Business Quiz 21 May
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BUSINESS QUIZ Dr. T.K. Jain. AFTERSCHOOOL M: 9414430763 [email protected] www.afterschool.tk www.afterschoool.tk
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WHICH IS BETTER 12000 AVAILABLE AFTER 12 YEARS OR 109000 AVAILABLE ATER 40 YEARS, YOUR DISCOUNT RATE IS 18%?
• The present value of 12000 is 1648, but present value of 109000 is only 145. so first option is better.
www.afterschoool.tk
Which is better investment – Rs. 100000, in which you receive 30000 every year for 10 years or Rs. 500000, on which you receive 5 lacks every seventh year for four times? Bank charges 18% per annum? • On first option, present value of all money received is 2.37 lakhs approx. , in second option, your present value of all cash inflows is 9.81 lahs. Thus in terms of quantum of returns, the second scheme is better. (net returns are 1.37 lakhs in first scheme, but it is 4.81 lakhs in second scheme).
www.afterschoool.tk
Calculate break even point with the following information: salary Rs. 40 lakhs, other fixed expenses: 20 Lakhs, contribution per unit: 18000?
• The break even point is achieved at 34 units only.
www.afterschoool.tk
What is EVA? • Economic value analysis
www.afterschoool.tk
What will be impact on total sales, if price of salt is increased? • Since it is essential commodity, the total sales will increase.
www.afterschoool.tk
What is the net balance of payment of India (approx.)? • Zero • As the balance of payment is always balanced. (for any country).
www.afterschoool.tk
If we have two markets, one with elasticity of .2 and other with elasticity of .8, and we have two options for price – Rs. 8 and Rs. 12, what will you do?
• Ans: you should charge price of 12 in the market where elasticity is .2 and charge price of 8 in the market where elasticity is .8.
www.afterschoool.tk
What is common in ABC Analysis, min-max plan, two bin system, order cyclic system and FSN analysis?
• All these are inventory control techniques.
www.afterschoool.tk
Which is better investment, 3% compounded monthly or 3.5% simple interest, (analyse over 5 years period)?
• After 5 years, the first amount is 117.9, and second amount is 117.5 • Thus first option is better.
www.afterschoool.tk
How much money is to be invested every year, so as to accumulate Rs. 300000 at the end of 10 years. Interest rate: 10%compound
• You have to invest 18823 per annum. Solution is as under: • (300000*.1)/[(1+0.1)^10 -1]
www.afterschoool.tk
A bond gives 10% return, face value is Rs 1000, it has a life of 7 years, at what price would you like to buy it? Your own discount rate is 18%, what will happen if your friend wants to buy it and he has discount rate of 14%?
• Present value of their return is Rs. 695. • Your friend will buy it at 907.
www.afterschoool.tk
What is SDLC • System development life cycle
www.afterschoool.tk
What is inflation? • General increase in price • Generally it is measured in terms of WPI or CPI WPI – WHOLESALE PRICE INDEX CPI – CONSUMER PRICE INDEX.
www.afterschoool.tk
What is CRR? • CASH RESERVE RATIO
www.afterschoool.tk
What is kaizen award? • Japanese management award for best innovation.
www.afterschoool.tk
What is BPR? • BUSINESS PROCESS REENGINEERING – completely transforming the processes of business – not just minor changes – but major changes.
www.afterschoool.tk
What is FEMA? • FOREIGN EXCHANGE MANAGEMENT ACT. • It has replaced FERA 1973.
www.afterschoool.tk
What is DSS? • DECISION SUPPORT SYSTEM – it uses models and decision tools to aid middle management in taking decsion.
www.afterschoool.tk
What is TPS? • Transactional processing system. It processes day to day routine transactions.
www.afterschoool.tk
What is EIS? • EXECUTIVE INFORMATION SYSTEM – SUPPOSED TO HELP TOP MANAGEMENT WITH GRAPHICS, AND OTHER TOOLS
www.afterschoool.tk
WHAT IS EXPERT SYSTEM? • It is a system that integrates advanced softwares, huge data bank to take difficult decision with the help of its own logic and artificial intelligence.
www.afterschoool.tk
What is LC? • LETTER OF CREDIT – it is a type of credit facility available in international trade.
www.afterschoool.tk
What is FOB? • FREE ON BOARD – here the seller bears all the expenses till the goods reach port of the buyer.
www.afterschoool.tk
What is HYPER MARKET? • It is a type of retail market – where we can find wider variety of assortment.
www.afterschoool.tk
What is vending machine? • In retail stores, you will find machines, which will give you goods, when you enter the currency.
www.afterschoool.tk
There are two machines – first will cost you Rs. 10000, the second will cost you Rs. 8000. the annual saving from these will be Rs. 1900 (for 7 years) and 2200(for 5 years) respectively. Which is better – assume that you have discount factor of 10%
• Present value of net savings from first machine is Rs. 9250, but the savings from second machine is Rs. 8339, so second machine is better.
www.afterschoool.tk
What is bridge loan? • It is a type of temporary loan for short period of time – till you start production and get loans from other sources.
www.afterschoool.tk
What is synergy? • 2+2 may be 5 or more than 5 – is positive synergy – the sum of individuals is greater then their individual strenght. It is the basic principle of team work. Have you heard story of 5 bulls and one lion and have you heard a story of four sons and one farmer – these are all on synergy. You are also harnessing it by collective efforts at AFTERSCHOOOL – read in a group.
www.afterschoool.tk
What is group think? • Tendency of the group to think alike. • It is the propensity of a group to start thinking in same direction – without proper reasoning – it is harmful to group and will cause negative synergy.
www.afterschoool.tk
Calculate EMI for a loan of Rs. 500000 payable in 20 instalments in 20 years, interest =10% • [500000*i*(1+i)^20]/(1+i)^20-1 • Rs. 58729.84 ans.
www.afterschoool.tk
If I am paying instalment of Rs. 5000 every year for 10 year, interst rate is 14%, what is my loan amount?
• [5000*{(1+i)^10-1}] /i*(1+i)^10 • Thus my loan amount is Rs. 26000
www.afterschoool.tk
What is the difference in FDI , FII, DII? FDI is foreign direct inestment FII is foreign institutional investor DII is domestic institutional investor
www.afterschoool.tk
What is your expected return and std. deviation, if you invest 1/3rd money in risk free and remainging in market portfolio. You get 9% in risk free and 15% in market portfolio (std dev. Is 21%?
• • • •
1/3 of 9% = 3 2/3 of 15% = 10 So your expected return is 13%. Your standard deviation is 2/3 of 21% = 14%. Ans.
www.afterschoool.tk
RIL has beta of 1.45, risk free rate 6%, expected return 10%, what is required return from RIL?
• 6+ (1.45(10-6)) = 11.8 % Ans.
www.afterschoool.tk
Dividend is 2%, growth rate is 7%,what should be market price, expected returns are 10%?
• [2*(1.07)] / (.1-.07) = 71.3
www.afterschoool.tk
Present rate of interest on 4 year zero coupon securit is 8% and on 5 year it is 7.8%. What is implied forward rate on 1 year loan 4 years in future?
• Implied growth rate: • [(1.078)^5/(1.08)^4] -1 = 7%
www.afterschoool.tk
What is factoring? • Sale of accounts receivables to third party is called factoring.
www.afterschoool.tk
What is revolvers? • It is a legal obligation on bank to provide loans.
www.afterschoool.tk
What is sustainable growth modeling? • In finance, it is the maximum growth rate which is possible in sales, given that all target financial and operating ratios are fulfilled. • In general parlance, sustainable growth means, adopting fair technology and growth model – which doesn’t harm enviornment. www.afterschoool.tk
www.afterschoool.tk
Thanks Afterschoool conducts three year integrated PGPSE (after class 12 along with CA & CS) and 18 month PGPSE (Post Graduate Programme in Social Entrepreneurship) along with preparation for CS / CFP / CFA /CMA / FRM. This course is also available online also. It also conducts workshops on social entrepreneurship in schools and colleges all over India – start social entrepreneurship club in your institution today with the help from afterschoool and help us in developing society.
www.afterschoool.tk
www.afterschoool.tk social entrepreneurship for better society
www.afterschoool.tk
www.afterschoool.tk
WHICH IS BETTER 12000 AVAILABLE AFTER 12 YEARS OR 109000 AVAILABLE ATER 40 YEARS, YOUR DISCOUNT RATE IS 18%?
• The present value of 12000 is 1648, but present value of 109000 is only 145. so first option is better.
www.afterschoool.tk
Which is better investment – Rs. 100000, in which you receive 30000 every year for 10 years or Rs. 500000, on which you receive 5 lacks every seventh year for four times? Bank charges 18% per annum? • On first option, present value of all money received is 2.37 lakhs approx. , in second option, your present value of all cash inflows is 9.81 lahs. Thus in terms of quantum of returns, the second scheme is better. (net returns are 1.37 lakhs in first scheme, but it is 4.81 lakhs in second scheme).
www.afterschoool.tk
Calculate break even point with the following information: salary Rs. 40 lakhs, other fixed expenses: 20 Lakhs, contribution per unit: 18000?
• The break even point is achieved at 34 units only.
www.afterschoool.tk
What is EVA? • Economic value analysis
www.afterschoool.tk
What will be impact on total sales, if price of salt is increased? • Since it is essential commodity, the total sales will increase.
www.afterschoool.tk
What is the net balance of payment of India (approx.)? • Zero • As the balance of payment is always balanced. (for any country).
www.afterschoool.tk
If we have two markets, one with elasticity of .2 and other with elasticity of .8, and we have two options for price – Rs. 8 and Rs. 12, what will you do?
• Ans: you should charge price of 12 in the market where elasticity is .2 and charge price of 8 in the market where elasticity is .8.
www.afterschoool.tk
What is common in ABC Analysis, min-max plan, two bin system, order cyclic system and FSN analysis?
• All these are inventory control techniques.
www.afterschoool.tk
Which is better investment, 3% compounded monthly or 3.5% simple interest, (analyse over 5 years period)?
• After 5 years, the first amount is 117.9, and second amount is 117.5 • Thus first option is better.
www.afterschoool.tk
How much money is to be invested every year, so as to accumulate Rs. 300000 at the end of 10 years. Interest rate: 10%compound
• You have to invest 18823 per annum. Solution is as under: • (300000*.1)/[(1+0.1)^10 -1]
www.afterschoool.tk
A bond gives 10% return, face value is Rs 1000, it has a life of 7 years, at what price would you like to buy it? Your own discount rate is 18%, what will happen if your friend wants to buy it and he has discount rate of 14%?
• Present value of their return is Rs. 695. • Your friend will buy it at 907.
www.afterschoool.tk
What is SDLC • System development life cycle
www.afterschoool.tk
What is inflation? • General increase in price • Generally it is measured in terms of WPI or CPI WPI – WHOLESALE PRICE INDEX CPI – CONSUMER PRICE INDEX.
www.afterschoool.tk
What is CRR? • CASH RESERVE RATIO
www.afterschoool.tk
What is kaizen award? • Japanese management award for best innovation.
www.afterschoool.tk
What is BPR? • BUSINESS PROCESS REENGINEERING – completely transforming the processes of business – not just minor changes – but major changes.
www.afterschoool.tk
What is FEMA? • FOREIGN EXCHANGE MANAGEMENT ACT. • It has replaced FERA 1973.
www.afterschoool.tk
What is DSS? • DECISION SUPPORT SYSTEM – it uses models and decision tools to aid middle management in taking decsion.
www.afterschoool.tk
What is TPS? • Transactional processing system. It processes day to day routine transactions.
www.afterschoool.tk
What is EIS? • EXECUTIVE INFORMATION SYSTEM – SUPPOSED TO HELP TOP MANAGEMENT WITH GRAPHICS, AND OTHER TOOLS
www.afterschoool.tk
WHAT IS EXPERT SYSTEM? • It is a system that integrates advanced softwares, huge data bank to take difficult decision with the help of its own logic and artificial intelligence.
www.afterschoool.tk
What is LC? • LETTER OF CREDIT – it is a type of credit facility available in international trade.
www.afterschoool.tk
What is FOB? • FREE ON BOARD – here the seller bears all the expenses till the goods reach port of the buyer.
www.afterschoool.tk
What is HYPER MARKET? • It is a type of retail market – where we can find wider variety of assortment.
www.afterschoool.tk
What is vending machine? • In retail stores, you will find machines, which will give you goods, when you enter the currency.
www.afterschoool.tk
There are two machines – first will cost you Rs. 10000, the second will cost you Rs. 8000. the annual saving from these will be Rs. 1900 (for 7 years) and 2200(for 5 years) respectively. Which is better – assume that you have discount factor of 10%
• Present value of net savings from first machine is Rs. 9250, but the savings from second machine is Rs. 8339, so second machine is better.
www.afterschoool.tk
What is bridge loan? • It is a type of temporary loan for short period of time – till you start production and get loans from other sources.
www.afterschoool.tk
What is synergy? • 2+2 may be 5 or more than 5 – is positive synergy – the sum of individuals is greater then their individual strenght. It is the basic principle of team work. Have you heard story of 5 bulls and one lion and have you heard a story of four sons and one farmer – these are all on synergy. You are also harnessing it by collective efforts at AFTERSCHOOOL – read in a group.
www.afterschoool.tk
What is group think? • Tendency of the group to think alike. • It is the propensity of a group to start thinking in same direction – without proper reasoning – it is harmful to group and will cause negative synergy.
www.afterschoool.tk
Calculate EMI for a loan of Rs. 500000 payable in 20 instalments in 20 years, interest =10% • [500000*i*(1+i)^20]/(1+i)^20-1 • Rs. 58729.84 ans.
www.afterschoool.tk
If I am paying instalment of Rs. 5000 every year for 10 year, interst rate is 14%, what is my loan amount?
• [5000*{(1+i)^10-1}] /i*(1+i)^10 • Thus my loan amount is Rs. 26000
www.afterschoool.tk
What is the difference in FDI , FII, DII? FDI is foreign direct inestment FII is foreign institutional investor DII is domestic institutional investor
www.afterschoool.tk
What is your expected return and std. deviation, if you invest 1/3rd money in risk free and remainging in market portfolio. You get 9% in risk free and 15% in market portfolio (std dev. Is 21%?
• • • •
1/3 of 9% = 3 2/3 of 15% = 10 So your expected return is 13%. Your standard deviation is 2/3 of 21% = 14%. Ans.
www.afterschoool.tk
RIL has beta of 1.45, risk free rate 6%, expected return 10%, what is required return from RIL?
• 6+ (1.45(10-6)) = 11.8 % Ans.
www.afterschoool.tk
Dividend is 2%, growth rate is 7%,what should be market price, expected returns are 10%?
• [2*(1.07)] / (.1-.07) = 71.3
www.afterschoool.tk
Present rate of interest on 4 year zero coupon securit is 8% and on 5 year it is 7.8%. What is implied forward rate on 1 year loan 4 years in future?
• Implied growth rate: • [(1.078)^5/(1.08)^4] -1 = 7%
www.afterschoool.tk
What is factoring? • Sale of accounts receivables to third party is called factoring.
www.afterschoool.tk
What is revolvers? • It is a legal obligation on bank to provide loans.
www.afterschoool.tk
What is sustainable growth modeling? • In finance, it is the maximum growth rate which is possible in sales, given that all target financial and operating ratios are fulfilled. • In general parlance, sustainable growth means, adopting fair technology and growth model – which doesn’t harm enviornment. www.afterschoool.tk
www.afterschoool.tk
Thanks Afterschoool conducts three year integrated PGPSE (after class 12 along with CA & CS) and 18 month PGPSE (Post Graduate Programme in Social Entrepreneurship) along with preparation for CS / CFP / CFA /CMA / FRM. This course is also available online also. It also conducts workshops on social entrepreneurship in schools and colleges all over India – start social entrepreneurship club in your institution today with the help from afterschoool and help us in developing society.
www.afterschoool.tk
www.afterschoool.tk social entrepreneurship for better society
www.afterschoool.tk
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