AS 03 Finance & Economics for Actuarial Mock Test 09
These questions cover essential concepts in finance, economics, taxation, financial analysis, and investment appraisal. Key topics include corporate tax surcharge, market knowledge, price elasticity of demand, financial statement analysis, government intervention, factoring, indifference curves, long-term solvency ratios, Internal Rate of Return (IRR), and elasticity measurement. The questions assess understanding of capital structure, working capital management, consumer behaviour, macroeconomic policy, investment decision-making, and financial reporting. Candidates are expected to apply both theoretical and practical concepts, making these questions highly relevant for AS 03 – Finance & Economics for Actuarial and strengthening analytical and decision-making skills for actuarial examinations.
1. What is the surcharge on corporate tax when taxable income is more than ₹10 Crores?
A. 0.12
B. 0.07
C. 0.15
D. 0.05
E. 0.10
2. Perfect Knowledge of Market Conditions means:
A. Only sellers have knowledge of market prices
B. Traders possess knowledge about the prices at which commodities are being purchased and sold
C. Buyers have no knowledge of prices
D. Knowledge is restricted to large firms
E. Government publishes daily price reports
3. If demand for a product is elastic, a small change in price will cause:
A. A small change in quantity demanded
B. No change in quantity demanded
C. A large change in quantity demanded
D. An infinite change in quantity demanded
E. A decrease in supply
4. Stock Analysts use financial statements primarily as:
A. A source of information for doing analysis of the share price and to give a reliable prediction about the stock price
B. A tool to determine the audit procedures
C. A means to assess the tax liability of the company
D. A way to determine the company's regulatory compliance
E. A measure of the quality of accounting policies used
5. The main objective of government intervention regarding income is to achieve:
A. Concentration of wealth among the most productive producers
B. An equitable distribution of income and wealth, which the free market does not achieve on its own
C. Maximum corporate profits to increase tax revenues
D. Elimination of all inequality through nationalisation
E. Promotion of luxury consumption to boost GDP growth
6. What is Factoring as a short-term source of finance?
A. A long-term government loan scheme
B. An insurance product for trade receivables
C. A government subsidy for export companies
D. A source of finance where the company sells its receivables to a factor at a discount, receives immediate cash, and reduces working capital blocked in debtors
E. A mandatory tax payment arrangement
7. An indifference curve shows the combination of two products that:
A. Minimizes total expenditure
B. Maximizes total revenue
C. Provides an individual with a given level of utility
D. Equals the market price
E. Minimizes production costs
8. Long-term solvency of a firm can be assessed by which type of ratios?
A. Liquidity ratios only
B. Activity ratios only
C. Market value ratios
D. Leverage/Capital Structure and Profitability ratios
E. Revenue ratios only
9. The IRR Decision Rule is:
A. Accept if IRR < Cost of Capital; Reject if IRR > Cost of Capital
B. Accept if IRR is exactly equal to the Cost of Capital
C. Accept if IRR > Inflation Rate; Reject otherwise
D. Accept if IRR > Cost of Capital (Cut-off Rate); IRR ≤ Cost of Capital = Reject
E. Accept all projects with any positive IRR
10. If the percentage change in quantity demanded equals the percentage change in price, elasticity is said to be:
A. Greater than one
B. Less than one
C. Zero
D. Unit
E. Infinite
