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Corporate Governance
Section A: Objective Type & Short Questions (30 Marks)
This section consists of Multiple Choice & Short Note Types questions.
Answer all the questions.
Part one carries 1 mark each & Part Two carries 5 marks each.
Part One:
Multiple Choices:
1. ________A group of persons chosen to govern the affairs of a corporation or other large institution.
a .Memorandum of Association
b. Nomination Committee
c. Board of Directors
d. Shareholders
2. BIFR stands for_______
a. Board of India and Financial Reconstruction
b. Board of Industrial and Financial Reconstruction
c. Board of Industrial and Finance Reconstruction
d. None of the above
3. ________is a review in which an auditor analyzes and verifies various records and processes relating to a
company‟s quality program.
a. Cost Audit
b. Quality Audit
c. Internal Audit
d. None of the above
4. Which of the following comes under in Justification?
a. Long Run Viability
b. Better Environment
c. Public Image
d. All of the above
5. USEPA stands for_______
6. The existence of a single producer or seller which is producing or selling a product which has no close
substitutes is called_______
a. Externalities
b. Price control
c. Monopoly
d. None of the above
7. SEBI stands for______
Examination Paper of Corporate Governance
IIBM Institute of Business Management 2
a. Securities and exchange Board of India
b. Stock and exchange Board of India
c. Self-regulatory and exchange Board of India
d. None of the above
8. Which of the following issue is not come under in corporate Governance?
a. Correct Preparation
b. Internal Control
c. oversight and management risk
d. Compensation of CEO and other Directors
9. Shareholder are required to inform the company in writing of any change in their address quoting their
folio number is known as______
a. Change of address
b. Transposition of shares
c. None receipt of Dividend
d. All of the above
10. Which of the following comes under External corporate Governance controls?
a. Competition
b. Managerial labour market
c. Debt Covenants
d. All of the above
Part Two:
1. What are the scopes of corporate governance?
2. Discuss the basic rights of shareholders?
3. List the type of “Auditors”.
4. Write a short note on corporate social responsibility.
Section B: Caselets (40 Marks)
This section consists of Caselets.
Answer all the questions.
Each caselet carries 20 marks.
Detailed information should form the part of your answer (Word limit 150 to 200 words)
Caselet 1
Real Juice Company
The company is in the business of producing and marketing fruit juices. Ritu joshi and Rohit Jain were
looking at the ad copy and turning it over and over again in their mind. The copy read, “The best fitness plan
for you real fruit, honest juice and no sugar. This was the main copy line. The more Ritu joshi repeated this
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Examination Paper of Corporate Governance
IIBM Institute of Business Management 3
line in her mind the uneasier she became. Something is wrong in the copy, she said to Rohit jain, the
marketing head. We cannot say best for health when we know for sure that the juice contain preservatives
and food color.
Rohit jain said, I don‟t see if anything is wrong in this. With food colors and preservatives added we couldn‟t
say it is best. This is what is wrong m replied Ritu.
Rohit said, but this is hyperbole and permitted by law. There is nothing wrong in saying this. Have you not
almost noticed all detergent brands say for best wash or whitest wash? This is simply a way of putting your
claim of brand‟s superiority. We are not talking about detergent washes and fabrics it is a health and fitness
fruit juice. We could not say something like‟, a great way to plan your fitness programme‟ or something like
that. We are saying real fruit, honest juice, and no sugar‟ … not a word about food color and preservatives‟.
Any consumer can contest our claim.”
Rohit Jain though for a moment then said, “let us get the legal opinion from our lawyer, Amit soni, to be on
the safe guard.
Amit listened to what Ritu had to say then said, “Companies use advertising to provide information to
consumers and offer alternatives in a competitive market situation. Advertising is false when it says A=B
and that is not true. But the ad is misleading; it falls under the category of unfair trade practice.” Loudly
reading the ad copy, Amit said‟” hyperbole such as best, newest most effective way, are permissible and
consumers are unlikely to take such claims with ant seriousness. When a brand says its air-conditioner is best
or most efficient, consumers know that this is just a manner of speech and do not truly believe and put their
money on such claims.
“Yes, Real juice passes the legal test fine, but ethically it won‟t be correct,” said Ritu joshi. “Please
understand. Here you are not making a claim,” said Amit soni.
Amit soni said,” comparative advertising is healthy but the advertiser must be clear about the claims to be
made. In this case, you are saying that Teal juice is good because it comes in cans and bottled drinks are not
as good. This is a direct attack on bottled drinks. Advertiser does not disclose all the parameters they have
considered in their conclusion of „best‟. They may select some major ones or may cheese to highlight the
trivial ones and ignore the major ones. These things happen every day and are not strictly provided under the
law. There must be prima facie evidence of damage or misrepresentation to establish a case of unfair trade
practice.” “so, we are legally safe,” said Rohit jain. “We will reword this campaign, but our other campaigns
have passed to muster.”
Ritu joshi felt differently, she said, “legally we may safe, but we have to also take an ethical view.”
We must not forget that our primary platform is health and fitness. This convenience angle is also crating
and impression of „good for health‟. I believe that as responsible advertisers, we have to be more concerned
about the ethical aspects than merely the legal angle. This is where we come to the line between what is legal
and what is ethical. We may be legally right but our act could be unethical if the word or pictures in the ad
could lead the consumer to believe something that is not true. The aura of the fitness instructor used as
endorser creates an impression that the information is coming to consumers from an environment where
there are people whose opinion consumer‟s view as being correct. Otherwise why use the instructor as
endorser.”
Question:
1. Analyze the issues in the case.
2. Why should advertiser bother about ethics if the ads measure up to legal parameters
Corporate Governance Professional
Guidelines for paper
Total No. of Questions is 100.
The minimum passing marks is 40%.
Each Question carries 1 mark.
Answer all the Questions.
Multiple Choices:
1. Corporate Governance is________.
a) About ethical conduct in business
b) Direct or indirect concerns in the organization
c) A manufacturing system
d) None of the above
2. The term corporate governance is derived from the__________.
a) Greek word
b) English word
c) French word
d) Latin word
3. The definition “Corporate Governance is the system by which business directed and controlled”
is given by a)
SEBI committee
b) OECD committee
c) Cadbury committee
d) All of the above
4. Internal control is implemented by the________.
a) Board of directors
b) Audit committee
c) Management
d) All of the above
5. OECD stands for_______________
6. Which of the following have the power to hire fire and compensate the top management?
a) Board of directors
b) Audit committee
c) Shareholders
d) Management
7. CII stands for _________________
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8. The managers are expected to act in the interest of:
a) Audit committee
b) Stakeholders
c) Employees
d) Customers
9. To endorse the organization strategy, develop directional policy, appoint, supervise and remunerate
senior executives and to ensure accountability of the organization to its owners and authorities is the
responsibility of:
a) CEO
b) Manager
c) Top management
d) Board of directors
10. SEBI stands for_________________
11. The role of corporate governance is_______
a) To ensure the efficient use of resources
b) It increases the shareholders value
c) Reduce the procurement and inventory cost
d) All of the above
12. Which of the following is not the issue of corporate governance?
a) Internal control
b) Compensation of CEO and other directors
c) Management of risk
d) Rights of corporation
13. The annual report should not include a)
How decision are taken by the board
b) The name of the chairman, CEO and other directors
c) Ability to hire management
d) The number of meeting
14. __________ is equal to the market price of his holding in shares.
a) Stakeholders wealth
b) Ethical conduct
c) Shareholder’s wealth
d) None of these
15. The key element of good corporate governance principle include a)
Honesty
b) Mutual respect
c) Performance orientation
d) All of the above
16. SOX stands for_____________________
17. The commonly accepted principle of corporate governance are___________
a) Protection of shareholders right
b) Role and responsibilities of board
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c) Interest of other stakeholders
d) All of the above
18. CII developed code of corporate governance in__________________
a) 1997
b) 1996
c) 1994
d) 1878
19. The property right is views simply as _________________
a) Planning right
b) Control right
c) Both a & b
d) None of the above
20. In which type of model the supervisory board is elected by shareholders and labor unions?
a) Japanese model
b) Anglo American model
c) German model
d) The Indian perspective
21. Which of the following come under the five principles of ethical power for organization?
a) Purpose
b) Pride
c) Patience
d) All of the above
22. Which of the following are the theories of corporate governance?
a) Shareholders theory vs. stakeholders theory
b) Stewardship theory
c) Property right theory
d) All of the above
23. The stewardship theory is__________
a) Control oriented
b) Involvement oriented
c) Both a &b
d) None of these
24. ____________ include government nominees and representatives of financial institutions.
a) Board of directors
b) Creditors, suppliers
c) Nominee directors
d) Chief executive officer
25. The __________ oversees internal control and disclosure controls and procedures for financial
reporting.
a) Nominating committee
b) Audit committee
c) Board committee
d) Higgs committee
Operations Research
Section A: Objective Type & Short Questions (30 Marks)
This section consists of Multiple Choice & Short Note type questions.
Answer all the questions.
Part One carries 1 mark each & Part Two carries 5 marks each
Part One:
Multiple Choices
1. In case of (<=) inequality, to convert the inequality to an equation, we used to add a slack
variable to the left hand side of the constraint, this slake variable should be________
a. Negative
b. Positive
c. May be positive or negative
d. Zero
2. In a set of m Χ n equations (m<n) the maximum number of corner points is given by :
3. According to penalty rule for artificial variables, the objective coefficient of the artificial variable
represents an appropriate penalty, positive or negative depending on the problem, but the
necessary condition required to hold this is, the value should be:
a. ∞
b. 0
c. 1
d. None
4. The cases of the Simplex method in which the value of the variables may increased indefinitely
without change in the constraints is________
a. Degeneracy
b. Alternative optima
c. Unbounded solutions
d. Nonexisting solutions
5. An arc in network model is said to be ‘Directed’ if it allows positive flow in one direction
and___________
a. Negative flow in negative direction
b. Zero flow in negative direction
c. Negative flow in perpendicular direction
d. None
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6. PERT stands for______________
7. In preemptive method for goal programming , the optimum value of a higher priority goal is
never degraded by a lower priority goal.(T/F)
8. The column dropping rule does not guarantee the non degradation of higher priority goals.(T/F)
9. The additive algorithm developed by E Balas for solving ILP problems was based on pure binary
variables.(T/F)
10. According to inventory model for commodity possession for smooth business operation, Holding
cost represents:
a. Price per unit of an inventory item.
b. The fixed charge incurred when an order is placed regardless of its size.
c. The cost of maintaining inventory in stock.
d. None.
Part Two:
1. What do you understand by ‘Degeneracy’ found in using simplex method?
2. What do know about ‘The Balancing of Transportation Model’? If unbalanced then remedy?
3. Explain ‘Vogel Approximation Model (VAM)’?
4. Explain ‘Dijkstra’s Algorithm’ for routing?
Section B: Practical Problems (40 marks)
This section consists of Practical Problems.
Answer all the questions.
Each Practical Problem is of 10 marks.
1. The stock of WalMark Stores, Inc., trades on the New York Stock Exchange under the symbol
WMS. Historically, the price of WMS goes up with the increase in the Dow average 60% of the
time and goes down with the DOW 25% of the time. There is also a 5% chance that WMS will go
up when the Dow goes and 10% that it will go down when the Dow goes up.
a) Determine the probability that WMS will go up regardless of the Dow.
b) Find the probability that probability that WMS goes up given that the Dow is up?
c) What is the probability WMS goes down given that Dow is down?
2. Prove that if the probability P {A/B} = P {A}, then A and B must be independent?
Logistics Engineering & Management
Section A: Objective Type & Short Questions (30 Marks)
This section consists of Multiple Choice & Short Note type questions.
Answer all the questions.
Part One carries 1 mark each & Part Two carries 5 marks each.
Part One:
Multiple Choices:
1. Analysis method in which evaluation of alternative design configuration using multiple criteria
is_________
a. Level of repair analysis
b. Maintenance task analysis
c. Evaluation of design alternatives
d. None of the above
2. Orientation of Logistic are________________
a. Product among organization
b. Total benefits among organization
c. Towards managing of labour
d. Towards managing the physical flow of material & product among organization
3. LMI stands for_______________
a. Logistics Management Information
b. Legal Management Information
c. Logistics Managerial Information
d. None of the above
4. Technical performance measures (TPMs) is applied for_____________
a. Evaluation of prime mission related system & elements for expenses
b. Evaluation of prime mission related system & elements for labour
c. Evaluation of prime mission related system & elements for support
d. None of the above
5. System structure should facilitate:
a. Design on an evolutionary basis
b. Design a system with in a minimum cost
c. Design on an evolutionary basis & with minimum cost
d. Both (a) & (b)
6. Conceptual design is initiated in response of_________
a. Identification of customer need
b. Identification of consumer demand
c. Identification of Industry demand
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d. None of the above
7. Industrial engineering refers to_______________
a. Design & development of a product
b. Design & development of industrial tools
c. Design & development of expenses
d. Design & development of production capability
8. Contractor logistic support (CLS) refers to_______________
a. System maintenance activities
b. System evaluation activities
c. Both (a) & (b)
d. None of the above
9. Discounting refers to______________
a. Application of selected rate of interest
b. Application of selected difference measure
c. Application of selected of interest & measure differences
d. None of the above
10. A plan which is directed towards covering of logistic support for a system is_______
a. System Retirement Plan
b. Post production Support plan
c. Facilities plan
d. Computer Resource plan
Part Two:
1. Personal training requirement are based on what factor?
2. What is meant by Design criteria? Provide some examples?
3. Briefly describe evaluation of logistic’s elements?
4. What are the advantages & disadvantages of functional organization?
Section B: Caselets (40 marks)
This section consists of Caselets.
Answer all the questions.
Each caselet carries 20 marks.
Detailed information should form the part of your answer (Word limit 200 to 250 words).
Caselet 1
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Examination Paper of Operations Management
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IIBM Institute of Business Management
Company Profile
Indian Steels Limited (ISL) is a Rs 6000 crore company established in the year 1986. The
company envisaged being a continuously growing top class company to deliver superior quality
and cost effective products for infrastructure development. The company performed with a
mission to attain 7 million ton liquid steel capacity through technological up-gradation,
operational efficiency and expansion; to produce steel with the international standards of cost and
quality; to meet the aspirations of the stakeholders. The production started in the year 1988 and
initially, it manufactured Angles, Pig Irons, Beams and Wire Rods that were mainly used for
constructing roads, dams and bridge. The products were mainly supplied to Public Sector
Undertaking such as Railway ,Public Work Department (PWD), Central Public Work Department
(CPWD), Rashtriya Setu Nigam, Audyogik Kendrya Vikas Nigam Ltd.and various foundry units.
The company had its headquarters at Raipur with three stockyards
The company has establish itself well and is said to be considering its expansion plan and
proposed merger with another steel making giant in the country. The company was awarded ISO
9001, ISO 14001 and ISO 18001 certifications. The temperature in the plant premises is
reportedly about 6 degrees Celsius lesser than that of the township, thanks to the greenery being
maintained therein.
Risk Management
Section A: Objective Type & Short Questions (30 Marks)
Part One:
Multiple Choices:
1. Which of the following is the characteristic of forward contract?
a. Is traded over the counter?
b. Is a customized financial product
c. Is a credit derivative
d. Both a & b
2. Coordinating all the operational risk activities of the bank, working towards achievement of the stated
goals & objective are the task attributed to:
a. Operational risk management committee
b. Operational risk management department
c. Operational risk management officers
d. Chief risk officer
3. This is the risk of adverse deviations of the mark-to-market value of the trading portfolio, due to market
movements; during the period required to liquidate the transactions.
a. Market Risk
b. Liquidation Risk
c. Market liquidity Risk
d. Credit & counterparty Risk
4. A fraud acts by a third party, of a type intended to defraud, misappropriate property or circumvent the
law is called____________
a. Internal fraud
b. External fraud
c. Damage to physical assets
d. Clients, products & business practices
5. In the standardized approach, bank‟s activities are divided into how many business lines?
a. 4
b. 6
c. 8
d. 10
6. Credit risk management committee & credit policy & procedures committee monitors__________
This section consists of Multiple Choices and Short Notes Type Questions.
Answer all the questions.
Part one carries 1 mark each and Part Two carries 5 marks each.
Examination Paper of Risk Management
IIBM Institute of Business Management 2
a. Market risk
b. Credit risk
c. Operational risk
d. All of the above
7. Which of the following is the duty of risk management committee for credit?
a. Implementation of risk management policy for credit strategy
b. Monitor credit risk
c. Regulatory/ Legal compliances
d. All of the above
8. Duration is defined as___________
a. Time to maturity
b. Average time
c. Weighted average time to maturity
d. Remaining maturity
9. ALCO stands for _____________
10. RAROC stands for _____________
Part Two:
1. List the principles of risk management.
2. Discuss the sources of risk.
3. What is „Asset liability management‟? List its objectives in banks.
4. Write a short note on Interest rate risk.
Section B: Caselets (40 Marks)
This section consists of Caselets.
Answer all the questions.
Each caselet carries 20 marks.
Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
Everybody Bank was set up with a registered office at Gwalior in 1995-96 by a leading financial
organization, when the government liberalized its policies and allowed private sector banks to operate. The
branch at Gwalior was established on November 13, 1995. Everybody bank was the first private sector bank
to commerce its operations at Gwalior. The bank had the advantage of being the first and got good business.
Subsequently, other private sector banks also opened their branches in Gwalior. Dinesh joined the branch as
branch head in june-1998. His focus was to retain the leadership of the bank with improved profitability. He
adopted a multi-programmed strategy which yielded good results during the three years of working. The
END OF SECTION A
Examination Paper of Risk Management
IIBM Institute of Business Management 3
bank not only continued to be a leader in private sector banks but also established nationalized banks. In
2001, it stood to the State Bank of India. Profitability also improved during these years.
Dinesh had joined Everybody Bank in 1997, after serving more than 20 years in a leading nationalized
bank. After serving for 1.5 years in other branches, he was posted at the Gwalior‟s branch as the Branch
head in June 1998. The new generation of banks was setup with a clear focus on the corporate sector during
its initial phases. The Gwalior branch of everybody bank also had the same focus with 85 percent of total
advances in the corporate sector and a residual 15 percent in the retail sector. Gradual opening up of the
economy, and increasing competition, forced the corporate sector to improve the quality of services and to
reduce the cost. In its search, the interest component gained focus and the corporate started looking for
avenues to mobilize low cost funds. RBI also gradually reduced the bank rate resulting in reduction of the
margin of profit, in the banks.
The deposits of the Gwalior branch consisted of high cost funds, namely, certificate of deposits at the rate
of 13-14 percent. The need of the hour was to collect the resources; therefore, all resources were tapped
irrespective of their costs. Considering the reduction in the margin of corporate sector, the bank changed its
focus from the corporate to the retail segment. It came up with the portfolio of schemes in the housing
loans, car loans, educational loans, loan against demat shares and personal loans. It resulted in the increases
of the share of retail segment from 15 percent to 50 percent and corresponding reduction in the corporate
segment from 85 percent to 15 percent. The strategy resulted in the improvement of the margin of the bank
to a level of 3-4 per cent.
Another strategy adopted by the bank, with a view to reduce the cost of resources, was to concentrate on
saving bank account and current account. With a view to tap the low cost funds, the strategy adopted was to
setup a network of branches in various cities. In 1998, there was only one branch in the city and by the end
of 2001 the number of ATMs across the city. The number of ATMs increased from one to five by 2001.
They also came up with services like mobile banking, internet banking etc.
Another important step taken by Dinesh in this direction was established high service standards. The
complaints from the customers were taken up seriously. Also, schemes of performance-linked
increment/bonus were adopted. The performance expectations of the management were high. The bank also
focused on all the areas of administrative cost very reduction. In this direction the staff requirement was
reviewed and the class four positions were reduced. The arrangements with taxi operators: courier service
companies were renegotiated for reducing the cost. For example, the courier cost per package was reduced
from Rs. 30 to Rs. 15. The executives voluntarily decided to travel in the economy class and do not during
the night, so as to avoid overnight stay charges. Although the not, the overtime allowances was permissible,
but in order to reduce the cost, the practice of payment of overtime was stopped. These strategies resulted in
saving of the bank, from Rs. 4.2 crores in 1998, to cover Rs 20 crores in 2001. total deposits increased
during these three years from Rs. 112 crores to 200 crores.
The assets of the bank had increased from 100 crore in 1998 to 267 crore in 2001. in addition to this, 65
crores were sanctioned in a non-fund limit. Dinesh also concentrated on improving the quality of assets.
The proactive approach of Dinesh resulted in the leading position of the branch during his tenure of three
years as the bank, i.e. , business per employee was the highest amongst all the 65 branches of the bank and
on the basis of profit per employee, the branch was ranked third. Achievements of Dinesh were appreciated
by the management in the meeting. After returning to his headquarters, sitting in his chamber he has
wondering as to what should be his future plan of action for further growth.
Questions:
1. Critically analyze the strategies adopted by Dinesh to retain the leading position.
2. What additional steps Dinesh could have taken to improve the profitability?
Risk Management and Financial Institutions
Section A: Objective Type & Short Questions (30 Marks)
This section consists of Multiple Choice & Short Notes type questions.
Answer all the questions.
Part one carries 1 mark each & Part Two carries 5 Marks each.
Part One:
Multiple Choices:
1. The options where the strike price is close to the price of underlying asset is:
a. At-the-money options
b. In-the-money options
c. Out-of-the money Options
d. All of these
2. Which of the following are the non-traditional derivatives?
a. Weather derivatives
b. Oil derivatives
c. Natural gas derivatives
d. All of the above
3. An option gives the holder the right to sell the underlying asset by a certain price is termed
as_____________
a. Call option
b. Put option
c. American option
d. European option
4. A product where value at any given time is linearly dependent on the value of an underlying market
variable is:
a. Linear product
b. Non-Linear product
c. Both a & b
d. None of these
5. The agreement between two companies to exchange cash flows in the future known as____________
a. Future
b. Forward
c. Swap
Examination Paper of Risk Management
IIBM Institute of Business Management 7
d. Options
6. The life insurance lasts for a specified period & pays a lump sum either when the policy holder dies or
at the end of the period, which ever, is known as____________
a. Variable life insurance
b. Group life insurance
c. Whole life insurance
d. Endowment life insurance
7. When an company wishing to issue is not publicly traded, the share issue known as____________
a. Equity share
b. Initial public offer(IPO)
c. Debenture
d. None of these
8. VAR stands for______________
9. The volatility of this model is changes with the passage of time
a. EMWA Model
b. GAMMA Model
c. VEGA Model
d. GARCH Model
10. LIBOR is stands for ______________
Part Two:
1. What is difference between open-ended and close-ended mutual fund?
2. Write short note on „option contract‟?
3. What are the main sources of liquidity for financial institution?
4. Explain the Concept of „Exchange-Traded Markets‟?
Section B: Practical Problems (40 Marks)
This section consists of Practical Questions.
Answer all the questions.
Each Question carries 10 marks.
Detailed information should from the part of your answer.
1. In the 1980s, Bankers Trust developed index currency option notes (ICONs). These are bonds in which
the amount received by the holder at maturity varies with a foreign exchange rate. One example was its
trade at maturity varies with a foreign exchange rate. One example was its trade with the Long Term
END OF SECTION A
Examination Paper of Risk Management
IIBM Institute of Business Management 8
Credit Bank of Japan. The ICON specified that if the yen/US dollar exchange rate, ST , is greater than
169 yen per dollar at maturity (in 1995), the holder of the bond receives $1,000. If it is less than 169
yen per dollar, the amount received by the holder of the bond is
1,000- max[0, 1,000 (169 - 1)
ST
When the exchange rate is below 84.5, nothing is received by the holder at maturity. Show that this
ICON is a combination of a regular bond and two options.
2. Suppose that the risk-free zero curves is flat at 7% per annum with continuous compounding and that
defaults can occur halfway through each year in a new 5- year credit default swap. Suppose that the
recovery rate is 30% and the default probabilities each year conditional on no earlier default are 3%.
Estimate the credit default swap spread. Assume payments are made annually.
3. Suppose that 6- month, 12-month, 18-month, 24-month, and 30-month zero rates are 4%, 4.2%, 4.4%,
4.6%, and 4.8% per annum, respectively, with continuous compounding. Estimate the cash price of a
bond with a face value of 100 that will mature in 30 months and pays a coupon of 4% per annum
semiannually.
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