𝐚𝐭𝐞 𝟒𝟎

Q24. Who is called Limited Partner in VC?

a) Limited Partners (LPs) is the term used for experienced investment experts who do
the actual management of the fund.
b) Limited Partners (LPs) is the term used for investors in venture capital firms.
c) Limited Partners (LPs) is the term used for person at a company who do not
participate in the decision-making process, but they may surely make a good first
impression on those who are responsible for making decisions.
d) None of these.
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Answer: B
Refer Page: 487, Topic: 21.10.
Explanation: Limited Partners (LPs) are the term used for investors in venture capital
firms.
LPs are individuals or institutions that have already put money into the funds
managed by the venture capital firm in which they are now investing.
Endowments, corporate pension funds, sovereign wealth funds, funds of funds, and
affluent families are all examples of limited partnerships (LPs).

Q25. Which type of hybrid debt and equity financing gives the lender the right to
convert the debt into equity in case of default, is often unsecured, used to finance an
acquisition or specific projects, provides higher returns to investors, and typically
matures in more than 5 years?
a) Convertible Debentures. b) Equity Capital.
c) Mezzanine Financing. d) Normal Debt Instruments.
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Answer: C
Refer Page: 445, Topic: 19.12.
Explanation: MEZZANINE FINANCING:

• This is another hybrid type of debt and equity financing.

• It gives the lender the right to convert the debt in to equity of the company in case
of default.

• Mezzanine financing is normally for raising funds for specific projects or to finance
an acquisition.

• Mezzanine financing can provide higher returns to investors compared to normal

debt instruments.

• However, for the issuing company, its cost is lower than the cost of equity capital
Therefore, it can be considered as very expensive debt or cheaper equity.

• Mezzanine debt is often an unsecured debt.

• It may be structured with partially fixed and partially variable interest rates.

• It typically matures in more than 5 years.

Q26. An entity should not have a turnover exceeding _____ in any financial year since
incorporation/registration to be recognized as Startup?
a) ₹50 crore. b) ₹75 crore.
c) ₹100 crore. d) ₹125 crore.
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Answer: C
Refer Page: 452, Topic: 20.3.2.
Explanation: An entity shall be considered a startup:
1. If it is incorporated as a private limited company (as defined in the Companies Act
2013) or registered as a partnership firm (registered under Section 59 of the
Partnership Act 1932) or a limited Liability partnership (under the Limited Liability
Partnership Act, 2008) in India.
2. Up to 10 years from the date of its incorporation/registration.
3. If its turnover for any of the Financial Year since Incorporation / registration has
not exceeded 100 crore.
4. It is working towards innovation, improvement or development of products or
processes of services or if it is a scalable business with a high potential of employment
generation or wealth creation.

Q27. Al uses computer ______ to conceptualize objects and ______ to move them?
a) Sensors, Robotics. b) Vision, Robotics.
c) Artificial Intelligence, Logic. d) Vision, Sensors.
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Answer: B
Refer Page: 514, Topic 22.1.
Explanation: In its most basic form, artificial intelligence is a process in which
computer vision is used to conceptualize objects and the ROBOTICS process is used to
control the objects and move them around.

Q28. Match the following?

LIST I LIST II

x) Descriptive i) This approach makes use of data on previous performance to

analytics. make recommendations for how similar situations should be
managed in the future.

y) Diagnostic ii) This is the practice of applying statistics to estimate and

analytics. evaluate future outcomes by employing statistical models and
techniques derived from machine learning.

z) Predictive iii) This type of analysis focuses on previous performance to

analytics. understand which factors drive particular trends.

t) Prescriptive iv) This method involves the interpretation of historical data and
analytics. key performance indicators to discover patterns and trends.

a) (x)-(i), (y)-(ii), (z)-(iii), (t)-(iv). b) (x)-(ii), (y)-(iv), (z)-(i), (t)-(iii).

c) (x)-(iii), (y)-(ii), (z)-(i), (t)-(iv). d) (x)-(iv), (y)-(iii), (z)-(ii), (t)-(i).
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Answer: D
Refer Page: 535, Topic: 23.3.
Explanation:
1. Descriptive analytics:
This method involves the interpretation of historical data and key performance
indicators to discover patterns and trends.
Using methods such as data aggregation and data mining, this makes it possible to get
a comprehensive view of events that have occurred in the past as well as those that
are occurring at the present time.
2. Diagnostic analytics:
This type of analysis focuses on previous performance to understand which factors
drive particular trends.
This can be accomplished through the use of drill-down, data discovery, data mining,
and correlation to uncover the reasons behind particular occurrences.
3. Predictive analytics:
This is the practice of applying statistics to estimate and evaluate future outcomes by
employing statistical models and techniques derived from machine learning.
In many cases, the conclusions of descriptive analytics are used in this manner to
construct models that determine the likelihood of particular outcomes.
4. Prescriptive analytics:
This approach makes use of data on previous performance to make recommendations
for how similar situations should be managed in the future.
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Q29. Which Programme offers training and a platform for women-led businesses as
part of its capacity development efforts to increase awareness of the project?
a) Virtual Incubation Programme for Women Entrepreneurs.
b) Communications for Female Entrepreneurs.
c) Startup India Hub Initiative.
d) Women Capacity Development Programme (WING).

Answer: D
Refer Page: 456, Topic: 20.7.8.
Explanation: Women Capacity Development Programme (WING):
The Women Capacity Development programme, often known as WING, offers training
and a platform for women-led businesses as part of its capacity development efforts.
This is done with the goal of increasing awareness of the project.

Q30. What do we call the various methods by which investors can recover their
investment, such as selling the portfolio firm to another company, launching an initial
public offering, or selling shares to other venture capitalists or private equity firms?
a) Investment Rounds. b) Growth Strategies.
c) Exit Options. d) Capital Infusion.
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Answer: C
Refer Page: 470, Topic [Link].
Explanation: Exit Options:
It's possible that the investors will come to the conclusion that they want to sell the
portfolio film another company currently operating in the market.
When one firm merges with another, either purchasing the entire target company or
only a portion of it, both businesses benefit.
A startup may a launch an initial public offering by listing its shares for the first time
on a stock exchange Considering that an initial public offering (IPO) is a laborious
process, generally speaking, it is only undertaken by corporations that have a
commendable history of earnings and are consistently expanding.
In addition, the investor has the option of selling their shares to other venture
capitalists or private equity companies in order to make their exit.

Q31. What is Al Hub?

a) Al Hub provides access to Neural Networks and Machine Learning.
b) A Hub where data scientists meet.
c) Al Hub provides developers and data scientist working on Al, access to collection of
useful components for their work.
d) A Hub where developers and programmers meet.
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Answer: C
Refer Page: 516, Topic 22.4.2.
Explanation: Al Hub:
Al Hub provides developers and data scientists working on artificial intelligence (AI)
systems with access to a collection of components to use in their work.
Making artificial intelligence more accessible to more companies requires making it
simpler for them to find, exchange, and reuse the tools and work they already have.

Q32. Match the Category of SEBI Alternative Investment Funds (AIFs) with their
Description:

Column A: Category of AIF Column B: Description

i) Category I AIFs. x) Employ diverse or complex trading strategies, may

use leverage including derivatives.
ii) Category II AIFs. y) Invest in start-ups, early-stage ventures, social
ventures, SMEs, infrastructure, etc.

iii) Category III AIFs. z) Do not undertake leverage or borrowing other than
to meet day-to-day operational requirements.

a) (i)-(y), (ii)-(z), (iii)-(x). b) (i)-(z), (ii)-(y), (iii)-(x).

c) (i)-(y), (ii)-(x), (iii)-(z). d) (i)-(x), (ii)-(z), (iii)-(y).
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Answer: A
Refer Page: 505, Topic 21.24.
Explanation: The SEBI (Alternative Investment Funds) Regulation, 2012:
Category I AIFS: AIFs which invest in start-up or early-stage ventures or social
ventures or SMEs or infrastructure or other sectors or areas which the government or
regulators consider as socially or economically desirable and shall include venture
capital funds, SME Funds, social venture funds, infrastructure funds and such other
Alternative Investment Funds as may be specified.
Category II AIFS: AIFs which do not fall in Category I and III and which do not
undertake leverage or borrowing other than to meet day-to-day operational
requirements and as permitted in the SEBI (Alternative Investment Funds)
Regulations, 2012.
Category III AIFS: AIFs which employ diverse or complex trading strategies and may
employ leverage including through investment in listed or unlisted derivatives. [Ref.
Regulation 3(4)(c)] Various types of funds such as hedge funds, PIPE Funds, etc. are
registered as Category III AIFS

Q33. _____ is a sub-category of Venture Capital Fund under Category I Alternative

Investment Fund (AIF) that raises funds from ______ and invests in accordance with
the provisions of Chapter III-A of AIF Regulations?
a) Private Equity Fund, institutional investors.
b) Angel Fund, angel investors.
c) Hedge Fund, accredited investors.
d) Real Estate Fund, retail investors.
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Answer: B
Refer Page: 506, Topic 21.24.
Explanation: Angel fund: is a sub-category of Venture Capital Fund under Category 1
Alternative Investment Fund that raises funds from angel investors and invests in
accordance with the provisions of Chapter III-A of AIF Regulations.

Q34. Match the Types of Preference shares with their correct explanation?

LIST I LIST II

x) Cumulative Preference i) These shares are issued on the condition that the
Shares. company will redeem them after the specified period
or even earlier at the company's option.

y) Non-Cumulative ii) In addition to the right to a fixed dividend, these

Preference Shares. shares give the holder the right to participate in any
surplus profits that remain after equity shareholders
have been paid dividends at a predetermined rate.

z) Participating Preference iii) If for some reason a dividend is not declared

Shares. throughout the course of a given year, the right to
receive that dividend for that year will be forfeited.

t) Redeemable Preference iv) It is one that holds the right to a definite sum of
Share dividend or dividend at a predetermined rate.

a) (x)-(i), (y)-(ii), (z)-(iii), (t)-(iv). b) (x)-(iv), (y)-(iii), (z)-(ii), (t)-(i).

c) (x)-(ii), (y)-(i), (z)-(iv), (t)-(iii). d) (x)-(iii), (y)-(iv), (z)-(i), (t)-(ii).
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Answer: B
Refer Page: 435, Topic: 19.4.2.
Explanation:
Cumulative Preference Shares: A cumulative preference share is one that holds the
right to a definite sum of dividend or dividend at a predetermined rate. These shares
are more valuable than regular preference shares.
Non-Cumulative Preference Shares: A non-cumulative preference share grants the
holder the right to receive a dividend payment that is predetermined in advance.
If for some reason a dividend is not declared throughout the course of a given year,
the right to receive that dividend for that year will be forfeited.
Participating Preference Shares: In addition to the right to a fixed dividend, these
shares give the holder the right to participate in any surplus profits that remain after
equity shareholders have been paid dividends at a predetermined rate.
Redeemable Preference Shares: These shares are issued on the condition that the
company will redeem them after the specified period or even earlier at the company's
option.

Q35. A convertible bond with a par value of 500 rupees is being sold for 520 rupees.
What is the conversion price if the conversion ratio is 20?
a) Rs. 15. b) Rs. 20.
c) Rs. 25. d) Rs. 26.
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Answer: C
Refer Page: 447, Topic: [Link].
Explanation: Par Value = ₹500.
Conversion Ratio = 20.
𝐏𝐚𝐫 𝐕𝐚𝐥𝐮𝐞 𝐨𝐟 𝐁𝐨𝐧𝐝 𝟓𝟎𝟎
Conversion Price = = = Rs.25
𝐂𝐨𝐧𝐯𝐞𝐫𝐬𝐢𝐨𝐧 𝐑𝐚𝐭𝐢𝐨 𝟐𝟎

Q36. Match the following in VC?

LIST I LIST II

x) Principals. i) They are persons who are on the cusp of becoming partners in
the company. They hold a position of authority inside the
company, yet they cannot be ranked among the most senior
employees of the company.

y) Analysts’ ii) Those with the least experience strive to become this. These
role. individuals are either folks who have recently graduated from
school or MBA students who are participating in an internship.
z) Partners. iii) They are considered to be the most senior members of a
venture capital firm, placing them a tier above principals.

t) Associates. iv) People who arrive with a financial background and significant
skills in creating relationships are typically the types of people
who are considered this.

a) (x)-(i), (y)-(ii), (z)-(iii), (t)-(iv). b) (x)-(ii), (y)-(iv), (z)-(i), (t)-(iii).

c) (x)-(iii), (y)-(ii), (z)-(i), (t)-(iv). d) (x)-(iv), (y)-(ii), (z)-(iii), (t)-(i).
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Answer: A
Refer Page: 486, Topic: 21.10.
Explanation: Principals - They are persons who are on the cusp of becoming partners
in the company. They hold a position of authority inside the company, yet they
cannot be ranked among the most senior employees of the company.
Analysts’ role - Those with the least experience strive to become this. These
individuals are either folks who have recently graduated from school or MBA students
who are participating in an internship.
Partners - They are considered to be the most senior members of a venture capital
firm, placing them a tier above principals.
Associates - People who arrive with a financial background and significant skills in
creating relationships are typically the types of people who are considered this

Q37. When a share's market price is Rs. 30 and a warrant contains the right to
purchase one share of common stock and is exercisable at Rs. 20 per common share,
the warrant's theoretical value is Rs.?
a) 5. b) 10.
c) 15. d) 20.
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Answer: B
Refer Page: 447, Topic: 19.5.
Explanation: Market price per share = ₹30.
Exercise Price = ₹20.
Theoretical Value = Market Price – Exercise Price.
= Rs. 30 – Rs. 20
= Rs. 10.

Q38. In terms of provisions of Section 47, where the dividend in respect of a class of
preference shares has not been paid for a period of __________, such class of
preference shareholders shall have a right to vote on all the resolutions placed before
the company?
a) Five Years or More. b) Three Years or More.
c) Two Years or More. d) Seven Years or More.
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Answer: C
Refer Page: 434, Topic: 19.4.1.
Explanation: In terms of provisions of Section 47, where the dividend in respect of a
class of preference shares has not been paid for a period of 2 years or more, such
class of preference shareholders shall have a right to vote on all the resolutions
placed before the company.