Tag: UGC NET MBA Study Material

UGC NET MBA Unit-5 MCQs

Financial and Investment Management

This set covers: Value & Returns, Capital Budgeting, Dividend Policy, Mergers & Acquisitions, Portfolio Management, Derivatives, Working Capital, and International Finance

🔹 Section A – Value & Returns (Time Value of Money, Bonds, Shares, Risk & Return)

1. The concept that “money today is worth more than the same sum tomorrow” is known as:
A. Risk premium
B. Time value of money
C. Inflation
D. Compounding
Answer: B
Explanation: Money has time value due to earning capacity and uncertainty of future.*

2. Future Value (FV) formula is:
A. $F V = P V \times (1 + r)^{n}$
B. $F V = P V / (1 + r)^{n}$
C. $P V = F V + r$
D. $P V = F V - r$
Answer: A

3. Present Value (PV) decreases when:
A. Interest rate increases
B. Time period decreases
C. Discount rate decreases
D. Cash flow increases
Answer: A

4. For an ordinary annuity, payments are made:
A. At the beginning of each period
B. At the end of each period
C. Randomly
D. Twice per year
Answer: B

5. If coupon rate is higher than required return, bond sells at:
A. Par
B. Discount
C. Premium
D. Zero value
Answer: C

6. The value of a bond is equal to:
A. Present value of interest + present value of principal
B. Sum of profits
C. Book value
D. Face value only
Answer: A

7. In Gordon’s Model, share value increases if:
A. Growth rate increases
B. Dividend payout decreases
C. Required return increases
D. Retention ratio decreases
Answer: A

8. Risk is measured statistically by:
A. Mean
B. Standard deviation
C. Variance
D. Both B & C
Answer: D

9. Coefficient of variation measures:
A. Absolute risk
B. Relative risk
C. Expected return
D. Portfolio beta
Answer: B

10. If expected return = 10% and risk-free rate = 5%, risk premium = ?
A. 15%
B. 5%
C. 10%
D. 2%
Answer: B

🔹 Section B – Capital Budgeting

11. Capital budgeting is concerned with:
A. Long-term investment decisions
B. Short-term financing
C. Inventory management
D. Dividend policy
Answer: A

12. Payback period measures:
A. Liquidity of investment
B. Profitability
C. NPV
D. IRR
Answer: A

13. NPV method considers:
A. Time value of money
B. Accounting profits only
C. Depreciation
D. Book value
Answer: A

14. A project is acceptable if:
A. NPV > 0
B. NPV = 0
C. NPV < 0
D. None
Answer: A

15. Internal Rate of Return (IRR) is that rate at which:
A. NPV = 0
B. Profit = 0
C. Cost = Benefit
D. Cash inflow = Cash outflow
Answer: A

16. Profitability Index (PI) =
A. PV of inflows / PV of outflows
B. Outflows / Inflows
C. ROI / Investment
D. None
Answer: A

17. ARR stands for:
A. Accounting Rate of Return
B. Actual Rate of Return
C. Average Risk Return
D. Annual Real Return
Answer: A

18. Discounted cash flow methods include:
A. NPV and IRR
B. ARR
C. Payback period
D. None
Answer: A

19. Risk-adjusted discount rate method adjusts:
A. Discount rate for risk
B. Cash flows
C. Profit margin
D. Inflation rate
Answer: A

20. Sensitivity analysis studies:
A. Impact of changes in variables on NPV
B. Market fluctuations
C. Inflation
D. Fixed costs
Answer: A

🔹 Section C – Dividend Theories

21. Walter’s Model assumes:
A. Constant cost of capital
B. Variable cost of equity
C. No retained earnings
D. Market imperfections
Answer: A

22. According to Walter, if r > k, the firm should:
A. Pay no dividend
B. Pay maximum dividend
C. Pay 50% dividend
D. Ignore dividend
Answer: A
Explanation: When return exceeds cost of capital, reinvestment is better.*

23. Gordon’s Model is also called:
A. Bird-in-hand theory
B. Clientele theory
C. Residual theory
D. None
Answer: A

24. M–M Theory assumes:
A. Perfect capital market
B. Taxes exist
C. Transaction cost
D. Inflation
Answer: A

25. Dividend irrelevance theory is given by:
A. Walter
B. Gordon
C. M–M
D. Keynes
Answer: C

26. Retention ratio is denoted by:
A. b
B. r
C. k
D. g
Answer: A

27. Growth rate (g) =
A. Retention ratio × Return on equity
B. Dividend / EPS
C. EPS / Dividend
D. Profit / Sales
Answer: A

28. Walter’s model uses:
A. D, E, r, k
B. PV, FV, r
C. Rf, β
D. ROI, WACC
Answer: A

29. Under M–M, dividend policy affects:
A. Not the firm’s value
B. Firm’s value
C. Stock price positively
D. Negatively
Answer: A

30. Which model is most suitable for growth firms?
A. Walter’s
B. Gordon’s
C. M–M
D. None
Answer: A

🔹 Section D – Mergers, Acquisitions & Corporate Restructuring

31. A merger between firms in same industry is:
A. Horizontal merger
B. Vertical merger
C. Conglomerate merger
D. None
Answer: A

32. A merger between supplier and manufacturer is:
A. Vertical merger
B. Horizontal merger
C. Circular merger
D. Conglomerate merger
Answer: A

33. Value creation occurs when:
A. Combined value > Individual values
B. Combined value < Individual values
C. Combined value = Individual values
D. None
Answer: A

34. Synergy means:
A. 2 + 2 > 4
B. 2 + 2 = 4
C. 2 + 2 < 4
D. None
Answer: A

35. Leveraged buyout (LBO) is financed through:
A. Debt
B. Equity
C. Both
D. Retained earnings
Answer: A

36. Hostile takeover means:
A. Without consent of target management
B. Mutual consent
C. Legal merger
D. Reverse merger
Answer: A

37. Reverse merger means:
A. Smaller company takes over a larger one
B. Conglomerate merger
C. Partial acquisition
D. None
Answer: A

38. Spin-off refers to:
A. Creating a new company from parent
B. Selling shares
C. Buying back shares
D. None
Answer: A

39. Mergers achieve:
A. Economies of scale
B. Cost reduction
C. Market expansion
D. All of the above
Answer: D

40. Due diligence in mergers means:
A. Evaluation before merger
B. Legal compliance
C. Accounting audit
D. Investment decision
Answer: A

🔹 Section E – Portfolio Management (CAPM & APT)

41. Portfolio diversification reduces:
A. Unsystematic risk
B. Systematic risk
C. Inflation
D. Market volatility
Answer: A

42. Systematic risk is caused by:
A. Market factors
B. Company factors
C. Management decisions
D. Product defects
Answer: A

43. Beta (β) in CAPM measures:
A. Systematic risk
B. Unsystematic risk
C. Liquidity
D. Credit risk
Answer: A

44. CAPM formula is:
A. $E (R_{i}) = R_{f} + β_{i} [E (R_{m}) - R_{f}]$
B. $E (R_{i}) = R_{m} + R_{f}$
C. $R_{i} = R_{f} \times β$
D. None
Answer: A

45. If β = 1.5, Rf = 6%, Rm = 12%, then Expected Return = ?
A. 15%
B. 9%
C. 12%
D. 10%
Answer: A
(6 + 1.5 × (12 − 6) = 15)

46. If β < 1, the security is:
A. Defensive
B. Aggressive
C. Neutral
D. Risk-free
Answer: A

47. Arbitrage Pricing Theory (APT) was given by:
A. Stephen Ross
B. William Sharpe
C. Markowitz
D. Fisher Black
Answer: A

48. According to APT, returns are affected by:
A. Multiple macro factors
B. Single factor only
C. Micro factors
D. None
Answer: A

49. Diversification can:
A. Eliminate unsystematic risk
B. Eliminate systematic risk
C. Eliminate all risk
D. None
Answer: A

50. The efficient frontier is a concept of:
A. Modern Portfolio Theory
B. CAPM
C. Dividend theory
D. Risk-free asset
Answer: A

🔹 Section F – Derivatives

51. Derivatives derive value from:
A. Underlying assets
B. Real assets
C. Shares only
D. Bonds only
Answer: A

52. A forward contract is:
A. Customized OTC contract
B. Standardized exchange-traded
C. Option
D. None
Answer: A

53. Futures are traded:
A. On exchanges
B. Privately
C. Only by banks
D. None
Answer: A

54. A call option gives right to:
A. Buy an asset
B. Sell an asset
C. Hold an asset
D. None
Answer: A

55. A put option gives right to:
A. Sell
B. Buy
C. Exchange
D. Lend
Answer: A

56. Option premium means:
A. Price paid to buy the option
B. Strike price
C. Spot price
D. None
Answer: A

57. Payoff of call option =
A. Max(0, S – K)
B. Max(0, K – S)
C. S – K
D. None
Answer: A

58. Payoff of put option =
A. Max(0, K – S)
B. Max(0, S – K)
C. S × K
D. None
Answer: A

59. Black–Scholes model is used for:
A. Option pricing
B. Bond valuation
C. Cash management
D. Portfolio management
Answer: A

60. Swap is:
A. Exchange of cash flows
B. Exchange of shares
C. Loan contract
D. Equity deal
Answer: A

🔹 Section G – Working Capital Management

61. Working capital =
A. Current Assets − Current Liabilities
B. Fixed Assets − Long-term Liabilities
C. Total Assets − Total Liabilities
D. None
Answer: A

62. Objective of working capital management:
A. Maintain liquidity & profitability balance
B. Increase sales only
C. Minimize debt
D. None
Answer: A

63. EOQ =
A. $\sqrt{\frac{2 A O}{C}}$
B. $2 A O / C$
C. $A + O + C$
D. None
Answer: A

64. Cash management ensures:
A. Availability of funds when needed
B. Profit maximization
C. Tax payment
D. None
Answer: A

65. Factoring means:
A. Selling receivables to a factor
B. Buying raw materials
C. Paying suppliers
D. Issuing shares
Answer: A

66. Permanent working capital means:
A. Minimum level required continuously
B. Seasonal requirement
C. Temporary loans
D. None
Answer: A

67. Working capital cycle starts from:
A. Purchase of raw materials
B. Sale of finished goods
C. Receipt of cash
D. Payment to creditors
Answer: A

68. Optimum working capital means:
A. No shortage or surplus
B. Maximum liquidity
C. Minimum debt
D. None
Answer: A

69. Inventory cost includes:
A. Ordering & carrying cost
B. Selling cost
C. Depreciation
D. Labour cost
Answer: A

70. Average collection period measures:
A. Receivable efficiency
B. Payables control
C. Cash turnover
D. None
Answer: A

🔹 Section H – International Financial Management

71. International finance deals with:
A. Cross-border financial decisions
B. Domestic accounting
C. Local banking
D. None
Answer: A

72. Foreign exchange market is a:
A. Global decentralized market
B. Local market
C. Regulated monopoly
D. None
Answer: A

73. Spot rate means:
A. Rate for immediate delivery
B. Future delivery rate
C. Average rate
D. None
Answer: A

74. Forward rate means:
A. Agreed rate for future transaction
B. Present rate
C. Exchange margin
D. None
Answer: A

75. Floating exchange rate is determined by:
A. Market forces
B. Central bank
C. IMF
D. Government
Answer: A

76. Fixed exchange rate is maintained by:
A. Government or central bank
B. Market
C. Investors
D. None
Answer: A

77. Transaction exposure arises from:
A. Contractual cash flows in foreign currency
B. Change in asset value
C. Inflation
D. None
Answer: A

78. Translation exposure affects:
A. Accounting statements
B. Real cash flows
C. Inflation
D. Tax
Answer: A

79. Economic exposure affects:
A. Long-term cash flows and competitiveness
B. Tax liability
C. Asset valuation only
D. None
Answer: A

80. Forward contracts are used to:
A. Hedge foreign exchange risk
B. Increase speculation
C. Control inflation
D. None
Answer: A

🔹 Section I – Advanced & Applied Concepts

81. Arbitrage means:
A. Risk-free profit from price difference
B. Long-term investment
C. Portfolio rebalancing
D. None
Answer: A

82. Currency swap involves:
A. Exchange of principal and interest in different currencies
B. Interest rate change
C. Option trading
D. None
Answer: A

83. Hedging aims to:
A. Minimize risk
B. Increase speculation
C. Maximize risk
D. None
Answer: A

84. Diversification is most effective when securities are:
A. Negatively correlated
B. Positively correlated
C. Independent
D. None
Answer: A

85. Beta = 0 means:
A. Risk-free security
B. Market portfolio
C. Aggressive stock
D. None
Answer: A

86. Interest coverage ratio =
A. EBIT / Interest
B. EBIT / Tax
C. EBIT / Sales
D. EBIT / Debt
Answer: A

87. High β (>1) indicates:
A. Greater volatility
B. Lower volatility
C. No risk
D. None
Answer: A

88. Sharpe ratio =
A. (Rp – Rf) / σ
B. (Rf – Rp) / σ
C. Rp × Rf
D. None
Answer: A

89. Portfolio risk is minimized when:
A. Correlation = −1
B. Correlation = +1
C. Correlation = 0
D. None
Answer: A

90. Risk-free asset has β =
A. 0
B. 1
C. >1
D. <0
Answer: A

November 10, 2025

UGC NET MBA Unit-5

Financial and Investment Management

This unit integrates financial decision-making, investment analysis, corporate restructuring, and international finance — one of the most important for both theory and numerical concepts in UGC NET.

🔹 1. Value and Returns

A. Time Preference for Money

Concept:
A rupee today is worth more than a rupee tomorrow because of its earning capacity.

Reasons:

Risk and uncertainty
Inflation
Consumption preference
Investment opportunities

Future Value (FV):

$F V = P V (1 + r)^{n}$

Where,
PV = Present Value, r = Interest rate, n = Number of periods

Present Value (PV):

$P V = \frac{F V}{(1 + r)^{n}}$

Annuity: Equal payments made at regular intervals.

Ordinary Annuity: Payments at the end of period
Annuity Due: Payments at the beginning of period

B. Valuation of Bonds

A bond is a long-term debt instrument.

Value of Bond:

$V_{B} = \sum_{t = 1}^{n} \frac{I}{(1 + k d)^{t}} + \frac{P}{(1 + k d)^{n}}$

Where:
I = Interest (coupon), kd = required rate of return, P = Par value, n = years to maturity

If Coupon Rate > Required Return → Premium Bond
If Coupon Rate < Required Return → Discount Bond

C. Valuation of Shares

For Preference Shares:

$V = \frac{D}{K}$

(D = fixed dividend, K = required rate)

For Equity Shares (Dividend Growth Model):

$P_{0} = \frac{D_{1}}{K_{e} - g}$

Where D₁ = expected dividend next year, Ke = cost of equity, g = growth rate.

D. Risk and Return

Return (R):

$R = \frac{(C u r r e n t I n c o m e + C a p i t a l G a i n)}{I n i t i a l I n v e s t m e n t}$

Risk:
Deviation of actual return from expected return.

Standard Deviation (σ):

$σ = \sqrt{\sum (R_{i} - \overset{ˉ}{R})^{2} P_{i}}$

Coefficient of Variation (CV):

$C V = \frac{σ}{\overset{ˉ}{R}} \times 100$

→ Used to compare relative risk between investments.

🔹 2. Capital Budgeting

Nature of Investment:

Capital budgeting involves long-term investment decisions in fixed assets (projects, plants, equipment).

Objectives:

Maximize shareholder wealth
Ensure efficient use of capital

Evaluation Methods:

Technique	Nature	Formula / Description
Payback Period	Non-discounted	Time to recover initial investment
ARR (Accounting Rate of Return)	Non-discounted	Average profit / Average investment
NPV (Net Present Value)	Discounted	PV of inflows – PV of outflows
IRR (Internal Rate of Return)	Discounted	Rate where NPV = 0
PI (Profitability Index)	Discounted	PV of inflows / PV of outflows

Decision Rules:
✅ Accept project if:

NPV > 0
IRR > cost of capital
PI > 1
Shorter payback (for liquidity)

Risk and Uncertainty in Capital Budgeting:

Risk-adjusted Discount Rate
Certainty Equivalent Approach
Sensitivity Analysis
Scenario Analysis
Simulation Analysis

🔹 3. Dividend Theories and Determination

A. Dividend Policy

Decides how much profit is distributed and how much retained.

Factors Affecting Dividend:

Liquidity position
Future growth needs
Shareholder expectations
Legal restrictions

B. Theories of Dividend

Theory	Proponent	Key Idea
Walter’s Model	Prof. James Walter	Dividend relevance; depends on return (r) and cost of capital (k).
Gordon’s Model	Myron Gordon	Investors prefer current dividends due to risk aversion.
M–M Model	Modigliani & Miller	Dividend policy is irrelevant under perfect market conditions.

Walter’s Model Formula:

$P = \frac{D + \frac{r}{k} (E - D)}{k}$

Gordon’s Model:

$P = \frac{E (1 - b)}{k - b g}$

where b = retention ratio, g = growth rate = br

🔹 4. Mergers, Acquisitions & Corporate Restructuring

A. Mergers and Acquisitions (M&A):

Merger: Two companies combine to form one.
Acquisition: One company purchases another.

Types:

Horizontal: Same industry (e.g., Vodafone–Idea)
Vertical: Supplier–buyer relationship
Conglomerate: Unrelated industries

B. Corporate Restructuring

Process of reorganizing ownership, capital, or structure to increase efficiency.

Objectives:

Synergy
Cost efficiency
Tax benefits
Diversification

C. Value Creation in M&A

Occurs if V(AB) > V(A) + V(B)
Reasons: economies of scale, market power, improved management.

D. Leveraged Buyout (LBO):

Acquisition financed largely through borrowed funds, where assets of the target are used as collateral.

E. Takeover:

When a firm acquires controlling interest in another.

Friendly Takeover: Mutual consent
Hostile Takeover: Without consent

🔹 5. Portfolio Management

A. Meaning:

Portfolio = combination of different investments to maximize return and minimize risk.

B. Risk Diversification:

Diversification reduces unsystematic (firm-specific) risk.

Total Risk = Systematic + Unsystematic

C. Capital Asset Pricing Model (CAPM):

$E (R_{i}) = R_{f} + β_{i} [E (R_{m}) - R_{f}]$

Where,
Rf = Risk-free rate,
β = Systematic risk,
Rm = Market return.

Interpretation:

β = 1 → average market risk
β > 1 → aggressive stock
β < 1 → defensive stock

D. Arbitrage Pricing Theory (APT):

Proposed by Stephen Ross, APT assumes multiple factors affect returns (inflation, GDP, interest rate, etc.).

$E (R) = R_{f} + b_{1} F_{1} + b_{2} F_{2} + \dots + b_{n} F_{n}$

🔹 6. Derivatives

Derivatives: Financial instruments whose value depends on underlying assets like stocks, bonds, or commodities.

A. Types:

Forward Contracts: Customized agreements to buy/sell at future date.
Futures Contracts: Standardized exchange-traded forwards.
Options: Right (not obligation) to buy/sell asset at fixed price.
Swaps: Exchange of cash flows or interest rates.

B. Options Terminology:

Call Option: Right to buy.
Put Option: Right to sell.
Strike Price: Agreed price.
Premium: Option cost.

Payoff:

Call Option Payoff = Max(0, S − K)
Put Option Payoff = Max(0, K − S)

C. Option Pricing Models:

Binomial Model – Step-by-step valuation.
Black–Scholes Model – Continuous model for European options.

🔹 7. Working Capital Management

A. Concept:

Working Capital = Current Assets − Current Liabilities
→ Ensures liquidity and smooth operations.

B. Determinants of Working Capital:

Nature of business
Credit policy
Inventory level
Business cycle
Production policy

C. Components:

Cash Management – maintaining optimum cash balance.
Inventory Management – controlling stock levels (EOQ model).
Receivables Management – credit control, collection period.
Payables Management – managing supplier payments.
Factoring: Selling receivables to a factor for immediate cash.

EOQ (Economic Order Quantity):

$E O Q = \sqrt{\frac{2 A O}{C}}$

Where,
A = Annual demand,
O = Ordering cost,
C = Carrying cost per unit.

🔹 8. International Financial Management

A. Definition:

Deals with financial management in international operations, including foreign exchange, risk, and cross-border investment.

B. Foreign Exchange Market:

A global market where currencies are traded.

Functions:

Currency conversion
Hedging and speculation
Financing international trade

C. Exchange Rate Systems:

Fixed Exchange Rate: Controlled by government.
Floating Exchange Rate: Determined by market forces.
Managed Float: Partial control by central bank.

D. Types of Foreign Exchange Risks:

Transaction Risk – due to exchange rate changes before settlement.
Translation Risk – affects accounting statements.
Economic Risk – affects long-term competitiveness.

E. Hedging Techniques:

Forward contracts
Futures
Options
Swaps

November 10, 2025

UGC NET MBA Unit-4 MCQs

Accounting & Financial Management

🔹 Section A – Accounting Principles and Standards

1. The primary objective of accounting is to:
A. Record all financial transactions
B. Provide financial information for decision-making
C. Calculate tax
D. Maintain secrecy
Answer: B
Explanation: Accounting provides relevant information to management and stakeholders for better decisions.*

2. The principle that states “business and owner are separate entities” is:
A. Cost Concept
B. Business Entity Concept
C. Matching Concept
D. Dual Aspect
Answer: B

3. The assumption that business will continue in the foreseeable future is:
A. Going Concern
B. Matching
C. Realisation
D. Conservatism
Answer: A

4. The concept of “recording only monetary transactions” refers to:
A. Accrual Concept
B. Money Measurement
C. Materiality
D. Entity
Answer: B

5. Matching Concept relates to:
A. Assets and Liabilities
B. Expenses and Revenues
C. Income and Capital
D. Assets and Income
Answer: B

6. Conservatism principle means:
A. Record all profits immediately
B. Provide for expected losses
C. Ignore depreciation
D. Avoid provisions
Answer: B

7. “Dual Aspect” means:
A. Every transaction has two sides
B. Assets = Liabilities
C. Income = Expenditure
D. Credit = Income
Answer: A

8. Accrual Concept records:
A. Only cash transactions
B. Income and expenses when incurred
C. Only credit transactions
D. Receipts only
Answer: B

9. Accounting Standards are issued in India by:
A. ICAI
B. SEBI
C. RBI
D. Ministry of Finance
Answer: A

10. Indian Accounting Standards are known as:
A. IAS
B. Ind AS
C. IFRS
D. GAAP
Answer: B

🔹 Section B – Financial Statements and Analysis

11. Financial statements are prepared to show:
A. Operational data
B. Financial performance and position
C. Employee satisfaction
D. Product quality
Answer: B

12. The statement showing profit or loss for a period is:
A. Balance Sheet
B. Income Statement
C. Cash Flow
D. Fund Flow
Answer: B

13. Which of the following is a financial statement?
A. Trial Balance
B. Cash Flow Statement
C. Ledger
D. Journal
Answer: B

14. “Financial position at a point of time” is shown by:
A. Income Statement
B. Cash Flow
C. Balance Sheet
D. Profit & Loss
Answer: C

15. Funds Flow Statement shows:
A. Movement of working capital
B. Profit distribution
C. Depreciation
D. Cash inflow only
Answer: A

16. Ratio Analysis helps in:
A. Measuring profitability, liquidity, solvency
B. Cost computation only
C. Production planning
D. Marketing
Answer: A

17. Current Ratio is:
A. Current Assets / Current Liabilities
B. Total Assets / Current Liabilities
C. Fixed Assets / Current Liabilities
D. Sales / Current Liabilities
Answer: A

18. Ideal Quick Ratio is:
A. 3:1
B. 2:1
C. 1:1
D. 0.5:1
Answer: C

19. Debt-Equity Ratio measures:
A. Solvency
B. Liquidity
C. Profitability
D. Turnover
Answer: A

20. DuPont analysis decomposes ROE into:
A. 2 parts
B. 3 parts
C. 4 parts
D. 5 parts
Answer: B
Explanation: ROE = Net Profit Margin × Asset Turnover × Equity Multiplier.*

🔹 Section C – Funds Flow and Cash Flow Analysis

21. Fund Flow statement is based on:
A. Cash basis
B. Accrual basis
C. Realisation concept
D. Cost basis
Answer: B

22. Cash Flow statement is classified into how many activities?
A. Two
B. Three
C. Four
D. Five
Answer: B
Explanation: Operating, Investing, Financing Activities.*

23. Cash Flow Statement is prepared as per:
A. AS–1
B. AS–3
C. AS–5
D. AS–9
Answer: B

24. Cash inflow from financing activity includes:
A. Issue of shares
B. Purchase of machinery
C. Interest received
D. Depreciation
Answer: A

25. Increase in current assets leads to:
A. Increase in cash
B. Decrease in cash
C. No effect
D. Increase in capital
Answer: B

26. Increase in current liabilities leads to:
A. Increase in working capital
B. Decrease in working capital
C. Increase in fixed capital
D. No effect
Answer: B

27. Depreciation is added back in Cash Flow because:
A. It is a cash expense
B. It is a non-cash expense
C. It reduces cash
D. It increases cash
Answer: B

28. Payment of dividend appears under:
A. Operating activities
B. Financing activities
C. Investing activities
D. None
Answer: B

29. Sale of fixed assets is a:
A. Cash inflow from investing activities
B. Cash outflow from investing activities
C. Cash inflow from financing activities
D. None
Answer: A

30. Issue of debentures for cash is a:
A. Financing inflow
B. Investing inflow
C. Operating inflow
D. None
Answer: A

🔹 Section D – Cost Sheet and Cost Accounting

31. Prime Cost =
A. Direct Material + Direct Labour + Direct Expenses
B. Factory Cost + Admin Overheads
C. Sales − Profit
D. Fixed Cost + Variable Cost
Answer: A

32. Factory Overheads include:
A. Indirect materials, labour, factory expenses
B. Direct materials only
C. Office expenses
D. Selling expenses
Answer: A

33. Total Cost of Production includes:
A. Prime cost only
B. Works cost + Office overhead
C. Selling cost only
D. Direct cost only
Answer: B

34. Cost Sheet helps in:
A. Price fixation and cost control
B. Tax calculation
C. Audit
D. Advertising
Answer: A

35. Selling and distribution overheads are added to:
A. Works cost
B. Cost of production
C. Prime cost
D. Office cost
Answer: B

36. Works Cost =
A. Prime cost + Factory overheads
B. Prime cost + Office overheads
C. Total cost – Selling expenses
D. None
Answer: A

37. The main objective of cost accounting is:
A. Cost control and cost reduction
B. Tax assessment
C. Cash management
D. Record keeping
Answer: A

38. Fixed costs remain constant:
A. Per unit
B. In total
C. Both
D. None
Answer: B

39. Variable costs vary:
A. With time
B. With volume of output
C. With capital
D. With assets
Answer: B

40. Semi-variable costs are:
A. Fixed only
B. Variable only
C. Partly fixed and partly variable
D. None
Answer: C

🔹 Section E – Marginal Costing and CVP Analysis

41. Contribution =
A. Sales – Variable Cost
B. Sales – Fixed Cost
C. Profit – Variable Cost
D. None
Answer: A

42. Break-even point means:
A. No profit, no loss
B. Maximum profit
C. Minimum loss
D. Maximum sales
Answer: A

43. P/V Ratio =
A. (Contribution / Sales) × 100
B. (Profit / Variable Cost) × 100
C. (Sales / Profit) × 100
D. (Cost / Sales) × 100
Answer: A

44. If Fixed Cost = ₹50,000 and Contribution per unit = ₹10, BEP (units) = ?
A. 5000
B. 4000
C. 6000
D. 4500
Answer: A

45. Margin of Safety =
A. Actual Sales – BEP Sales
B. BEP Sales – Actual Sales
C. Contribution – Profit
D. Sales – Variable Cost
Answer: A

46. At BEP, contribution equals:
A. Profit
B. Fixed Cost
C. Variable Cost
D. None
Answer: B

47. Higher P/V ratio indicates:
A. Higher profit potential
B. Higher cost
C. Lower sales
D. None
Answer: A

48. Variable cost per unit is ₹30, Selling price ₹50, Fixed cost ₹2,00,000.
BEP units = ?
A. 10,000
B. 20,000
C. 5,000
D. 15,000
Answer: A
(Fixed Cost ÷ (SP − VC) = 2,00,000 ÷ 20 = 10,000)

49. CVP analysis helps in:
A. Profit planning and decision-making
B. Tax calculation
C. Salary fixation
D. Inventory valuation
Answer: A

50. Margin of Safety ratio =
A. (MOS / Sales) × 100
B. (BEP / Sales) × 100
C. (Profit / Sales) × 100
D. None
Answer: A

🔹 Section F – Standard Costing & Variance Analysis

51. Variance =
A. Standard Cost − Actual Cost
B. Fixed Cost − Variable Cost
C. Sales − Cost
D. None
Answer: A

52. Material Price Variance =
A. (SP − AP) × AQ
B. (SQ − AQ) × SP
C. (SQ − AQ) × AQ
D. None
Answer: A

53. Material Usage Variance =
A. (SQ − AQ) × SP
B. (SP − AP) × AQ
C. (SP × AQ)
D. None
Answer: A

54. Labour Efficiency Variance =
A. (SH − AH) × SR
B. (SR − AR) × AH
C. (SR × AH)
D. None
Answer: A

55. Overhead Variance measures difference between:
A. Standard and Actual Overhead
B. Standard and Actual Cost
C. Direct and Indirect Cost
D. None
Answer: A

56. Variance analysis is used for:
A. Cost control
B. Profit estimation only
C. Production
D. Legal reporting
Answer: A

57. Adverse variance means:
A. Actual > Standard (cost)
B. Standard > Actual
C. Profit increase
D. None
Answer: A

58. Standard Costing helps in:
A. Setting performance benchmarks
B. Recruitment
C. Financial auditing
D. Tax planning
Answer: A

59. Labour Rate Variance =
A. (SR − AR) × AH
B. (SH − AH) × SR
C. (AR − SR) × SH
D. None
Answer: A

60. Favourable variance means:
A. Actual cost < Standard cost
B. Actual cost > Standard cost
C. No change
D. None
Answer: A

🔹 Section G – Financial Management Concepts

61. The main objective of financial management is:
A. Profit maximization
B. Wealth maximization
C. Sales maximization
D. Cost reduction
Answer: B

62. Investment decision relates to:
A. Capital budgeting
B. Dividend policy
C. Working capital
D. All of these
Answer: A

63. Financing decision deals with:
A. Sources of funds
B. Use of funds
C. Profit sharing
D. None
Answer: A

64. Dividend decision concerns:
A. Distribution of profits
B. Raising of funds
C. Investments
D. None
Answer: A

65. Liquidity decision ensures:
A. Sufficient working capital
B. Higher debt
C. More dividends
D. None
Answer: A

66. The term “capital budgeting” refers to:
A. Long-term investment decisions
B. Cash budget
C. Sales planning
D. Payroll
Answer: A

67. Weighted Average Cost of Capital (WACC) represents:
A. Overall cost of financing
B. Only debt cost
C. Only equity cost
D. None
Answer: A

68. Financial management focuses on:
A. Planning and controlling financial resources
B. Auditing
C. Accounting
D. Legal compliance
Answer: A

69. Working capital =
A. Current Assets − Current Liabilities
B. Fixed Assets − Liabilities
C. Assets + Liabilities
D. Equity + Debt
Answer: A

70. The goal of financial management is to maximize:
A. Shareholders’ wealth
B. Managerial perks
C. Sales volume
D. Government revenue
Answer: A

🔹 Section H – Capital Structure and Cost of Capital

71. Capital structure means:
A. Mix of debt and equity
B. Asset composition
C. Working capital
D. Expenses
Answer: A

72. Modigliani–Miller theory suggests:
A. Capital structure is irrelevant
B. High debt increases value
C. Low debt increases value
D. None
Answer: A

73. Traditional theory suggests:
A. Optimum debt–equity ratio maximizes value
B. No relation between value and leverage
C. Only debt should be used
D. Only equity should be used
Answer: A

74. Cost of equity (Ke) is calculated using:
A. Dividend and market price
B. Interest
C. EBIT
D. None
Answer: A

75. WACC formula:
A. (E/V × Ke) + (D/V × Kd × (1−T))
B. E/V + D/V
C. (D−E)/V
D. None
Answer: A

76. Cost of debt is calculated after:
A. Tax
B. Dividend
C. Interest
D. Depreciation
Answer: A

77. Optimum capital structure minimizes:
A. Overall cost of capital
B. Profit
C. Assets
D. Tax
Answer: A

78. Debt-Equity ratio of 2:1 means:
A. Debt is double equity
B. Equity is double debt
C. Equal
D. None
Answer: A

79. Financial risk increases with:
A. Increase in debt
B. Increase in equity
C. Increase in reserves
D. Decrease in sales
Answer: A

80. Retained earnings are:
A. Internal source of finance
B. External source
C. Loan
D. None
Answer: A

🔹 Section I – Budgeting and Control

81. Budgeting means:
A. Planning future activities in monetary terms
B. Cost recording
C. Profit calculation
D. None
Answer: A

82. Budgetary control involves:
A. Comparing actual results with budgets
B. Recording transactions
C. Auditing
D. None
Answer: A

83. Cash budget shows:
A. Expected cash inflows and outflows
B. Profitability
C. Assets
D. Liabilities
Answer: A

84. Flexible budget adjusts to:
A. Different activity levels
B. Fixed activity level
C. Production cost only
D. None
Answer: A

85. Zero-Based Budgeting starts from:
A. Zero base
B. Previous year
C. Standard cost
D. Fixed cost
Answer: A

86. Capital budgeting deals with:
A. Long-term investments
B. Short-term loans
C. Payroll
D. None
Answer: A

87. The first step in budgetary control is:
A. Setting objectives
B. Implementing budget
C. Evaluating variance
D. Feedback
Answer: A

88. Budget Manual contains:
A. Procedures for preparing budgets
B. Annual report
C. Cash flow
D. Accounting standards
Answer: A

89. Responsibility accounting links budget with:
A. Departmental responsibility
B. Sales team
C. Government
D. Customers
Answer: A

90. Variance between actual and budgeted is used for:
A. Control
B. Audit
C. Tax
D. None
Answer: A

🔹 Section J – Leverages and EBIT–EPS Analysis

91. Leverage means:
A. Use of fixed costs to magnify returns
B. Sales increase
C. Cost reduction
D. Risk elimination
Answer: A

92. Operating leverage measures:
A. Effect of sales change on EBIT
B. Effect of EBIT on EPS
C. Financial risk
D. None
Answer: A

93. Financial leverage measures:
A. Effect of EBIT change on EPS
B. Effect of sales on EBIT
C. Production risk
D. None
Answer: A

94. Combined leverage =
A. Operating leverage × Financial leverage
B. Sales ÷ EBIT
C. EBIT ÷ EPS
D. None
Answer: A

95. Financial Breakeven Point =
A. Fixed financial charges
B. EBIT
C. EBT
D. Sales
Answer: A

96. Indifference point is where:
A. EPS under two financing options is same
B. Profit = Loss
C. Sales = Cost
D. None
Answer: A

97. Higher leverage means:
A. Higher risk and higher return
B. Lower risk
C. Constant profit
D. None
Answer: A

98. If contribution = ₹4,00,000 and EBIT = ₹2,00,000, Operating Leverage = ?
A. 2
B. 1
C. 0.5
D. 4
Answer: A

99. EBIT–EPS analysis helps in:
A. Selecting best financing option
B. Determining product price
C. Cost control
D. Inventory valuation
Answer: A

100. Combined leverage indicates:
A. Overall business and financial risk
B. Only operating risk
C. Only financial risk
D. None
Answer: A

November 10, 2025

UGC NET MBA Unit-4

Accounting and Financial Management

1. Accounting Principles and Standards

Meaning of Accounting:

Accounting is the process of recording, classifying, summarizing, and interpreting financial transactions to provide useful information for decision-making.

Basic Accounting Principles (GAAP):

Business Entity Concept: Business and owner are separate entities.
Going Concern Concept: Business will continue for the foreseeable future.
Money Measurement Concept: Only monetary transactions are recorded.
Accounting Period Concept: Results are reported for a fixed period (usually one year).
Cost Concept: Assets are recorded at their purchase price.
Dual Aspect Concept: Every transaction affects two accounts (Debit = Credit).
Accrual Concept: Record income and expenses when they occur, not when cash is received or paid.
Matching Concept: Match revenues with related expenses in the same period.
Conservatism: Recognize expected losses, not profits.
Materiality: Only significant information should be disclosed.

Accounting Standards (AS) and IFRS

Issued in India by Institute of Chartered Accountants of India (ICAI).
Ensure uniformity, transparency, and comparability in financial reporting.
International Standards: IFRS (International Financial Reporting Standards).
Ind AS: Indian convergence with IFRS.

🔹 2. Preparation of Financial Statements

Financial Statements show the financial performance and position of a business.

Major Statements:

Income Statement (Profit & Loss Account) – shows profitability.
Balance Sheet – shows financial position at a point in time.
Cash Flow Statement – shows movement of cash.
Statement of Changes in Equity (for companies).

Format of Balance Sheet (Condensed):

Assets = Liabilities + Owner’s Equity

Liabilities	Amount (₹)	Assets	Amount (₹)
Capital		Fixed Assets
Long-term Loans		Current Assets
Current Liabilities

🔹 3. Financial Statement Analysis

Used to evaluate financial health and assist managerial decision-making.

Techniques of Analysis:

Comparative Statement Analysis – compares financial data across years.
Common Size Analysis – expresses items as % of total.
Ratio Analysis – most common tool.
Cash Flow & Funds Flow Analysis.
Trend Analysis.

A. Ratio Analysis

1️⃣ Liquidity Ratios

Current Ratio = Current Assets / Current Liabilities
→ Ideal = 2:1
Quick Ratio (Acid-Test) = (Current Assets − Inventory) / Current Liabilities
→ Ideal = 1:1

2️⃣ Solvency Ratios

Debt-Equity Ratio = Total Debt / Shareholders’ Equity
Interest Coverage Ratio = EBIT / Interest Expense

3️⃣ Profitability Ratios

Gross Profit Ratio = (Gross Profit / Sales) × 100
Net Profit Ratio = (Net Profit / Sales) × 100
Return on Assets (ROA) = Net Profit / Total Assets
Return on Equity (ROE) = Net Profit / Shareholders’ Equity

4️⃣ Activity Ratios

Inventory Turnover = Cost of Goods Sold / Average Inventory
Debtors Turnover = Credit Sales / Average Debtors

B. Funds Flow Analysis

Shows changes in working capital between two balance sheets.

Key Terms:

Fund: Working Capital (Current Assets − Current Liabilities)
Sources of Fund: Issue of shares, long-term loans, sale of assets.
Uses of Fund: Purchase of assets, repayment of debt, dividend payment.

C. Cash Flow Analysis

Prepared as per AS-3, it shows inflows and outflows of cash.

Activities:

Operating Activities: Day-to-day operations.
Investing Activities: Purchase/sale of assets or investments.
Financing Activities: Issue/repayment of capital and loans.

D. DuPont Analysis

DuPont model breaks Return on Equity (ROE) into three components:

$ROE = Net Profit Margin \times Asset Turnover \times Equity Multiplier$

Helps in understanding how profit, efficiency, and leverage affect ROE.

🔹 4. Cost Accounting and Cost Sheet

Cost Accounting:
Identifies, measures, and controls costs for cost efficiency.

Cost Sheet:
A statement showing the total cost of production and selling a product.

Format:

Particulars	Amount (₹)
Prime Cost = Direct Material + Direct Labour + Direct Expenses
+ Factory Overheads = Works Cost
+ Office & Admin Overheads = Cost of Production
+ Selling & Distribution Overheads = Cost of Sales
+ Profit = Sales

🔹 5. Marginal Costing and CVP Analysis

Marginal Costing:
Costs are divided into Fixed and Variable; fixed costs are not charged to individual products.

Contribution (C):

$C = Sales - Variable Cost$

Profit = Contribution − Fixed Cost

Cost-Volume-Profit (CVP) Analysis

Used to study the relationship between cost, volume, and profit.

Key Equations:

Break-Even Point (BEP):

$BEP (units) = \frac{Fixed Cost}{Selling Price per Unit – Variable Cost per Unit}$
BEP (Sales ₹):

$BEP (₹) = \frac{Fixed Cost}{P/V Ratio}$

P/V Ratio (Profit-Volume Ratio):

$P/V Ratio = \frac{Contribution}{Sales} \times 100$

Margin of Safety (MOS):

$MOS = Actual Sales - BEP Sales$

🔹 6. Standard Costing and Variance Analysis

Standard Costing:
Predetermined cost used as a benchmark for comparison.

Variance:
Difference between standard and actual performance.

Types:

Material Variance:
- Material Cost Variance = (Standard Cost − Actual Cost)
- Material Price Variance = (SP − AP) × AQ
- Material Usage Variance = (SQ − AQ) × SP
Labour Variance:
- Labour Cost Variance = (SR × SH) − (AR × AH)
- Labour Efficiency Variance = (SH − AH) × SR
Overhead Variance:
- Overhead Cost Variance = Standard OH − Actual OH

Purpose:
Control and performance evaluation.

🔹 7. Financial Management – Concept and Functions

Definition:

Financial Management involves planning, organizing, and controlling financial resources to achieve organizational objectives.

Main Functions:

Investment Decision – Capital budgeting.
Financing Decision – Sources of funds and capital structure.
Dividend Decision – Distribution of profits.
Liquidity Decision – Managing working capital.

Objectives:

Maximize shareholders’ wealth.
Ensure profitability, liquidity, and solvency.

🔹 8. Capital Structure and Cost of Capital

Capital Structure:

Combination of debt and equity used for financing business operations.

Capital Structure Theories:

Net Income (NI) Theory: More debt → higher firm value (due to low cost).
Net Operating Income (NOI) Theory: Value independent of capital structure.
Traditional Theory: Moderate debt optimizes value.
Modigliani–Miller (M–M) Theory: In perfect market, structure is irrelevant.

Cost of Capital:

Minimum rate of return expected by investors.

$Overall Cost of Capital (WACC) = \frac{E}{V} K_{e} + \frac{D}{V} K_{d} (1 - T)$

Where:
E = Equity, D = Debt, V = Total Capital, Ke = Cost of Equity, Kd = Cost of Debt, T = Tax rate.

Sources of Finance:

Long-term: Shares, debentures, loans, retained earnings.
Short-term: Trade credit, bank loans, commercial paper.

🔹 9. Budgeting and Budgetary Control

Meaning:

Budgeting = Preparing future financial plans.
Budgetary Control = Comparing actual with budgeted performance to take corrective action.

Types of Budgets:

Fixed Budget – For one level of activity.
Flexible Budget – For multiple activity levels.
Cash Budget – Forecast of cash inflow/outflow.
Capital Budget – Long-term investment planning.
Zero-Based Budgeting (ZBB):
Every activity must be justified from zero base (no automatic carry-forward).

Budgetary Process:

Define objectives.
Prepare budgets.
Implement.
Compare actual vs. budget.
Take corrective actions.

🔹 10. Leverages and EBIT–EPS Analysis

Leverage:

Leverage measures how changes in sales or EBIT affect profits.

A. Operating Leverage (OL):

$OL = \frac{Contribution}{EBIT}$

→ Measures effect of sales change on operating income.

B. Financial Leverage (FL):

$FL = \frac{EBIT}{EBT}$

→ Measures effect of EBIT change on EPS.

C. Combined Leverage (CL):

$CL = OL \times FL$

Financial Breakeven Point:

$BEP (financial) = Fixed Financial Charges (Interest, Preference Dividend)$

Indifference Point:
Level of EBIT where EPS remains same for two financial plans (debt vs. equity).

✅ Quick Summary Keywords:

GAAP, Financial Statements, Ratio Analysis, Cash Flow, DuPont, Cost Sheet, Marginal Costing, Variance, Capital Structure, Budgeting, Leverage, EBIT–EPS, ZBB.

November 10, 2025

UGC NET MBA Unit-3 MCQs

Human Resource Development and Industrial Relations

🔹 Section A – Strategic Role of Human Resource Management (SHRM)

1. Strategic Human Resource Management focuses on:
A. Administrative efficiency
B. Alignment of HR strategies with business goals
C. Personnel administration only
D. Payroll management
Answer: B
Explanation: SHRM integrates HR practices with overall business strategy to improve performance.*

2. SHRM is mainly _______ in nature.
A. Reactive
B. Proactive and long-term
C. Short-term
D. Routine
Answer: B

3. According to Ulrich’s HR model, which is NOT an HR role?
A. Employee Champion
B. Administrative Expert
C. Change Agent
D. Financial Controller
Answer: D

4. The primary aim of SHRM is to:
A. Minimize cost
B. Maximize output
C. Gain competitive advantage through people
D. Maintain discipline
Answer: C

5. A strategic HR plan must be linked to:
A. Individual aspirations
B. Organizational mission and vision
C. Employee benefits
D. Government policies
Answer: B

6. HR managers act as “strategic partners” by:
A. Conducting payroll
B. Aligning HR goals with business objectives
C. Handling grievances
D. Managing benefits
Answer: B

7. HR scorecards are used to:
A. Evaluate HR contribution to strategic goals
B. Maintain attendance
C. Record training hours
D. Track salary data
Answer: A

8. A key characteristic of SHRM is:
A. Focus on day-to-day HR issues
B. Focus on long-term, organization-wide goals
C. Focus on individual disputes
D. Avoiding employee development
Answer: B

9. SHRM gives importance to:
A. Cost reduction only
B. Human capital as a strategic resource
C. Rules and discipline
D. Centralization
Answer: B

10. The process of linking HR metrics to strategic outcomes is called:
A. HR Analytics
B. HR Accounting
C. HR Forecasting
D. HR Auditing
Answer: A

🔹 Section B – Competency Mapping & Balanced Scorecard

11. Competency Mapping identifies:
A. Employee compensation
B. Knowledge, skills and behaviors for a job
C. Financial performance
D. None
Answer: B

12. The main purpose of competency mapping is to:
A. Hire cheap labour
B. Identify skill gaps and develop talent
C. Terminate poor performers
D. Maintain hierarchy
Answer: B

13. The components of competency are:
A. Knowledge, Skill, Attitude
B. Personality, Experience, Power
C. Motivation, Pay, Job
D. None
Answer: A

14. Balanced Scorecard was developed by:
A. Drucker and Fayol
B. Kaplan and Norton
C. Herzberg and Maslow
D. Taylor and Gilbreth
Answer: B

15. The Balanced Scorecard links strategy to:
A. Financial results only
B. Four perspectives of performance
C. Employee relations
D. Marketing plans
Answer: B

16. The four perspectives in the Balanced Scorecard are:
A. Finance, Customers, Processes, Learning & Growth
B. Sales, HR, R&D, Production
C. Profit, People, Planet, Policy
D. None
Answer: A

17. Competency mapping helps mainly in:
A. Training & development
B. Marketing
C. Production
D. Accounting
Answer: A

18. Learning & Growth in BSC focuses on:
A. Employee capabilities and knowledge
B. Market share
C. Financial results
D. Product pricing
Answer: A

19. Balanced Scorecard integrates:
A. Past performance only
B. Financial and non-financial indicators
C. Employee turnover data
D. External audit reports
Answer: B

20. Competency-based HR practices improve:
A. Bureaucracy
B. Employee productivity and alignment
C. Centralization
D. Resistance
Answer: B

🔹 Section C – Career Planning and Development

21. Career planning is the responsibility of:
A. The employee
B. The organization only
C. Both employee and organization
D. Government
Answer: C

22. Career development focuses on:
A. Individual promotion
B. Long-term growth and satisfaction
C. Short-term profits
D. Retirement
Answer: B

23. The first stage of career development is:
A. Exploration
B. Mid-career
C. Establishment
D. Decline
Answer: A

24. Succession planning is a part of:
A. Career planning
B. Industrial relations
C. Training
D. Payroll
Answer: A

25. Mentoring helps in:
A. Skill transfer and career growth
B. Job evaluation
C. Recruitment
D. Stress management
Answer: A

26. Career plateau occurs when:
A. Employee is promoted
B. Career growth stagnates
C. Employee changes job
D. Salary increases
Answer: B

27. Career counselling involves:
A. Providing guidance for career decisions
B. Salary negotiation
C. Legal advice
D. Promotion interviews
Answer: A

28. Mid-career stage is usually characterized by:
A. Stability and self-assessment
B. Job hunting
C. Learning phase
D. Retirement planning
Answer: A

29. Career development is essential for:
A. Employee retention
B. Job dissatisfaction
C. Conflict generation
D. Retirement benefits
Answer: A

30. The final stage of career development is:
A. Exploration
B. Decline or withdrawal
C. Establishment
D. Growth
Answer: B

🔹 Section D – Performance Management & Appraisal

31. Performance management is a ______ process.
A. One-time event
B. Continuous process
C. Annual formality
D. Monthly review
Answer: B

32. Performance appraisal is primarily aimed at:
A. Measuring employee performance
B. Giving punishment
C. Replacing workers
D. Financial planning
Answer: A

33. 360-degree feedback includes input from:
A. Superiors only
B. Peers, subordinates, and customers
C. HR only
D. Self only
Answer: B

34. MBO (Management by Objectives) was introduced by:
A. Elton Mayo
B. Peter Drucker
C. Douglas McGregor
D. Frederick Taylor
Answer: B

35. The BARS method is used for:
A. Recruitment
B. Performance appraisal
C. Grievance handling
D. Counseling
Answer: B

36. Key Result Areas (KRAs) are linked to:
A. Job description
B. Performance targets
C. Grievances
D. Training needs
Answer: B

37. Assessment centers are used for:
A. Training and managerial appraisal
B. Production control
C. Payroll
D. Finance
Answer: A

38. The most objective appraisal system is:
A. Graphic rating scale
B. MBO
C. Ranking
D. Essay method
Answer: B

39. Performance management aims at:
A. Aligning performance with strategy
B. Reducing HR cost
C. Legal compliance
D. Paperwork
Answer: A

40. Feedback should be:
A. Destructive
B. Delayed
C. Immediate and constructive
D. Avoided
Answer: C

🔹 Section E – Organization Development (OD) & Change

41. Organization Development is a _______ process.
A. Planned and systematic
B. Accidental
C. Reactive
D. Short-term
Answer: A

42. OD focuses on:
A. Organizational effectiveness and change
B. Recruitment
C. Cost cutting
D. Pay structure
Answer: A

43. OD interventions are based on:
A. Behavioral science
B. Economics
C. Engineering
D. Statistics only
Answer: A

44. Sensitivity training is also called:
A. T-Group Training
B. Job rotation
C. Coaching
D. On-the-job training
Answer: A

45. Team building is an example of:
A. Human process intervention
B. Structural intervention
C. Strategic intervention
D. Technological intervention
Answer: A

46. Job redesign is a type of:
A. Techno-structural intervention
B. Human resource intervention
C. Cultural intervention
D. Political intervention
Answer: A

47. OD aims at improving:
A. Human relations and productivity
B. Machinery efficiency
C. Finance
D. Law enforcement
Answer: A

48. The final stage in the OD process is:
A. Evaluation and feedback
B. Diagnosis
C. Intervention
D. Planning
Answer: A

49. OD is a _______ process.
A. Participative
B. Dictatorial
C. Centralized
D. Mechanical
Answer: A

50. Change management involves:
A. Managing resistance
B. Controlling finance
C. Designing policies
D. Promoting unions
Answer: A

🔹 Section F – Talent Management & Skill Development

51. Talent management refers to:
A. Attracting, developing, and retaining talent
B. Payroll
C. Recruitment only
D. Disciplinary actions
Answer: A

52. Succession planning is part of:
A. Talent retention
B. Talent development
C. Talent acquisition
D. Performance management
Answer: B

53. Skill India Mission was launched in:
A. 2010
B. 2015
C. 2018
D. 2020
Answer: B

54. Pradhan Mantri Kaushal Vikas Yojana aims to:
A. Train youth for employment
B. Support agriculture
C. Build infrastructure
D. Promote exports
Answer: A

55. Talent management enhances:
A. Employee engagement and innovation
B. Conflicts
C. Cost
D. Turnover
Answer: A

56. National Skill Development Corporation (NSDC) is under:
A. Ministry of HRD
B. Ministry of Skill Development & Entrepreneurship
C. Ministry of Finance
D. NITI Aayog
Answer: B

57. Skill development is essential for:
A. Employability and competitiveness
B. Conflict
C. Centralization
D. Outsourcing
Answer: A

58. Key part of talent management is:
A. Employer branding
B. Layoffs
C. Unionization
D. Bureaucracy
Answer: A

59. Talent pipeline refers to:
A. Future-ready employees for critical roles
B. Machinery
C. HR cost
D. Appraisal form
Answer: A

60. The most critical phase of talent management is:
A. Retention
B. Recruitment
C. Training
D. Termination
Answer: A

🔹 Section G – Employee Engagement & Work-Life Balance

61. Employee engagement is:
A. Emotional commitment to the organization
B. Physical attendance
C. Salary-based motivation
D. Job rotation
Answer: A

62. Engaged employees show:
A. High productivity and loyalty
B. Low morale
C. Indifference
D. High absenteeism
Answer: A

63. Work-life balance means:
A. Equal pay
B. Equal time for work and personal life
C. Balance between professional and personal responsibilities
D. Long working hours
Answer: C

64. Flexible working hours promote:
A. Stress
B. Work-life balance
C. Turnover
D. Absenteeism
Answer: B

65. Employee engagement is measured by:
A. Surveys and feedback
B. Salary slips
C. Promotion letters
D. Attendance
Answer: A

66. The opposite of employee engagement is:
A. Disengagement
B. Teamwork
C. Motivation
D. Innovation
Answer: A

67. A key factor in work-life balance:
A. Supportive leadership
B. Long overtime hours
C. Strict hierarchy
D. Lack of communication
Answer: A

68. Burnout is a result of:
A. Work-life imbalance
B. Recognition
C. Engagement
D. Rest
Answer: A

69. Highly engaged employees are:
A. Committed and passionate
B. Passive
C. Disinterested
D. Depressed
Answer: A

70. Work-life initiatives enhance:
A. Employee retention and morale
B. Absenteeism
C. Conflicts
D. Bureaucracy
Answer: A

🔹 Section H – Industrial Relations, Disputes & Grievance Management

71. Industrial Relations deals with:
A. Employer–employee relations
B. Finance
C. Production
D. Marketing
Answer: A

72. The Industrial Disputes Act was enacted in:
A. 1946
B. 1947
C. 1952
D. 1965
Answer: B

73. The main objective of IR is:
A. Industrial peace and productivity
B. Conflict promotion
C. Wage increase only
D. Worker politics
Answer: A

74. Grievance means:
A. Employee dissatisfaction
B. Bonus
C. Promotion
D. None
Answer: A

75. First step in grievance procedure:
A. Reporting to immediate supervisor
B. Labour court
C. Trade union
D. Arbitration
Answer: A

76. Industrial disputes are settled by:
A. Conciliation, Arbitration, Adjudication
B. HR department
C. Legal firm
D. Employee committee
Answer: A

77. Collective bargaining involves:
A. Employers and employees negotiating
B. Individual complaints
C. Arbitration only
D. Government intervention
Answer: A

78. Conciliation is done by:
A. Neutral third party
B. Union leader
C. HR manager
D. Government alone
Answer: A

79. Industrial peace promotes:
A. Productivity
B. Strikes
C. Absenteeism
D. Grievance
Answer: A

80. The main aim of grievance handling is:
A. Fair and quick resolution
B. Delay
C. Discipline
D. Reward
Answer: A

🔹 Section I – Labour Welfare, Social Security & Trade Unions

81. Labour welfare aims to:
A. Improve well-being of workers
B. Control wages
C. Maintain hierarchy
D. Restrict unions
Answer: A

82. Employees’ Provident Fund Act was passed in:
A. 1948
B. 1952
C. 1972
D. 1980
Answer: B

83. Payment of Gratuity Act came into force in:
A. 1952
B. 1965
C. 1972
D. 1985
Answer: C

84. Maternity Benefit Act ensures:
A. Paid leave for female employees
B. Pension
C. Bonus
D. Provident fund
Answer: A

85. The first Indian labour law was:
A. Factories Act, 1881
B. Trade Union Act, 1926
C. ID Act, 1947
D. EPF Act, 1952
Answer: A

86. Trade Union Act was passed in:
A. 1920
B. 1926
C. 1930
D. 1947
Answer: B

87. Collective bargaining helps in:
A. Peaceful resolution of disputes
B. Conflict escalation
C. Political movement
D. Firing employees
Answer: A

88. The function of trade unions is:
A. Protect and promote workers’ interest
B. Promote management
C. Handle accounts
D. None
Answer: A

89. The main principle of collective bargaining:
A. Give and take
B. Conflict
C. Delay
D. Litigation
Answer: A

90. Social Security protects workers from:
A. Old age, sickness, and unemployment
B. Promotions
C. Transfers
D. Training
Answer: A

🔹 Section J – International HRM & Green HRM

91. IHRM refers to:
A. Managing HR in global context
B. Domestic HR only
C. Outsourcing
D. None
Answer: A

92. The greatest challenge in IHRM is:
A. Cultural differences
B. Training cost
C. Local hiring
D. Bureaucracy
Answer: A

93. Managing expatriates is a part of:
A. IHRM
B. Industrial Relations
C. Domestic HRM
D. Payroll
Answer: A

94. Ethnocentric approach means:
A. Home-country dominance
B. Host-country dominance
C. Global equality
D. Localization
Answer: A

95. Polycentric approach focuses on:
A. Host-country employees
B. Global managers
C. Home-country employees
D. Regional management
Answer: A

96. Geocentric approach emphasizes:
A. Global best talent, regardless of nationality
B. Home-country only
C. Host-country only
D. None
Answer: A

97. Expatriate means:
A. Employee sent abroad for work
B. Retired person
C. Local employee
D. Temporary worker
Answer: A

98. Green HRM integrates:
A. Environmental management into HR practices
B. Finance into HR
C. Marketing into HR
D. Legal aspects
Answer: A

99. Green recruitment focuses on:
A. Hiring eco-conscious employees
B. Cost cutting
C. Outsourcing
D. Mass hiring
Answer: A

100. Paperless office and e-HRM are examples of:
A. Green HRM practices
B. Industrial relations
C. HR planning
D. OD interventions
Answer: A

November 10, 2025

UGC NET MBA Unit-3

Human Resource Development and Industrial Relations

This unit focuses on the strategic aspects of HRM, employee development, industrial relations, and emerging HR trends such as Green HRM and Global HR Challenges.

🔹 1. Strategic Role of Human Resource Management

Meaning:

Strategic Human Resource Management (SHRM) integrates HR policies and practices with the strategic objectives of the organization to gain a competitive advantage.

Key Features:

Aligns HR policies with business strategy.
Long-term and proactive in nature.
Focuses on organizational performance and employee engagement.
Treats employees as strategic assets.
Links human capital to organizational success.

Objectives:

Achieve business goals through people.
Build a performance-driven culture.
Ensure workforce flexibility and adaptability.
Foster innovation and leadership.

Strategic HR Roles (Ulrich Model):

Strategic Partner – Align HR strategies with business goals.
Change Agent – Manage transformation and cultural change.
Administrative Expert – Streamline HR processes.
Employee Champion – Support employee welfare and development.

🔹 2. Competency Mapping & Balanced Scorecard

A. Competency Mapping

Definition:
The process of identifying key competencies (knowledge, skills, and behaviors) required for performing specific jobs effectively.

Components of Competency:

Knowledge – What an individual knows.
Skill – What an individual can do.
Attitude/Behaviour – How an individual behaves.

Purpose:

Recruitment and selection
Training and development
Performance appraisal
Career planning

Steps in Competency Mapping:

Identify key roles.
Collect data (through interviews, observation, questionnaires).
Prepare competency framework.
Assess employees against competencies.
Develop training plans to fill gaps.

B. Balanced Scorecard (BSC)

Developed by: Robert Kaplan and David Norton (1992).

Definition:
A strategic management tool that measures organizational performance from multiple perspectives, not just financial results.

Four Perspectives of BSC:

Financial Perspective – Profitability, ROI, revenue growth.
Customer Perspective – Customer satisfaction, retention, market share.
Internal Business Processes – Efficiency, innovation, quality.
Learning & Growth Perspective – Employee skills, training, culture, technology.

Purpose:

Aligns day-to-day work with strategy.
Measures both lag and lead indicators.
Links performance with strategic goals.

🔹 3. Career Planning and Development

Meaning:

A systematic process by which an employee plans their career goals and the organization supports this growth through career development programs.

Career Planning:
→ Employee’s responsibility to identify career goals.
Career Development:
→ Organization’s responsibility to provide opportunities to achieve those goals.

Objectives:

Align individual and organizational goals.
Enhance employee satisfaction.
Reduce turnover and improve retention.

Stages of Career Development:

Exploration (early career)
Establishment (stabilization)
Mid-career (growth or stagnation)
Late-career (decline or mentoring)
Retirement (withdrawal)

Tools:

Career counselling
Mentoring
Job rotation
Succession planning

🔹 4. Performance Management and Appraisal

Performance Management (PM):

A continuous process of setting goals, assessing progress, and improving performance of employees.

Performance Appraisal (PA):

A systematic evaluation of an employee’s job performance and potential.

Objectives:

Provide feedback
Identify training needs
Basis for promotion and pay
Career development

Appraisal Methods:

Traditional Methods	Modern Methods
Ranking Method	360° Feedback
Graphic Rating Scale	Management by Objectives (MBO)
Critical Incident	Behaviourally Anchored Rating Scales (BARS)
Checklist	Assessment Centre

360° Feedback:
Feedback from superiors, peers, subordinates, and customers.

MBO (Drucker):
Joint goal setting between manager and employee → Periodic review → Performance evaluation.

🔹 5. Organization Development (OD), Change & OD Interventions

Organization Development (OD):

A planned, organization-wide effort to increase effectiveness through planned interventions based on behavioral science.

Characteristics:

Planned and systematic.
Long-term focus.
Participative and collaborative.
Based on data and diagnosis.

OD Process:

Problem identification
Diagnosis
Planning and intervention
Evaluation and feedback

OD Interventions:
→ Techniques used to bring about organizational change.

Types:

Human Process Interventions: Team building, T-groups, sensitivity training.
Techno-Structural Interventions: Job redesign, workflow restructuring.
Human Resource Interventions: Performance management, career planning.
Strategic Interventions: Organizational transformation, cultural change.

🔹 6. Talent Management & Skill Development

Talent Management:

Systematic attraction, development, motivation, and retention of talented employees.

Process:

Talent acquisition
Talent development
Talent retention
Succession planning

Importance:

Improves productivity and innovation.
Builds leadership pipeline.
Enhances employer brand.

Skill Development:

Process of enhancing employee competencies to meet current and future job requirements.

Indian Initiatives:

National Skill Development Mission (NSDM)
Pradhan Mantri Kaushal Vikas Yojana (PMKVY)
Skill India Mission

🔹 7. Employee Engagement & Work-Life Balance

Employee Engagement:

Emotional and intellectual commitment of employees toward their organization.

Drivers of Engagement:

Recognition and rewards
Leadership support
Communication
Learning opportunities
Work environment

Types:

Engaged Employees – Highly committed and motivated.
Not Engaged – Indifferent and uninspired.
Actively Disengaged – Negative attitude, harmful to morale.

Work-Life Balance (WLB):

Maintaining a healthy balance between professional and personal life.

Benefits:

Reduces stress and burnout.
Increases productivity and retention.
Enhances job satisfaction.

WLB Initiatives:

Flexible working hours
Remote work options
Childcare and wellness programs
Leave policies

🔹 8. Industrial Relations (IR): Concept, Disputes & Grievance Management

Meaning:

IR refers to the relationship between employers, employees, and trade unions in the industrial context.

Objectives:

Maintain industrial peace.
Ensure employee welfare.
Promote productivity.
Minimize conflicts.

Industrial Disputes:

Disagreement between employer and employees regarding employment terms.

Common Causes:

Wages and benefits
Working conditions
Job security
Discipline and unfair treatment

Settlement of Disputes (as per Industrial Disputes Act, 1947):

Conciliation
Arbitration
Adjudication
Collective bargaining

Grievance Management:

Formal process of addressing employee complaints and dissatisfaction.

Steps:

Identification of grievance
Communication to supervisor
Investigation
Redressal
Feedback

Essentials: Timeliness, confidentiality, and fairness.

🔹 9. Labour Welfare and Social Security

Labour Welfare:

Efforts made to improve employee well-being (economic, social, and psychological).

Types:

Statutory Welfare: Mandated by law (canteens, restrooms).
Voluntary Welfare: Employer-initiated (clubs, housing).
Mutual Welfare: Cooperative activities (credit societies).

Social Security:

Protection of workers against contingencies like sickness, injury, unemployment, and old age.

Social Security Measures in India:

Employees’ State Insurance Act, 1948 (ESI)
Employees’ Provident Fund Act, 1952 (EPF)
Payment of Gratuity Act, 1972
Maternity Benefit Act, 1961
Pension Schemes

🔹 10. Trade Union and Collective Bargaining

Trade Union:

An organized association of workers formed to protect and promote their common interests.

Functions:

Protect workers’ rights
Negotiate with management
Provide welfare and support

Trade Union Act, 1926: Governs formation and regulation of trade unions in India.

Collective Bargaining:

Negotiation process between management and employees (through unions) to resolve employment issues.

Steps in Collective Bargaining:

Preparation
Discussion and negotiation
Agreement
Implementation
Evaluation

Levels:

Plant level
Industry level
National level

🔹 11. International Human Resource Management (IHRM)

Definition:
Management of human resources in a global context—across different countries and cultures.

Key Challenges:

Managing expatriates
Cultural differences
Legal and political systems
Compensation parity
Global talent acquisition

IHRM Functions:

International recruitment and selection
Expatriate training and development
Global performance management
Cross-cultural communication

Approaches to IHRM:

Ethnocentric: Home-country policies dominate.
Polycentric: Host-country practices followed.
Geocentric: Best talent selected globally.

🔹 12. Green HRM (Environmental HRM)

Definition:
Integration of environmental management into HRM practices to promote sustainability.

Objectives:

Reduce carbon footprint through HR policies.
Encourage eco-friendly employee behavior.
Build environmental awareness.

Green HRM Practices:

Green Recruitment: Hiring candidates with eco-values.
Green Training: Promoting environmental awareness.
Green Performance Appraisal: Rewarding eco-friendly practices.
Green Compensation: Incentives for sustainability achievements.
Paperless Office and e-HRM Systems.

Benefits:

Improved corporate image.
Reduced waste and energy costs.
Sustainable organizational culture.

November 10, 2025

UGC NET MBA Unit-2 MCQs

Organisational Behaviour & Human Resource Management

Section A – Organisational Behaviour: Concept, Significance & Theories

1. Organisational Behaviour (OB) is the study of _______.
A. Machines and processes
B. Human behaviour in organisations
C. Technical skills
D. Business environment
Answer: B
Explanation: OB focuses on understanding and predicting human behaviour in the workplace.

2. The term “Organisational Behaviour” is mainly derived from:
A. Sociology
B. Psychology
C. Anthropology
D. All of these
Answer: D
Explanation: OB draws concepts from psychology, sociology, anthropology, and political science.

3. The Hawthorne Experiments were conducted by:
A. F.W. Taylor
B. Henri Fayol
C. Elton Mayo
D. Max Weber
Answer: C
Explanation: Elton Mayo’s studies emphasized the importance of social factors at work.

4. Which of the following theories emphasized human relations?
A. Classical Theory
B. Bureaucratic Theory
C. Neo-Classical Theory
D. Contingency Theory
Answer: C
Explanation: Neo-classical theory highlighted the significance of human needs and relationships.

5. Systems Theory views an organization as:
A. A mechanical system
B. A closed system
C. An open system interacting with environment
D. A random system
Answer: C
Explanation: The Systems Approach considers an organization as an open system.

6. “There is no one best way to manage” is the essence of:
A. Systems Theory
B. Contingency Theory
C. Bureaucratic Theory
D. Classical Theory
Answer: B
Explanation: Contingency Theory states that management style depends on situational variables.

7. OB helps managers to _______.
A. Predict and control employee behaviour
B. Eliminate conflicts
C. Reduce wages
D. None
Answer: A
Explanation: OB helps in understanding and influencing employee behaviour effectively.

8. A system approach in OB recognizes:
A. Individual isolation
B. Interdependence of subsystems
C. Departmental hierarchy
D. Autocracy
Answer: B
Explanation: Systems approach focuses on interdependence of individuals, groups, and environment.

9. The study of individuals and groups in organizations is called:
A. Industrial psychology
B. Organisational Behaviour
C. Human Engineering
D. Management
Answer: B

10. The ultimate objective of OB is:
A. Profit maximization
B. Employee turnover
C. Organizational effectiveness
D. Bureaucracy
Answer: C
Explanation: OB seeks to improve organizational performance and effectiveness.

🔹 Section B – Individual Behaviour: Personality, Perception, Values, Attitudes, Learning & Motivation

11. Personality is the sum total of:
A. Physical traits only
B. Mental ability only
C. Ways an individual reacts and interacts
D. Intelligence
Answer: C

12. The “Big Five” model of personality includes all except:
A. Openness
B. Conscientiousness
C. Introversion
D. Agreeableness
Answer: C
Explanation: Introversion is not part of Big Five; it includes neuroticism instead.

13. Perception is the process of:
A. Storing information
B. Selecting, organizing and interpreting stimuli
C. Emotional control
D. Mental relaxation
Answer: B

14. Stereotyping is a type of:
A. Learning
B. Perception error
C. Motivation
D. Personality trait
Answer: B

15. Values are:
A. Temporary beliefs
B. Enduring beliefs about right and wrong
C. Situational behaviors
D. Emotions
Answer: B

16. According to Festinger, inconsistency between attitude and behaviour leads to:
A. Cognitive harmony
B. Cognitive dissonance
C. Motivation
D. Job satisfaction
Answer: B

17. Learning can be defined as:
A. Permanent change in behaviour through experience
B. Temporary reaction
C. Genetic ability
D. Emotional response
Answer: A

18. Classical conditioning was proposed by:
A. Pavlov
B. Skinner
C. Bandura
D. Maslow
Answer: A

19. Operant conditioning theory emphasizes:
A. Reinforcement
B. Observation
C. Association
D. Instinct
Answer: A

20. Social Learning theory was given by:
A. Herzberg
B. Bandura
C. McGregor
D. Alderfer
Answer: B

🔹 Section C – Motivation Theories

21. According to Maslow, self-actualization is:
A. Basic need
B. Safety need
C. Growth need
D. Social need
Answer: C

22. Herzberg’s two-factor theory includes:
A. Hygiene and Motivators
B. Rewards and Penalties
C. Needs and Desires
D. Drives and Goals
Answer: A

23. In Vroom’s Expectancy Theory, motivation = _______.
A. Expectancy + Valence
B. Expectancy × Valence × Instrumentality
C. Reward × Effort
D. Ability × Effort
Answer: B

24. Equity Theory is associated with:
A. Fairness perception
B. Group motivation
C. Leadership
D. Conflict
Answer: A

25. Goal Setting Theory was proposed by:
A. Maslow
B. McGregor
C. Locke
D. Taylor
Answer: C

26. Alderfer’s ERG theory condenses Maslow’s needs into:
A. Two categories
B. Three categories
C. Four categories
D. Five categories
Answer: B

27. In Expectancy theory, “Valence” means:
A. Perceived probability of success
B. Value of outcome to the individual
C. Link between effort and reward
D. Reward system
Answer: B

28. According to McGregor, Theory X managers assume employees are:
A. Self-motivated
B. Lazy and avoid work
C. Innovative
D. Independent
Answer: B

29. Theory Y managers believe employees are:
A. Work-haters
B. Creative and responsible
C. Passive
D. Unreliable
Answer: B

30. Motivation leads to:
A. Behavioural change
B. Discipline only
C. Fear
D. Conflict
Answer: A

🔹 Section D – Group Behaviour and Leadership

31. A group of people who interact to achieve goals is called:
A. Group
B. Crowd
C. Union
D. Gathering
Answer: A

32. Stages of group development (Tuckman) include:
A. Forming, Storming, Norming, Performing, Adjourning
B. Planning, Leading, Controlling
C. Design, Build, Operate
D. Hire, Train, Fire
Answer: A

33. Informal groups are formed:
A. By management
B. Socially by employees
C. By HR department
D. By unions
Answer: B

34. Team building mainly focuses on:
A. Technical efficiency
B. Coordination and cooperation
C. Profit maximization
D. Training
Answer: B

35. Leadership is primarily concerned with:
A. Directing people to achieve goals
B. Planning only
C. Controlling finance
D. Negotiation
Answer: A

36. Trait Theory assumes:
A. Leaders are born
B. Leaders are made
C. Leadership is situational
D. Leadership is transactional
Answer: A

37. According to Fiedler’s model, leadership effectiveness depends on:
A. Task structure only
B. Situation and leader’s style match
C. Personality only
D. Rewards
Answer: B

38. Transformational leadership focuses on:
A. Short-term exchange
B. Inspiring and transforming followers
C. Strict control
D. Rewards only
Answer: B

39. Transactional leadership emphasizes:
A. Vision
B. Rewards and punishments
C. Motivation
D. Empowerment
Answer: B

40. Situational leadership theory was given by:
A. Hersey and Blanchard
B. Maslow
C. Fiedler
D. Skinner
Answer: A

🔹 Section E – Interpersonal Behaviour & Transactional Analysis

41. Transactional Analysis was developed by:
A. Daniel Goleman
B. Eric Berne
C. Elton Mayo
D. Kurt Lewin
Answer: B

42. The three ego states in TA are:
A. Parent, Adult, Child
B. High, Medium, Low
C. Leader, Follower, Neutral
D. Positive, Negative, Neutral
Answer: A

43. A complementary transaction results in:
A. Conflict
B. Smooth communication
C. Manipulation
D. Misunderstanding
Answer: B

44. Crossed transactions lead to:
A. Harmony
B. Miscommunication or conflict
C. Agreement
D. Productivity
Answer: B

45. Interpersonal behaviour primarily deals with:
A. Technical communication
B. Interaction between individuals
C. Machine control
D. Production methods
Answer: B

🔹 Section F – Organisational Culture, Climate & Diversity

46. Organisational Culture refers to:
A. Shared values and beliefs
B. Rules and regulations
C. Salary structure
D. Legal system
Answer: A

47. Organizational Climate reflects:
A. Employees’ perception of work environment
B. Official hierarchy
C. Job description
D. Pay level
Answer: A

48. Difference between culture and climate is that culture is _______.
A. Temporary
B. Surface-level perception
C. Deep-rooted and stable
D. Always negative
Answer: C

49. According to Charles Handy, “Role Culture” emphasizes:
A. Authority
B. Defined rules and hierarchy
C. Innovation
D. Freedom
Answer: B

50. Hofstede’s framework of culture includes all except:
A. Power distance
B. Uncertainty avoidance
C. Leadership style
D. Individualism vs Collectivism
Answer: C

51. Workforce diversity includes:
A. Age, gender, ethnicity, culture
B. Similar backgrounds
C. Same education level
D. None
Answer: A

52. Diversity in workplace enhances:
A. Conflicts only
B. Creativity and innovation
C. Uniformity
D. Bureaucracy
Answer: B

53. Major challenge of workforce diversity:
A. Team communication
B. Homogeneity
C. High pay
D. Automation
Answer: A

54. Cross-cultural OB helps to:
A. Ignore cultural values
B. Understand global workforce
C. Reduce global business
D. Centralize control
Answer: B

55. High power distance culture means:
A. Equality in power
B. Acceptance of hierarchy
C. Strong democracy
D. Open criticism
Answer: B

🔹 Section G – Emotions, Stress & Justice

56. Emotional Intelligence concept is given by:
A. Elton Mayo
B. Daniel Goleman
C. Maslow
D. McGregor
Answer: B

57. Components of Emotional Intelligence include all except:
A. Self-awareness
B. Self-regulation
C. Technical ability
D. Empathy
Answer: C

58. Positive stress is called:
A. Eustress
B. Distress
C. Hyperstress
D. Hypostress
Answer: A

59. Negative stress causing harm is:
A. Distress
B. Eustress
C. Challenge
D. Stability
Answer: A

60. Stress can be reduced by:
A. Meditation
B. Time management
C. Counselling
D. All of these
Answer: D

61. Organizational justice means:
A. Ethical accounting
B. Fairness in workplace decisions
C. Political power
D. Employee turnover
Answer: B

62. Distributive justice relates to:
A. Fairness of procedures
B. Fairness of outcomes
C. Fair communication
D. Leadership
Answer: B

63. Procedural justice refers to:
A. Fair processes
B. Fair results
C. Fair emotions
D. Legal justice
Answer: A

64. Interactional justice emphasizes:
A. Respect and communication
B. Legal rules
C. Rewards
D. Punishment
Answer: A

65. Whistle-blowing means:
A. Reporting unethical practices
B. Team meeting
C. Training
D. Public relations
Answer: A

🔹 Section H – HRM: Concept, Perspectives, Trends

66. HRM stands for:
A. Human Resource Management
B. Human Rights Management
C. Human Relation Model
D. Human Responsibility Method
Answer: A

67. HRM is primarily concerned with:
A. Managing machines
B. Managing people at work
C. Managing production
D. Managing finance
Answer: B

68. Hard HRM focuses on:
A. Employee welfare
B. Control and efficiency
C. Motivation
D. Learning
Answer: B

69. Soft HRM emphasizes:
A. Development and people-orientation
B. Cost cutting
C. Centralization
D. Rules
Answer: A

70. Strategic HRM links HR practices with:
A. Financial decisions
B. Organizational strategy
C. Technology
D. Legal compliance
Answer: B

71. Recent HRM trends include all except:
A. HR analytics
B. Talent management
C. Gig work culture
D. Centralized control
Answer: D

72. Main objective of HRM:
A. Optimal utilization of human talent
B. Maximizing production only
C. Increasing employee turnover
D. None
Answer: A

🔹 Section I – HR Planning, Recruitment & Training

73. HR Planning ensures:
A. Right number of people at right time
B. Cost reduction
C. Job rotation
D. Staff removal
Answer: A

74. First step in HR planning is:
A. Forecasting demand
B. Assessing current HR inventory
C. Recruitment
D. Selection
Answer: B

75. Recruitment is a _______ process.
A. Negative
B. Filtering
C. Positive (attracting candidates)
D. Eliminating
Answer: C

76. Selection process is:
A. Choosing right candidate
B. Advertising
C. Induction
D. Training
Answer: A

77. Induction aims at:
A. Orientation and familiarization of new employees
B. Job evaluation
C. Reward system
D. Training
Answer: A

78. Training focuses on:
A. Present job performance
B. Future managerial skills
C. Promotions
D. Appraisal
Answer: A

79. Development is concerned with:
A. Future growth of employees
B. Job rotation only
C. Production
D. Pay
Answer: A

80. On-the-job training includes:
A. Lectures
B. Coaching, Job rotation
C. Simulation
D. Conferences
Answer: B

81. Off-the-job training includes:
A. Job instruction
B. Role play and case study
C. Coaching
D. Apprenticeship
Answer: B

82. The first level of training evaluation (Kirkpatrick Model) is:
A. Learning
B. Reaction
C. Behavior
D. Results
Answer: B

🔹 Section J – Job Analysis, Evaluation & Compensation

83. Job Analysis produces:
A. Job Description and Job Specification
B. Training modules
C. Payroll
D. Reward chart
Answer: A

84. Job Description defines:
A. Duties and responsibilities
B. Employee’s age
C. Skill level
D. Salary
Answer: A

85. Job Specification includes:
A. Job duties
B. Personal qualities and skills required
C. Job hierarchy
D. Salary
Answer: B

86. Job Evaluation aims to:
A. Find relative worth of jobs
B. Fix bonuses
C. Design organization
D. Recruit employees
Answer: A

87. The simplest method of job evaluation:
A. Point rating
B. Ranking method
C. Factor comparison
D. Analytical hierarchy
Answer: B

88. Compensation Management deals with:
A. Wages, salaries and benefits
B. HR planning
C. Training
D. Appraisal
Answer: A

89. Fringe benefits include:
A. House rent, leave, insurance
B. Overtime
C. Bonus only
D. None
Answer: A

90. Job Evaluation ensures:
A. Internal equity
B. External equity
C. Wage control
D. Both A and B
Answer: D

Section K – Miscellaneous & Revision

91. Organizational Behaviour is primarily a _______ science.
A. Pure
B. Applied
C. Natural
D. Physical
Answer: B

92. Personality is influenced by:
A. Heredity
B. Environment
C. Situation
D. All of these
Answer: D

93. Emotional stability refers to:
A. Calmness under stress
B. Aggressiveness
C. Nervousness
D. Laziness
Answer: A

94. The process of comparing performance with standards belongs to:
A. Controlling
B. Motivation
C. Coordination
D. Evaluation
Answer: A

95. Leadership differs from management because:
A. Leadership focuses on influencing people
B. Management focuses only on planning
C. Both are same
D. None
Answer: A

96. Self-regulation in Emotional Intelligence means:
A. Managing one’s emotions
B. Managing others’ emotions
C. Avoiding teamwork
D. Ignoring problems
Answer: A

97. Diversity management helps organizations to:
A. Compete globally
B. Increase conflicts
C. Hire locals only
D. Avoid change
Answer: A

98. Whistle Blower Protection Act (India) was enacted in:
A. 2010
B. 2014
C. 2016
D. 2019
Answer: B

99. The person who coined “Theory X and Theory Y” is:
A. McGregor
B. Maslow
C. Herzberg
D. Vroom
Answer: A

100. OB and HRM are related because both deal with:
A. Human behaviour and management of people
B. Finance
C. Machines
D. Technology
Answer: A

November 10, 2025

UGC NET MBA Unit-2

Organisational Behaviour (OB) & Human Resource Management (HRM)

1. Organisational Behaviour – Concept and Significance

Definition:
Organisational Behaviour (OB) is the study of how individuals and groups behave within an organization, and how this behavior affects organizational performance.

According to Stephen Robbins:
“OB is a field of study that investigates the impact that individuals, groups, and structure have on behavior within organizations, for the purpose of applying such knowledge toward improving organizational effectiveness.”

Significance:

Improves managerial effectiveness.
Enhances motivation and productivity.
Promotes teamwork and cooperation.
Reduces absenteeism and turnover.
Encourages innovation and leadership.

OB is interdisciplinary: draws from psychology, sociology, anthropology, and political science.

2. Theories of Organisational Behaviour

(A) Classical Theories

Focused on structure, efficiency, and rationality.
Example: Scientific Management (Taylor), Administrative Theory (Fayol), Bureaucracy (Weber).

(B) Neo-Classical Theories

Emphasized human relations and motivation.
Example: Elton Mayo’s Hawthorne Studies, Maslow’s Human Needs, McGregor’s Theory X and Y.

(C) Modern Theories

Focused on systems, contingency, and behavioral science.
Example: Systems Theory, Contingency Theory, Socio-Technical Systems Theory.

3. Individual Behaviour

Individual behaviour is determined by biological, psychological, and environmental factors.

Key Determinants:

Personality
Perception
Values
Attitude
Learning
Motivation

Let’s understand each briefly 👇

(a) Personality

Meaning: Personality refers to the sum total of ways in which an individual reacts to and interacts with others.
Determinants: Heredity, Environment, and Situation.
Theories of Personality:
- Type Theory (Carl Jung, Sheldon): Classifies people as introverts/extroverts.
- Trait Theory (Allport, Cattell): Focuses on enduring characteristics.
- Big Five Model:
  1. Openness to Experience
  2. Conscientiousness
  3. Extraversion
  4. Agreeableness
  5. Neuroticism (Emotional stability)

(b) Perception

Definition: Process by which individuals interpret and organize sensory impressions to give meaning to their environment.
Perceptual Process:
Stimulus → Selection → Organization → Interpretation → Response
Errors in Perception:
- Halo effect
- Stereotyping
- Selective perception
- Attribution error

(c) Values

Enduring beliefs about what is right or wrong.
Types:
- Terminal Values: Desired end-states (e.g., happiness, success).
- Instrumental Values: Modes of behavior (e.g., honesty, responsibility).

(d) Attitude

A learned predisposition to respond positively or negatively toward an object or person.
Components:
1. Cognitive (belief)
2. Affective (feeling)
3. Behavioural (action)
Theory: Festinger’s Cognitive Dissonance Theory — inconsistency between beliefs and behavior causes tension.

(e) Learning

A relatively permanent change in behavior due to experience.
Theories of Learning:
1. Classical Conditioning (Pavlov): Learning by association.
2. Operant Conditioning (Skinner): Learning through rewards/punishments.
3. Social Learning (Bandura): Learning through observation and imitation.

(f) Motivation

The process of stimulating people to take action to accomplish goals.

Major Theories:

Type	Theory	Proponent	Key Idea
Need-based	Hierarchy of Needs	Maslow	5 levels – Physiological → Safety → Social → Esteem → Self-Actualization
	ERG Theory	Alderfer	Existence, Relatedness, Growth
	Two-Factor Theory	Herzberg	Hygiene vs Motivators
Process-based	Expectancy Theory	Vroom	Motivation = Expectancy × Instrumentality × Valence
	Equity Theory	Adams	Fairness in input-output ratio
	Goal-Setting Theory	Locke	Specific, challenging goals improve performance

4. Group Behaviour

A group is two or more people interacting interdependently to achieve common goals.

Types of Groups:

Formal Groups: Created by organization (committees, teams).
Informal Groups: Socially formed (friendship, interest groups).

Group Dynamics:

How group members interact and influence each other.
Stages (Tuckman’s Model):
1. Forming
2. Storming
3. Norming
4. Performing
5. Adjourning

Team Building:

The process of improving group effectiveness through trust, communication, and collaboration.

Effective Team Characteristics:

Clear goals
Open communication
Mutual trust
Defined roles
Participative leadership

Leadership:

Leadership is the ability to influence others to achieve goals.

Theories of Leadership:

Approach	Description
Trait Theory	Leaders are born, not made (traits like confidence, intelligence).
Behavioral Theory	Leadership depends on leader’s behavior (Ohio & Michigan studies).
Situational Theory (Fiedler, Hersey-Blanchard)	Leadership style depends on situation or maturity of followers.
Transformational Leadership (Burns, Bass)	Inspires followers to transcend self-interest for organizational goals.
Transactional Leadership	Based on exchange – rewards for performance.

5. Interpersonal Behaviour & Transactional Analysis

Interpersonal Behaviour:
Mutual actions and communication between individuals in an organization.

Transactional Analysis (Eric Berne):
A method for understanding interpersonal communication.

Ego States:

Parent: Authoritative or nurturing.
Adult: Rational and logical.
Child: Emotional, spontaneous.

Types of Transactions:

Complementary: Matching ego states → smooth communication.
Crossed: Ego mismatch → conflict.
Ulterior: Hidden motives → manipulation.

6. Organizational Culture and Climate

Organizational Culture:
Shared values, beliefs, and practices that shape behavior in an organization.

Types (Charles Handy):

Power Culture – centralized authority.
Role Culture – defined hierarchy and roles.
Task Culture – team and project-based.
Person Culture – individual-oriented.

Organizational Climate:
The perception of the work environment by employees (e.g., friendly, innovative, rigid).

Difference:
Culture = Deep-rooted values; Climate = Surface-level perceptions.

7. Workforce Diversity & Cross-Cultural Behaviour

Workforce Diversity:
Differences in employees based on gender, age, ethnicity, nationality, and background.

Benefits:

Innovation and creativity
Global competitiveness
Broader talent base

Challenges:

Communication barriers
Stereotyping and prejudice

Cross-Cultural OB:
Understanding how culture influences behavior (important in MNCs).

Model:
Hofstede’s Cultural Dimensions:

Power Distance
Individualism vs Collectivism
Masculinity vs Femininity
Uncertainty Avoidance
Long-term Orientation
Indulgence vs Restraint

8. Emotions and Stress Management

Emotions:
Intense feelings directed toward someone or something.

Emotional Intelligence (EI):
Ability to understand and manage one’s own and others’ emotions.
Proponent: Daniel Goleman.
Components:

Self-awareness
Self-regulation
Motivation
Empathy
Social skills

Stress:
A state of physical or mental tension caused by perceived challenges.

Types:

Eustress: Positive stress (motivating).
Distress: Negative stress (harmful).

Management Techniques:

Time management
Relaxation and meditation
Support groups
Counselling
Organizational support programs

9. Organisational Justice and Whistle Blowing

Organisational Justice:
Employee perception of fairness in workplace decisions.

Types:

Distributive Justice: Fairness in outcomes (pay, rewards).
Procedural Justice: Fairness in processes and policies.
Interactional Justice: Respectful treatment and communication.

Whistle Blowing:
Revealing unethical or illegal practices within the organization.

Internal Whistle-blowing: Reporting within the organization.
External Whistle-blowing: Reporting to outside agencies.
Protected under the Whistle Blowers Protection Act (2014) in India.

10. Human Resource Management (HRM)

Concept:
HRM involves planning, organizing, directing, and controlling the procurement, development, compensation, and maintenance of human resources.

Objectives:

Effective utilization of human talent.
Employee motivation and satisfaction.
Organizational growth and harmony.

Functions:

Managerial Functions: Planning, Organizing, Directing, Controlling.
Operative Functions: Procurement, Development, Compensation, Integration, Maintenance.

Perspectives of HRM

Hard HRM: Focus on quantitative, business needs, control, and cost reduction.
Soft HRM: Focus on people, development, and motivation.

Influences on HRM:

Legal framework, globalization, technology, workforce demographics, culture.

Recent Trends in HRM

Talent management
E-HRM and HR analytics
Flexible working & gig workforce
Diversity & inclusion
Employer branding
Strategic HRM

11. Human Resource Planning (HRP)

Definition:
HRP ensures the right number of people with the right skills are available at the right time.

Process:

Assess current HR inventory
Forecast future HR needs
Analyze gaps
Develop HR strategies
Monitor and evaluate

12. Recruitment and Selection

Recruitment: Process of attracting potential candidates.
Sources:

Internal (promotion, transfers)
External (advertisements, job portals, campus recruitment)

Selection: Choosing the most suitable candidate.
Steps: Application → Tests → Interviews → Reference check → Medical exam → Job offer.

Induction (Orientation): Introducing the new employee to the organization’s culture and values.

13. Training and Development

Training: Short-term process to improve skills for current job.
Development: Long-term process for managerial growth.

Methods:

On-the-job: Coaching, job rotation, apprenticeship.
Off-the-job: Lectures, case study, simulation, workshops.

Evaluation: Kirkpatrick’s 4 levels – Reaction, Learning, Behavior, Results.

14. Job Analysis, Evaluation, and Compensation

Job Analysis: Systematic study of job contents and requirements.
→ Outputs: Job Description + Job Specification.

Job Evaluation: Determining relative worth of jobs to establish fair pay.
Methods:

Ranking
Classification
Point system
Factor comparison

Compensation Management:
Designing and managing pay structures and benefits to reward employees fairly.

Components:

Basic Pay
Incentives
Fringe Benefits
Perks
Non-monetary Rewards

November 10, 2025

UGC NET MBA Unit-1 MCQs

Section A – Management Concepts & Theories

1. Management is the process of _______.
A. Planning and Controlling only
B. Getting things done through people
C. Commanding subordinates
D. Ensuring discipline
Answer: B
Explanation: Management involves achieving goals by coordinating people and resources effectively.

2. Who is regarded as the Father of Scientific Management?
A. Henry Fayol
B. Max Weber
C. F.W. Taylor
D. Elton Mayo
Answer: C
Explanation: F.W. Taylor introduced scientific principles to improve efficiency at work.

3. Which of the following focuses on division of labor and authority?
A. Human Relations Approach
B. Bureaucratic Approach
C. Administrative Management
D. Behavioral Approach
Answer: C
Explanation: Henri Fayol’s Administrative Management emphasizes management principles like division of work and authority.

4. Max Weber is associated with which management theory?
A. Bureaucratic Model
B. Systems Approach
C. Contingency Theory
D. Scientific Management
Answer: A
Explanation: Weber developed the bureaucratic model emphasizing hierarchy and rules.

5. “Management is a social process involving responsibility for effective planning and regulation of operations.” — Who said this?
A. Koontz & O’Donnell
B. George Terry
C. E.F.L. Brech
D. Henry Fayol
Answer: C
Explanation: E.F.L. Brech defined management as a social process of planning and control.

6. According to Fayol, which principle ensures one superior for one subordinate?
A. Unity of Direction
B. Unity of Command
C. Scalar Chain
D. Order
Answer: B
Explanation: Unity of Command avoids confusion by ensuring one reporting line.

7. The concept of ‘Esprit de Corps’ refers to:
A. Division of work
B. Team spirit
C. Discipline
D. Centralization
Answer: B
Explanation: Esprit de Corps means unity and team spirit among employees.

8. The Hawthorne Studies were conducted by:
A. F.W. Taylor
B. Elton Mayo
C. Chester Barnard
D. Henri Fayol
Answer: B
Explanation: Elton Mayo’s Hawthorne Experiments revealed the importance of human relations.

9. Which management approach says “There is no one best way”?
A. Systems Approach
B. Behavioral Approach
C. Contingency Approach
D. Quantitative Approach
Answer: C
Explanation: The Contingency Approach depends on the situation and environment.

10. Systems Approach views organization as:
A. Closed system
B. Open system interacting with environment
C. Social club
D. Static structure
Answer: B
Explanation: Systems Approach sees organizations as open systems with input-output feedback.

🔹 Section B – Management Roles & Skills

11. Mintzberg identified how many managerial roles?
A. 5
B. 7
C. 10
D. 12
Answer: C
Explanation: Mintzberg identified 10 roles grouped into interpersonal, informational, and decisional.

12. Which of the following is an interpersonal role?
A. Spokesperson
B. Liaison
C. Entrepreneur
D. Negotiator
Answer: B
Explanation: Liaison connects manager with external and internal contacts.

13. Human skills are most essential at:
A. Top level
B. Middle level
C. Lower level
D. All levels
Answer: D
Explanation: Managers at all levels need interpersonal skills.

14. Conceptual skills are more critical for:
A. Top-level managers
B. Supervisors
C. Technical staff
D. Foremen
Answer: A
Explanation: Top-level managers need conceptual skills for strategic decisions.

15. Technical skill refers to:
A. Ability to use tools or techniques
B. Managing people
C. Decision-making
D. Developing strategies
Answer: A
Explanation: Technical skill is job-specific expertise.

🔹 Section C – Management Functions

16. Planning is a _______ function.
A. Primary
B. Secondary
C. Supportive
D. Supervisory
Answer: A
Explanation: Planning precedes all other management functions.

17. The process of grouping activities into departments is called:
A. Delegation
B. Departmentation
C. Decentralization
D. Formalization
Answer: B
Explanation: Departmentation organizes related activities together.

18. Staffing involves:
A. Recruitment and Selection
B. Training
C. Appraisal
D. All of these
Answer: D
Explanation: Staffing covers all HR-related functions.

19. Coordinating ensures:
A. Control
B. Unity of action
C. Planning
D. Authority
Answer: B
Explanation: Coordination integrates various departmental efforts.

20. Controlling is closely linked to:
A. Planning
B. Staffing
C. Directing
D. Communication
Answer: A
Explanation: Control compares performance against plan.

🔹 Section D – Communication

21. Communication is successful when:
A. Message is long
B. Receiver understands message correctly
C. Feedback is delayed
D. Sender dominates
Answer: B
Explanation: Communication is effective only when understanding occurs.

22. Noise in communication refers to:
A. Feedback
B. Physical or psychological barriers
C. Communication gap
D. None
Answer: B
Explanation: Noise represents barriers to communication.

23. Informal communication network is also called:
A. Grapevine
B. Chain
C. Wheel
D. Star
Answer: A
Explanation: Informal communication spreads through grapevine.

24. Downward communication flows from:
A. Employees to Managers
B. Superior to Subordinate
C. Same level employees
D. Customers to company
Answer: B
Explanation: Downward communication conveys orders, policies, etc.

25. Diagonal communication occurs:
A. Between same department
B. Between different levels and departments
C. Only at top level
D. Among customers
Answer: B
Explanation: Diagonal cuts across functions and levels.

🔹 Section E – Decision Making

26. Decision-making is primarily a function of:
A. Planning
B. Organizing
C. Leading
D. Controlling
Answer: A
Explanation: Planning involves making decisions about goals and methods.

27. The first step in decision making is:
A. Evaluating alternatives
B. Identifying the problem
C. Implementing solution
D. Feedback
Answer: B

28. The Delphi Technique is used for:
A. Supervision
B. Forecasting through expert opinion
C. Recruitment
D. Quality control
Answer: B

29. Brainstorming technique encourages:
A. Critical judgment
B. Free flow of ideas
C. Centralization
D. Discipline
Answer: B

30. Decision Tree helps in:
A. Routine decisions
B. Probabilistic decisions under risk
C. Group formation
D. Motivation
Answer: B

31. Linear Programming is a tool for:
A. Organizing resources
B. Optimization of limited resources
C. Pricing
D. Communication
Answer: B

32. Marginal analysis compares:
A. Average cost with revenue
B. Total cost with profit
C. Marginal cost with marginal benefit
D. Cost with price
Answer: C

33. Cost-benefit analysis evaluates:
A. Qualitative outcomes
B. Social relationships
C. Economic feasibility
D. Customer satisfaction
Answer: C

34. Game Theory applies to:
A. Monopoly
B. Oligopoly
C. Perfect competition
D. All markets
Answer: B

35. Sensitivity analysis is used for:
A. Routine control
B. Testing impact of variable changes
C. Employee feedback
D. Leadership development
Answer: B

🔹 Section F – Organisation Structure & Design

36. The simplest form of organization is:
A. Line
B. Matrix
C. Functional
D. Project
Answer: A

37. Dual authority exists in:
A. Line organization
B. Matrix structure
C. Bureaucratic model
D. Line and staff
Answer: B

38. Delegation involves:
A. Authority only
B. Responsibility only
C. Both authority and responsibility
D. Accountability only
Answer: C

39. Centralization means:
A. Power at top
B. Power at bottom
C. No power
D. Equal power
Answer: A

40. Span of control means:
A. Levels in hierarchy
B. Number of subordinates reporting to a manager
C. Number of departments
D. Area of control
Answer: B

🔹 Section G – Managerial Economics

41. Managerial Economics bridges:
A. Management and Law
B. Economics and Decision Making
C. Sociology and Management
D. Finance and HR
Answer: B

42. The law of demand shows a _______ relationship between price and quantity.
A. Direct
B. Positive
C. Inverse
D. None
Answer: C

43. Which curve shows combinations of goods giving same satisfaction?
A. Demand curve
B. Indifference curve
C. Supply curve
D. Isoquant
Answer: B

44. Elasticity of demand measures:
A. Customer loyalty
B. Responsiveness to price changes
C. Market demand
D. None
Answer: B

45. Demand forecasting means:
A. Estimating past sales
B. Estimating future demand
C. Calculating elasticity
D. Deciding pricing
Answer: B

46. Which market has a single seller?
A. Monopoly
B. Oligopoly
C. Perfect competition
D. Monopolistic
Answer: A

47. FMCG market is an example of:
A. Monopoly
B. Monopolistic competition
C. Perfect competition
D. Duopoly
Answer: B

48. Telecom industry is an example of:
A. Oligopoly
B. Monopoly
C. Perfect competition
D. Duopoly
Answer: A

49. In perfect competition, a firm is a _______.
A. Price maker
B. Price taker
C. Price leader
D. Price regulator
Answer: B

50. Marginal Revenue equals Marginal Cost at:
A. Minimum profit
B. Maximum profit
C. Break-even
D. Loss
Answer: B

🔹 Section H – National Income and Inflation

51. GDP refers to:
A. Gross Domestic Product
B. Gross Development Product
C. General Demand Price
D. Gross Depreciated Product
Answer: A

52. GNP = GDP + _______
A. Depreciation
B. Net income from abroad
C. Taxes
D. None
Answer: B

53. Per capita income is calculated as:
A. GNP ÷ Population
B. NNP ÷ Exports
C. GDP ÷ Imports
D. NDP ÷ Taxes
Answer: A

54. Inflation means:
A. Increase in wages
B. Rise in general price level
C. Decrease in prices
D. Rise in GDP
Answer: B

55. CPI measures:
A. Wholesale prices
B. Consumer prices
C. Exports
D. Imports
Answer: B

56. Demand-pull inflation occurs due to:
A. Excess demand
B. Low demand
C. High supply
D. High productivity
Answer: A

57. Cost-push inflation is due to:
A. Increased cost of production
B. Decrease in money supply
C. Demand fall
D. Government control
Answer: A

58. Hyperinflation means:
A. Mild rise
B. Very rapid increase in prices
C. Fall in prices
D. Controlled inflation
Answer: B

59. Which index is most used in India for inflation?
A. GDP deflator
B. CPI
C. SPI
D. API
Answer: B

60. Inflation reduces:
A. Purchasing power
B. Money supply
C. GDP
D. Employment
Answer: A

🔹 Section I – Business Ethics, CSR & Corporate Governance

61. Business ethics refers to:
A. Law
B. Moral principles guiding business
C. Profit maximization
D. Industrial laws
Answer: B

62. The main objective of business ethics is:
A. Reduce taxes
B. Promote moral behavior
C. Maximize sales
D. Maintain monopoly
Answer: B

63. CSR means:
A. Corporate Social Responsibility
B. Corporate Shareholder Ratio
C. Common Service Regulation
D. Company Social Reform
Answer: A

64. According to Carroll, which is the first responsibility of business?
A. Legal
B. Ethical
C. Economic
D. Philanthropic
Answer: C

65. CSR includes:
A. Environmental responsibility
B. Community development
C. Ethical practices
D. All of these
Answer: D

66. Corporate governance ensures:
A. Profit only
B. Transparency and accountability
C. More sales
D. Tax reduction
Answer: B

67. Who regulates corporate governance in India?
A. SEBI
B. RBI
C. NITI Aayog
D. TRAI
Answer: A

68. Value-based organization is guided by:
A. Profit maximization
B. Shared ethical values
C. Productivity goals
D. Competition
Answer: B

69. The ethical dilemma arises when:
A. Law is violated
B. Right vs Right conflict occurs
C. Competition is high
D. Profit decreases
Answer: B

70. Triple Bottom Line of CSR includes:
A. Profit, People, Planet
B. Money, Market, Media
C. Power, Policy, Profit
D. Product, Price, Promotion
Answer: A

🔹 Section J – Decision Tools & Quantitative Methods

71. Break-even point is the level where:
A. Total cost = Total revenue
B. Cost > Revenue
C. Profit is maximum
D. Cost < Revenue
Answer: A

72. PERT stands for:
A. Program Evaluation and Review Technique
B. Project Evaluation and Resource Technique
C. Performance Evaluation and Reporting Tool
D. None
Answer: A

73. CPM focuses mainly on:
A. Cost optimization
B. Time optimization
C. Both time and cost
D. Human resource
Answer: C

74. Expected Monetary Value (EMV) is used in:
A. Decision under certainty
B. Decision under risk
C. Decision under uncertainty
D. Routine tasks
Answer: B

75. Simulation models are used in:
A. Risk analysis
B. Motivation
C. HR Planning
D. Legal compliance
Answer: A

76. Game theory helps in:
A. Coordination
B. Conflict resolution
C. Competitive strategy
D. Planning
Answer: C

77. Linear Programming aims at:
A. Maximizing objective under constraints
B. Minimizing risk
C. Motivating employees
D. Reducing span of control
Answer: A

78. Decision Tree represents:
A. Sequential decisions
B. HR policies
C. Organization chart
D. Flowchart
Answer: A

79. Heuristic decision making relies on:
A. Experience and judgment
B. Data analysis
C. Statistics
D. Group discussion
Answer: A

80. The primary limitation of heuristic approach is:
A. Slow
B. Biased or inaccurate
C. Expensive
D. Complex
Answer: B

🔹 Section K – Quick Concepts

81. Management as an art emphasizes:
A. Application of skills and creativity
B. Development of rules
C. Quantitative tools
D. Legal framework
Answer: A

82. Management as a science emphasizes:
A. Measurement and universal laws
B. Intuition
C. Human behavior
D. Politics
Answer: A

83. A manager at lower level mainly uses:
A. Conceptual skills
B. Technical skills
C. Political skills
D. Analytical skills
Answer: B

84. Planning provides:
A. Direction
B. Control
C. Structure
D. Communication
Answer: A

85. Leadership involves primarily:
A. Planning
B. Motivation and guidance
C. Staffing
D. Controlling
Answer: B

86. Which is NOT a function of management?
A. Coordinating
B. Motivating
C. Auditing
D. Controlling
Answer: C

87. Organizing involves:
A. Assigning tasks and resources
B. Measuring performance
C. Setting objectives
D. None
Answer: A

88. Controlling involves:
A. Monitoring results
B. Taking corrective action
C. Comparing actual with planned performance
D. All of the above
Answer: D
Explanation: Controlling includes measuring performance, comparing it with standards, and taking corrective measures.

89. The principle of “Scalar Chain” refers to:
A. Unity of command
B. Chain of authority from top to bottom
C. Employee remuneration
D. Communication barriers
Answer: B
Explanation: Scalar chain ensures a clear line of authority from higher to lower levels.

90. Which of the following is NOT a part of Fayol’s 14 principles?
A. Unity of Direction
B. Division of Work
C. Scientific Management
D. Equity
Answer: C
Explanation: Scientific Management was proposed by Taylor, not Fayol.

91. The “Unity of Direction” principle implies:
A. One plan for one group of activities
B. One boss for each employee
C. One department for each plan
D. Centralized control
Answer: A
Explanation: Unity of direction ensures coordinated efforts under one plan.

92. Motivation is primarily a part of which management function?
A. Planning
B. Organizing
C. Directing
D. Controlling
Answer: C
Explanation: Motivation, leadership, and communication are part of directing.

93. Coordination is called the _______ of management.
A. Essence
B. Element
C. Extension
D. Function
Answer: A
Explanation: Coordination integrates all managerial functions, hence called its essence.

94. Feedback is essential for:
A. One-way communication
B. Two-way communication
C. Formal communication only
D. None
Answer: B
Explanation: Feedback completes the two-way communication process.

95. Which of the following is an example of upward communication?
A. Orders from superior
B. Complaints from subordinates
C. Instructions from manager
D. Circulars
Answer: B
Explanation: Upward communication flows from lower to higher levels.

96. When the decision-maker knows all outcomes, it is:
A. Decision under risk
B. Decision under certainty
C. Decision under uncertainty
D. None
Answer: B
Explanation: Under certainty, results of each alternative are known.

97. The process of transferring authority to subordinates is called:
A. Delegation
B. Decentralization
C. Centralization
D. Devolution
Answer: A
Explanation: Delegation means giving authority and responsibility to subordinates.

98. Corporate governance mainly aims to protect:
A. Government interest
B. Shareholders and stakeholders’ interest
C. Customers only
D. Employees only
Answer: B
Explanation: Corporate governance ensures fairness, accountability, and transparency for stakeholders.

99. The highest level of CSR according to Carroll’s Pyramid is:
A. Economic
B. Legal
C. Ethical
D. Philanthropic
Answer: D
Explanation: Philanthropic responsibility is voluntary and represents the top of Carroll’s CSR pyramid.

100. Value-based organizations are focused on:
A. Ethical conduct and social responsibility
B. Profit maximization only
C. Technology adoption
D. Financial growth
Answer: A
Explanation: Value-based organizations operate on ethical values and moral leadership.

November 10, 2025

UGC NET MBA Unit-1

Management – Concept, Process, Theories and Approaches, Roles and Skills

1. Meaning and Nature of Management

Definition:
Management is the process of planning, organizing, leading, and controlling organizational activities to achieve predetermined goals effectively and efficiently.

Nature / Characteristics:

Goal-Oriented – focuses on achieving organizational objectives.
Continuous Process – management is ongoing at all levels.
Universal – applicable in all types of organizations.
Integrative Force – unites efforts of individuals.
Dynamic Function – adapts to changes in environment.
Multidisciplinary – draws knowledge from economics, psychology, sociology, etc.
Group Activity – always done through people.

Levels of Management:

Top Level – Policy making (Board, CEO, MD).
Middle Level – Interprets policies and coordinates (Department Heads).
Lower Level – Supervisory, day-to-day control (Supervisors, Foremen).

2. Process of Management

The management process involves a series of interrelated functions:

Planning: Setting objectives and deciding the future course of action.
Organizing: Arranging resources and activities to implement plans.
Staffing: Recruiting, training, and developing human resources.
Directing: Guiding, motivating, and leading subordinates.
Coordinating: Integrating efforts of different departments.
Controlling: Measuring performance and taking corrective actions.

3. Theories and Approaches of Management

A. Classical Approach

Scientific Management (F.W. Taylor):
- Emphasizes efficiency through scientific methods.
- Principles:
  - Science, not rule of thumb
  - Harmony, not discord
  - Cooperation, not individualism
  - Development of each worker to greatest efficiency
- Tools: Time and motion study, standardization, differential wage system.
Administrative Management (Henri Fayol):
- Focused on management functions.
- 14 Principles: Division of work, Authority, Discipline, Unity of Command, Unity of Direction, Subordination of individual interest, Remuneration, Centralization, Scalar Chain, Order, Equity, Stability of Tenure, Initiative, Esprit de Corps.
Bureaucratic Approach (Max Weber):
- Focused on structured hierarchy, formal rules, and merit-based promotion.

B. Neo-Classical Approach

Human Relations Approach (Elton Mayo – Hawthorne Studies):
Emphasized the role of social factors, teamwork, and motivation in productivity.
Recognized informal groups and worker satisfaction.

C. Modern Approaches

Systems Approach: Organization as an open system interacting with its environment.
Contingency Approach: “It depends” – management style depends on situation.
Quantitative Approach: Use of mathematical models and statistics for decision-making.

4. Management Roles and Skills

A. Mintzberg’s Managerial Roles

Role Type	Roles	Examples
Interpersonal	Figurehead, Leader, Liaison	Representing firm, motivating employees
Informational	Monitor, Disseminator, Spokesperson	Collecting and sharing information
Decisional	Entrepreneur, Disturbance handler, Resource allocator, Negotiator	Problem-solving and decision-making

B. Managerial Skills (Katz)

Technical Skills – Knowledge of specific tools and techniques.
Human Skills – Ability to work effectively with people.
Conceptual Skills – Ability to view the organization as a whole.

5. Management Functions (Detailed)

Function	Description	Key Activities
Planning	Deciding objectives and actions in advance.	Forecasting, setting goals, policy formulation
Organizing	Arranging resources and defining structure.	Departmentation, delegation, authority
Staffing	Managing human resources.	Recruitment, training, performance appraisal
Coordinating	Harmonizing activities of all departments.	Integration, communication, synchronization
Controlling	Measuring and correcting performance.	Setting standards, comparing results, corrective action

6. Communication

Definition: Process of transmitting information, ideas, and understanding from one person to another.

Types of Communication:

Formal and Informal
Upward, Downward, Horizontal, Diagonal
Verbal, Non-verbal, and Written

Communication Process:
Sender → Message → Channel → Receiver → Feedback → Noise

Barriers:

Physical (noise, distance)
Semantic (language issues)
Psychological (attitudes, emotions)
Organizational (hierarchy, authority gaps)

7. Decision Making – Concept, Process, Techniques and Tools

Concept:

Decision making is the selection of the best alternative from available options.

Process:

Identify problem
Analyze situation
Generate alternatives
Evaluate alternatives
Choose the best option
Implement the decision
Review and feedback

A. Techniques of Decision Making

1. Qualitative Techniques

Technique	Description	Use
Brainstorming	Group idea generation without criticism	Creative problem-solving
Nominal Group Technique	Structured brainstorming with ranking	Policy formulation
Delphi Technique	Expert consensus through repeated anonymous feedback	Forecasting
Heuristics	Rules of thumb based on experience	Quick operational decisions
Intuition	Gut feeling based on experience	Strategic or emergency decisions
Participative Decision-Making	Involvement of employees	Motivation and acceptance

2. Quantitative Techniques

Technique	Meaning	Application
Marginal Analysis	Compare marginal cost and marginal benefit	Pricing, production level
Cost–Benefit Analysis	Compare all costs and benefits	Investment decisions
Break-even Analysis	Find no-profit no-loss point	Sales and cost planning
Decision Tree	Diagram showing alternatives, probabilities, and payoffs	Risky investments
Linear Programming	Mathematical optimization under constraints	Resource allocation
Game Theory	Competitive decision-making	Oligopoly pricing
Simulation	What-if scenario testing	Risk and finance modeling
PERT/CPM	Time and cost analysis for projects	Project management
Probability Analysis	Expected value under risk	Insurance, investments
Sensitivity Analysis	Effect of variable changes on outcomes	Budgeting, project planning

B. Tools of Decision Making

Tool	Purpose	Example
SWOT Analysis	Identify internal strengths, weaknesses, and external opportunities/threats	Strategic decisions
Delphi Method	Forecasting expert opinions	Technological forecasting
Simulation Models	Predict outcomes of different scenarios	Financial projections
Operations Research Models	Optimize resource use	Transportation, assignment
Brainstorming Sheets	Record and evaluate creative ideas	Product design
Decision Matrix	Compare alternatives on weighted criteria	Vendor selection

Conditions of Decision Making

Certainty: Outcomes are known.
Risk: Probabilities of outcomes known.
Uncertainty: No information about probabilities.

Common Decision-Making Errors:

Overconfidence Bias
Anchoring Bias
Confirmation Bias
Escalation of Commitment
Availability Bias

8. Organisation Structure and Design

Meaning:
The framework that defines roles, responsibilities, authority relationships, and communication channels.

Types of Structures:

Line Structure: Simple, authority flows top to bottom.
Functional Structure: Based on specialization (e.g., HR, Finance).
Line and Staff Structure: Combines authority and expert advice.
Matrix Structure: Dual authority (project + function).
Project and Network Structures: Temporary, flexible structures for innovation.

Key Concepts:

Authority: Legal right to command.
Responsibility: Obligation to perform assigned duties.
Delegation: Assigning authority to subordinates.
Centralization: Decision-making at top level.
Decentralization: Decision-making distributed.
Span of Control: Number of subordinates under one manager.

9. Managerial Economics

Meaning:
Application of economic principles to solve managerial problems and improve decision-making.

Importance:

Demand forecasting
Pricing decisions
Production and cost analysis
Profit management
Capital budgeting

10. Demand Analysis

Concept	Description
Law of Demand	Inverse relation between price and quantity demanded.
Utility Analysis	Cardinal (measurable) and ordinal (preference-based) satisfaction.
Indifference Curve	Different combinations of goods giving same satisfaction.
Elasticity of Demand	Responsiveness of demand to change in price, income, etc.
Demand Forecasting	Estimation of future demand using statistical tools.

11. Market Structures

Type	Firms	Product	Price Control	Example
Perfect Competition	Many	Homogeneous	None	Agriculture
Monopoly	One	Unique	Complete	Railways
Monopolistic	Many	Differentiated	Limited	FMCG
Oligopoly	Few	Similar/Differentiated	Interdependent	Telecom, Airlines

12. National Income

Concepts:

GDP: Value of goods/services within a country.
GNP: GDP + income from abroad – income to foreigners.
NNP, NDP, PCI: Derived measures.

Measurement Methods:

Product Method
Income Method
Expenditure Method

Difficulties: Non-monetary output, double counting, informal sector.

13. Inflation

Meaning: Continuous rise in the general price level.

Types:

Demand-pull
Cost-push
Creeping, Walking, Galloping, Hyper

Measurement:

CPI (Consumer Price Index)
WPI (Wholesale Price Index)
GDP Deflator

Effects:

Reduces purchasing power
Hurts fixed income groups
Encourages speculation

14. Business Ethics and CSR

Business Ethics:

Set of moral principles guiding business behavior.

Importance: Builds trust, reputation, and long-term success.

Corporate Social Responsibility (CSR):

Company’s responsibility toward society beyond profit-making.

Carroll’s Model:

Economic
Legal
Ethical
Philanthropic responsibilities

Ethical Dilemmas: Conflict between profit and moral principles.

15. Corporate Governance

Meaning: System of rules, practices, and processes by which a firm is directed and controlled.

Principles:
Transparency – Accountability – Fairness – Responsibility

Mechanisms:

Board of Directors
Audit Committees
Independent Directors
SEBI Guidelines

16. Value-Based Organisation

Definition:
An organization guided by shared ethical values such as trust, honesty, and transparency.

Benefits:

Strong culture
Employee commitment
Customer loyalty
Long-term sustainability

November 10, 2025

Tag: UGC NET MBA Study Material

UGC NET MBA Unit-5 MCQs

Financial and Investment Management

🔹 Section A – Value & Returns (Time Value of Money, Bonds, Shares, Risk & Return)

🔹 Section B – Capital Budgeting

🔹 Section C – Dividend Theories

🔹 Section D – Mergers, Acquisitions & Corporate Restructuring

🔹 Section E – Portfolio Management (CAPM & APT)

🔹 Section F – Derivatives

🔹 Section G – Working Capital Management

🔹 Section H – International Financial Management

🔹 Section I – Advanced & Applied Concepts

UGC NET MBA Unit-5

Financial and Investment Management

🔹 1. Value and Returns

A. Time Preference for Money

B. Valuation of Bonds

C. Valuation of Shares

D. Risk and Return

🔹 2. Capital Budgeting

Nature of Investment:

Evaluation Methods:

Risk and Uncertainty in Capital Budgeting:

🔹 3. Dividend Theories and Determination

A. Dividend Policy

B. Theories of Dividend

🔹 4. Mergers, Acquisitions & Corporate Restructuring

A. Mergers and Acquisitions (M&A):

B. Corporate Restructuring

C. Value Creation in M&A

D. Leveraged Buyout (LBO):

E. Takeover:

🔹 5. Portfolio Management

A. Meaning:

B. Risk Diversification:

C. Capital Asset Pricing Model (CAPM):

D. Arbitrage Pricing Theory (APT):

🔹 6. Derivatives

A. Types:

B. Options Terminology:

C. Option Pricing Models:

🔹 7. Working Capital Management

A. Concept:

B. Determinants of Working Capital:

C. Components:

🔹 8. International Financial Management

A. Definition:

B. Foreign Exchange Market:

C. Exchange Rate Systems:

D. Types of Foreign Exchange Risks:

E. Hedging Techniques:

UGC NET MBA Unit-4 MCQs

Accounting & Financial Management

🔹 Section A – Accounting Principles and Standards

🔹 Section B – Financial Statements and Analysis

🔹 Section C – Funds Flow and Cash Flow Analysis

🔹 Section D – Cost Sheet and Cost Accounting

🔹 Section E – Marginal Costing and CVP Analysis

🔹 Section F – Standard Costing & Variance Analysis

🔹 Section G – Financial Management Concepts

🔹 Section H – Capital Structure and Cost of Capital

🔹 Section I – Budgeting and Control

🔹 Section J – Leverages and EBIT–EPS Analysis

UGC NET MBA Unit-4

Accounting and Financial Management

1. Accounting Principles and Standards

Meaning of Accounting:

Basic Accounting Principles (GAAP):

Accounting Standards (AS) and IFRS

🔹 2. Preparation of Financial Statements

Format of Balance Sheet (Condensed):

🔹 3. Financial Statement Analysis

Techniques of Analysis:

A. Ratio Analysis

B. Funds Flow Analysis

C. Cash Flow Analysis

D. DuPont Analysis

🔹 4. Cost Accounting and Cost Sheet

🔹 5. Marginal Costing and CVP Analysis

Cost-Volume-Profit (CVP) Analysis