Professional Documents
Culture Documents
VIVA All Final
VIVA All Final
2)Semantic barrier
The Semantic Barriers refers to the misunderstanding between the sender and receiver
arising due to the different meanings of words, signs and other symbols used in
the communication.
Channel richness refers to the amount of information that can be transmitted from one
person to another during any given communication. The more information that can be passed, the
richer the channel. For example, a telephone call is much more personal than formal report even
if they convey the same information.
4)What is medium?
5)What is cohesiveness?
• Cohesion can be more specifically defined as the tendency for a group to be in unity
while working towards a goal or to satisfy the emotional needs of its members.
• This definition includes important aspects of cohesiveness, including its
multidimensionality, dynamic nature, instrumental basis, and emotional dimension.
• Being a cohesive team means that not only group goals met but everyone feels like they
have contributed to the overall success of the group.
There are five forms of power. They are Coercive, Reward, Legitimate, Referent, Expert,
and Informational.
12)Expert power?
Expert power is the perception that a certain person has an elevated level of knowledge
or a specific skill set that others in an organization don't have. This perception leads to more
influence within the expert's place of work.
13)Referent power?
Referent power is a form of reverence gained by a leader who has strong interpersonal
relationship skills. Referent power is the ability of a leader to effectively model behavior to her
employees in a manner that provides a point of reference for employees' own behavior in work
situations. This modeling can occur even without employee knowledge.
14)Zone of tolerance (ZOT) is defined as “the difference between desired service and the level
of service considered adequate”. As may be noted in this definition, the ZOT model recognizes
that customers enter service encounters with different expectation levels.
15)What is politics?
• Political behavior in organizations consists of activities that are not required as part of an
individual’s formal role but that influence, or attempt to influence, the distribution of
advantages and disadvantages within the organization.
• Political behavior includes efforts to influence the goals, criteria, or processes used for
decision making.
• Political behaviors also includes actions such as withholding key information from
decision makers, joining a coalition, whistleblowing, spreading rumors, leaking
confidential information to the media, exchanging favors with others in the organization
for mutual benefit, and lobbying on behalf of or against a particular individual or decision
alternative.
Impression Management, the process by which people control the impressions others form of
them, plays an important role in inter-personal behavior.
Kurt Lewin developed a change model involving three steps: unfreezing, changing and
refreezing. For Lewin, the process of change entails creating the perception that a change is
needed, then moving toward the new, desired level of behavior and finally, solidifying that new
behavior as the norm.
• Recruitment refers to the process where potential applicants are searched for, and then
encouraged to apply for an actual or anticipated vacancy.
• Selection is the process of hiring employees among the shortlisted candidates and
providing them a job in the organization.
• Training allows employees to acquire new skills, sharpen existing ones, perform better,
increase productivity and be better leaders. Since a company is the sum total of what
employees achieve individually, organizations should do everything in their power to
ensure that employees perform at their peak.
• A development program brings all employees to a higher level so they all have similar
skills and knowledge. This helps reduce any weak links within the company who rely
heavily on others to complete basic work tasks.
Training Need Analysis (TNA) is the process of identifying the gap between
employee training and needs of training. Training needs analysis is the first stage in the training
process and involves a series of steps that reveal whether training will help to solve problem
which has been identified.
Performance management is the process of ensuring that a set of activities and outputs
meets an organization's goals in an effective and efficient manner. Performance management can
focus on the performance of an organization, a department, an employee, or the processes in
place to manage particular tasks.
8)What is 360-degree performance appraisal?
A core focus in creating human resource policies and practices (HRPP) is the degree to
which HR goals and objectives align with the strategic objectives of the organization (vertical
alignment) and how the HR goals and objectives align with each other (horizontal alignment)
10)How attrition rate is calculated?
A common attrition rate definition refers to employee or staff turnover, but in a broader
sense, attrition rate is a calculation of the number of individuals or items that vacate or move out
of a larger, collective group over a specified time frame. Attrition rate is also commonly referred
to as churn rate.
Engaging employees is critical for retaining valuable talent and is an important piece of
the employee satisfaction puzzle; as disengaged employees are more likely to leave their jobs.
According to Forbes, employees who are engaged in their work are more likely to be motivated
and remain committed to their employer.
12) What is HR Planning? What information is required for HR planning?
These laws have many provisions to safe the interests of workers of organised and unorganised
sectors in India.
• Formalization refers to the extent to which organizational policies, practices, and ways
of completing tasks are standardized for the individual employees, organizational units,
groups, teams and the organization as a whole, which leads to the development of
processes, relationships, and operating procedures.
• Centralization refers to the distribution of decision-making authority, information, and
power throughout an organization.
15) You are leading a team of 5 salesmen. Suddenly you find that the number of customer
complaints have increased. What will you do now?
After this analysis have a discussion with salesmen about what is the cause for the complaints.
Then find a solution for this problem. Keenly monitor the salesmen performance and get to know
their response rate towards each customer.
MARKETING
1) What is the difference between need, want and demand? Explain with examples.
In short, needs are things that satisfy the basic requirement. Wants are requests directed
to specific types of items. Demands are requests for specific products that the buyer is willing to
and able to pay for.
Example- Lego. Toy company, Lego is responsible for probably one of the best examples of
Crowdsourcing we've seen. The company allows users to design new products, and at the same
time, test the demand. ... Just like McDonalds, creators take it upon themselves to promote their
idea, and in doing so promote Lego as a company, too.
4)What is the difference between product positioning and brand positioning?
Product positioning is the process used to determine how to communicate product attributes to
the target customers based on customer needs.
Brand positioning refers to the rank the company's brand possess in relation to the competition.
5)What is inbound marketing?
Inbound marketing is a marketing methodology that is designed to draw visitors and
potential customers in, rather than outwardly pushing a brand, product or service onto prospects
in the hope of lead generation or customers.
Examples. Facebook is a prime example – whether it is to post, share, or amplify, the marketer
would have to send a friend request (or a permission) to the potential prospects. Opt-in email is
an example of permission marketing, where Internet users request to receive information about
a certain product or a service.
9)What are above the line and below the line media?
• Above the line advertising – ATL is used when the focus is on mass media promotion to
reach a large audience. e.g. television, radio, or billboards.
• BTL includes marketing activities such as brochures, direct mail, flyers, sponsorships
and email campaigns.
10)What is a meta-market?
• The combination of an intangible market such as the internet, promoting closely related
tangible or intangible products is known as a Meta market. For understanding
meta markets lets first outline two definitions.
• Market Places – Markets of physical goods and products is known as Market places.
The market places has presence of companies which manufacture their own products.
• Market space – The online market space with websites such as Ebay, Amazon and
others is known as Market spaces. These sites do not have offline products. They only
sell others products online.
11) What is Porter’s 3 generic strategies?
A firm's relative position within its industry determines whether a firm's profitability is
above or below the industry average. The fundamental basis of above average profitability in the
long run is sustainable competitive advantage. There are two basic types of competitive
advantage a firm can possess: low cost or differentiation. The two basic types of competitive
advantage combined with the scope of activities for which a firm seeks to achieve them, lead to
three generic strategies for achieving above average performance in an industry: cost leadership,
differentiation, and focus. The focus strategy has two variants, cost focus and differentiation
focus.
1. Cost Leadership
In cost leadership, a firm sets out to become the low cost producer in its industry. The sources of
cost advantage are varied and depend on the structure of the industry. They may include the
pursuit of economies of scale, proprietary technology, preferential access to raw materials and
other factors. A low cost producer must find and exploit all sources of cost advantage. if a firm
can achieve and sustain overall cost leadership, then it will be an above average performer in its
industry, provided it can command prices at or near the industry average.
2. Differentiation
In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that
are widely valued by buyers. It selects one or more attributes that many buyers in an industry
perceive as important, and uniquely positions itself to meet those needs. It is rewarded for its
uniqueness with a premium price.
3. Focus
The generic strategy of focus rests on the choice of a narrow competitive scope within an
industry. The focuser selects a segment or group of segments in the industry and tailors its
strategy to serving them to the exclusion of others.
Cross-selling occurs when you sell customers offerings that complement or supplement
the purchases they’ve already made. For example, if you encourage a customer who just bought
a new phone to get a protective case at the same time, that’s a cross-selling win.
Upselling occurs when you increase a customer’s value by encouraging them to add on
services or purchase a more expensive model. For example, if someone comes into your furniture
store looking for a bedside table and you sell them a whole bedroom set instead, that’s an upsell.
Buzz marketing refers to marketing strategies used to capture the attention of the
customers and other influencers to amplify the marketing message to an extent where talking
about the brand, product, or service becomes entertaining, fascinating, and newsworthy.
Buzz marketing is a viral marketing technique that is focused on maximizing the word-
of-mouth potential of a particular campaign or product, whether that is through conversations
among consumers' family and friends or larger scale discussions on social media platforms. By
getting consumers talking about their products and services, companies that employ buzz
marketing hope to grow their awareness through the growth of online traffic and increase sales
and profits. A buzz marketing example would be if a company decides to promote a product
through some type of event centered around a show or stunt of some kind where consumers can
try the product and are encouraged to share their experiences through everyday conversation or
online. Another term for buzz marketing is astroturfing.
14) What are the main challenges in marketing communication these days
Generating enough traffic and leads was the top global marketing issue, according to
the 2017 and 2018 State of Inbound reports.
A 2019 survey from Vital shows that more than 35% of marketers face challenges related to
leads and/or traffic, showing that this trend still continues.
Clearly, marketers are struggling with producing enough demand for their content. And
as the years progress and competition stiffens, this will only become truer. With so many options
of platforms for marketers to publish their content and even more ways to promote it, it's hard to
know where to focus your efforts.
When it comes to creating content that produces enough traffic and leads, marketers
should ask themselves two questions: Are you truly creating high-quality content -- the type of
content people would pay for? And, do you know the type of content your audience actually
wants?
In 2020, the most common customer marketing tactic is creating exclusive content for customers.
For example, HubSpot Research has found that 53% of consumers want to see more video from
marketers in the future, while only 14% want to see more blog posts. To learn more about how
the way people are reading and interacting with content is changing, check out this HubSpot
Research report.
Once you know you're creating the type of content your audience wants, the focus shifts to
promoting it in a way that makes your audience take notice. More than ever before, people are
being flooded with content. Consumers don't have to use a search engine to find answers.
Instead, articles fill their news feed or buzz in their pocket via mobile notification.
2. Providing the ROI of Your Marketing Activities
Measuring the ROI (return on investment) of your marketing activities has remained a
top marketing challenge globally year-over-year.
In fact, only 53.85% of marketers surveyed say they even measure Customer Acquisition costs.
It continues to be a vital way for marketers to understand the effectiveness of each particular
marketing campaign or piece of content.
Plus, proving ROI often goes hand-in-hand with making an argument to increase budget: No
ROI tracking, no demonstrable ROI. No ROI, no budget.
Although return on investment is a crucial stat that shows your campaigns success or
progress, tracking the ROI of every single marketing activity isn't always easy, especially if you
don't have two-way communication between your marketing activities and sales reports.
When it comes to providing ROI, there's a strong case to be made for dedicating time and
resources to establishing links between marketing activities and sales results. This means using
both marketing software (like HubSpot) and a CRM solution (like HubSpot's free CRM), and
then tying them together to close the loop between your marketing and sales efforts with
a service-level agreement (SLA). That way, you can directly see how many leads and customers
are generated through your marketing activities.
We've found there's no better combination than having an SLA and doing inbound
marketing. According to the 2018 report, inbound organizations with SLAs had twice the ROI of
misaligned organizations.
(Use this ROI calculator to simulate the potential ROI you could realize by conducting inbound
marketing.)
How can you create a winning marketing campaign without a budget? The truth is, it's
pretty hard. But, even when you have a great, revenue-generating idea, you still usually need to
get your budget approved by a higher-up.
For 2020, 64% of marketers said their marketing budget has increased
Why It’s a Challenge
Securing more budget is a pressing challenge for marketing globally. And often, getting
more budget is easier said than done -- especially for smaller organizations that aren't working
with sizable nor flexible marketing spend.
But the key to securing more money for your team might not be that complex. Here's what you
can do.
The key to unlocking budget lies in being able to prove the ROI of your marketing
efforts. According to our report, organizations that can calculate ROI are more likely to receive
higher budgets.
Again, success with inbound marketing also plays a large role in driving higher budgets.
Effective strategies obviously produce results, and our data shows those who feel confident in
their marketing strategy are more than 2X as likely to get higher budgets for their marketing
teams. But remember, inbound marketing is a long game. If you get off to a slow start, you
shouldn’t back off -- in fact, you might consider doubling down.
15) Customer relationship management (CRM) is suitable for what type of companies?
Customer Relationship Management or CRM consists of strategies, processes, and software that
manages your company’s interactions with customers and potential clients.
CRM can be used in marketing, sales, and operations, to monitor and improve relationships, and
upsell clients.
The goal of using CRM is to improve and expand a customer lifecycle, by enhancing
relationships, adapting customer retention strategies and driving sales growth.
Managing this cycle can mean the difference between customer retention and customer churn.
1. Apple CRM
If you’ve ever used an Apple device, you probably had to register it using an Apple ID. An
Apple ID is an account you use to access Apple services like the App Store, Apple Music,
iCloud, iMessage, FaceTime, and more.
These unique IDs synchronize across devices, save music and film preferences, and
provide bespoke recommendations based on what you like. For users, this is convenient. For
Apple, it’s a tool that provides insights on what customers like and it can be used for
effortless, targeted marketing.
2. Coca-Cola CRM
Coca-Cola uses CRM to promote collaboration and deal with customer issues quickly and
efficiently.
By using CRM software, every member of a Coca-Cola team can identify issues, monitor
customer behaviour and social media to promote offers and promotions.
Moreover, team members can use mobile apps on the go to access customer history anytime and
anywhere, create and update work orders, and send out field technicians in real-time.
Shoppable Posts
It’s highly unlikely that you know anyone who doesn’t use some form of social media.
Given its ubiquitous nature, social media has understandably become an integral part of online
marketing. What may not be as obvious is just how many users shop on social media networks.
This represents a tremendous opportunity for businesses, given that 72% of Instagram users have
purchased a product on the app. Even more impressive, a survey of more than 4,000 Pinterest
users found that 70% use Pinterest to find new and interesting products.
Fortunately for merchants, these platforms have made it easier for them to use the power of
social media to reach their customers. Whether you use Facebook, Pinterest or Instagram, there
are now ways for e-commerce stores to create shoppable posts, making it easy for users to shop
directly from your post.
Social media offers you the ability to reach new customers quickly and easily, shortening the
sales funnel and making it easier for users to shop.
In recent years, both augmented reality (AR) and virtual reality (VR) have become
massively popular and are emerging as top trends in marketing. In 2020, AR is expected to
surpass VR in popularity, despite VR’s early lead.
Already, many major companies are making use of AR. Ikea, for example, has an app that allows
users to visualize what a piece of furniture would look like in their home before making a
purchase.
Interactive Content
Today’s buyers are looking for new experiences when they go online, and for many, that means
greater interactivity. In fact, a whopping 91% are seeking more visual and interactive content.
There are several reasons for this:
• Interactive content is different and new, and as such, it stands out more.
• Interactive content is immensely shareable, and when users share this content, it helps to grow
awareness of your brand.
• Simply put, interactive content is more engaging. Users enjoy it more than other content.
Personalization
2020 is going to be the year of personalized marketing. Consumers are quite adept at
tuning out generic ads that have no real connection to them. Accordingly, traditional means of
advertising are becoming much less effective. So, what can be done? Personalize it!
In a survey of 1,000 people, 90% remarked that they found personalization appealing. More
important for your business is the fact that 80% admitted they’d be more likely to give their
business to a company that offered them a personalized experience.
Email lists are an old standby of marketers, and they lend themselves well to personalization.
Segmented lists with personalized email blasts have been shown to perform than generic emails
sent to an entire list. Don’t miss this opportunity to connect with your audience in a meaningful
way.
Those involved in digital marketing are already familiar with automation, but now
Google has announced Google Ads updates that will likely lead to automation and smart bidding
becoming the new normal.
Google Ads makes use of machine learning in order to optimize your bids. This gives you
several new abilities to help you maximize your conversion, including:
• The ability to set your bids to change automatically when sales start or stop
• The ability to optimize bids over multiple campaigns with a chosen set of conversion actions
While there are a variety of new trends to keep your eye on, that doesn’t mean that all the old
methods have become outdated. In fact, there are several marketing trends that have been big in
the past and are expected to continue into 2020.
For example, how many people in Pakistan need I-pad? Or why do people really need to go
to space? They don’t need it at all, but they go. Creation of need is not the function of marketing.
Marketing is how the products create value to the customer and receive it by needs and wants.
Marketing does both, it creates and satisfies needs of customers. Marketers must use the
marketing development’s term to create needs. They must learn how to change in knowledge,
behavior, attitudes, or creativity. Then, it helps customers to be motivated to learn and make a
decision, helps the customers effectively handle the information and experience, or helps the
customers understand the product application and influences the buying behavior. Marketing also
satisfy needs. Marketing creates a transaction for exchanging the product for a value and thus
create a satisfaction to the buyer’s needs. Marketing is based on identifying and satisfying
customers’ needs profitability.
19) What you do, when you face a lower price competitor?
22) What is style, fashion and fad lifecycle? Draw the graph for them.
• Style goes along with plc cycle with growth and decline.
• Fashion decline at the mature stage. Ifetime is upto maturity stage. It have steep decline
once they reach highest stage.
• Fad ends in the introduction stage.
23) What are the characteristics of service that differentiates it from a product?
Services are unique and four characteristics separate them from goods,
namely intangibility, variability, inseparability, and perishability.
25) What is the difference between logistics and supply chain management?
The basic difference between Logistics and Supply Chain Management is
that Logistics management is the process of integration and maintenance (flow and storage) of
goods in an organization whereas Supply Chain Management is the coordination
and management (movement) of supply chains of an organization.
Logistics management is a part of supply chain management.
26) What is yield management in pricing strategy? Give example.
Yield management is a variable pricing strategy, based on understanding, anticipating
and influencing consumer behavior in order to maximize revenue or profits from a fixed, time-
limited resource (such as airline seats or hotel room reservations or advertising inventory)
To generate more money with the allocated resources, we will price the goods and services
like booking tickets at theatre for RS120 and buying snacks starting at RS.70.
27) What is the difference between social marketing and social media marketing?
Social marketing – First, understanding the audience, then building a campaign specifically
around them. alter or maintain how people behave.
Social media marketing – Introducing a new or existing audience to a product or idea. increase
awareness, clickthroughs or perceptions.
• PROSPECTING is the 1st and the foremost stage of the selling process. Prospecting
Prospecting means identifying and locating Potential buyers.
• PRE-APPROACH Pre-approach is the 2nd stage of the selling process. The salesman
is to acquire enough information about such prospects in order to approach each one in
the most effective manner.
• APPROACH Approach is the 3rd stage of the selling process. When the salesman
comes in actual contact with the prospect or likely customer.
• PRESENTATION AND DEMONSTRATION It is the 4th stage of the selling process.
In this step, the salesman demonstrates to the customer the need-satisfying characteristics
of the products being offered for sale.
• MEETING OR HANDLING OBJECTIONS It is the 5th step in the selling process.
Under this step the salesman is required to handle and over come objections arising
during or as a result of presentation and demonstration, it is just natural for the customer
to ask questions, raise objections and seek explanation.
• CLOSING THE SALES It is the 6th stage of the selling process. After having
answered and overcome objections, it is the right time for the salesman to clinch the deal
by closing the demonstration
• FOLLOW - UP It is the 7th and last stage of the selling process. After closing, it is
important for the salesman to follow up the order booked so as to ensure that the order is
properly executed.
34) What is digital marketing and why it is important in current market?
• Digital marketing is the best approach to reach target audience in cost effective manner
and is easier to scale the business on faster rate.
• In current scenario average user with internet spends 3 h on internet platform daily and it
makes it biggest platform to promote any brands to eye catch user or buyer
35) What are the objectives of market segmentation?
• A key objective for market segmentation is determining what price different groups of
consumers are willing to pay for your product.
• When you have divided your market into segments based on what people can afford to
pay, you can focus on segments that can pay the lowest or the higher prices
36) Explain the new product development process.
37) Who gave the idea of 4P’S in marketing?
first expressed in 1960 by E J McCarthy.
38) Draw the ANSOFF Matrix.
An advantage that allows a business to be more successful than its competitors over a
long period of time. A firm can acquire it by having good quality, price, location, selection,
service and speed/turnaround than the competitor.
2) Which are the potential new entrants to be assessed as threat for the hotel industry?
Substitutes such as Airbnb which is lesser cost. Location of the hotel and the area
enhances demand and the ratings that the hotels receive from customers. Travelers decide on
where to choose to stay when traveling based on ratings, reviews and convenience. Some
competitors lack the expectations of the customer. Branding and image are also factors
A value chain is a business model that describes the full range of activities needed to
create a product or service. For companies that produce goods, a value chain comprises the steps
that involve bringing a product from conception to distribution, and everything in between—
such as procuring raw materials, manufacturing functions, and marketing activities.
5) Are vision and mission part of strategy or do they stand apart?
Part of strategy
6) How a business model is developed by a company?
A good business model uses its resources to improve its market position, adding new
products, features and customers or expanding into new applications For instance, direct sales,
franchising, advertising-based, and brick-and-mortar stores are all examples of traditional
business models.
7) How does the strategy of a first mover and a later entrant differ?
A first mover is a service or product that gains a competitive advantage by being the first
to market with a product or service. Being first typically enables a company to establish strong
brand recognition and customer loyalty before competitors enter the arena. Amazon created the
first online bookstore. If the market responds unfavorably, then later entrants could capitalize on
the first mover's failure to produce a product that aligns with consumer interests
8) What is a defensive strategy?
Blockbuster was one of the biggest and recognized DVD rental company around the
world. When Netflix appeared in the industry, Blockbuster had to take a defensive strategy to
fight against that strong competitor. So they also introduced on demand video, helps companies
to retain valuable customers that can be taken away by competitors
2) STANDARD DEVIATION
Standard deviation is the measure of dispersion of a set of data from its mean. It measures the
absolute variability of a distribution; the higher the dispersion or variability, the greater is the
standard deviation and greater will be the magnitude of the deviation of the value from their
mean.
3) SKEWNESS:
Example: India has more than 50% of its population below the age of 25 and more than 65%
below the age of 35. If you’ll plot the distribution of the age of the population of India, you will
find that there is a hump on the left side of distribution and the right side is comparatively planar
4) KURTOSIS
Kurtosis is a measure of whether the data are heavy-tailed or light-tailed relative to a normal
distribution. That is, data sets with high kurtosis tend to have heavy tails, or outliers. Data sets
with low kurtosis tend to have light tails, or lack of outliers. A uniform distribution would be the
extreme case
A distribution having a relatively high peak is called leptokurtic. A distribution which is flat-
topped is called platykurtic. The normal distribution which is neither very peaked nor very flat-
topped is also called mesokurtic.
5) IQR:
The interquartile range (IQR) is a measure of variability, based on dividing a data set into
quartiles. Quartiles divide a rank-ordered data set into four equal parts. The values that divide
each part are called the first, second, and third quartiles; and they are denoted by Q1, Q2, and
Q3, respectively.
Q1 is the "middle" value in the first half of the rank-ordered data set.
Q3 is the "middle" value in the second half of the rank-ordered data set.
For example, consider the following numbers: 1, 3, 4, 5, 5, 6, 7, 11. Q1 is the middle value in the
first half of the data set. Since there are an even number of data points in the first half of the data
set, the middle value is the average of the two middle values; that is, Q1 = (3 + 4)/2 or Q1 = 3.5.
Q3 is the middle value in the second half of the data set. Again, since the second half of the data
set has an even number of observations, the middle value is the average of the two middle
values; that is, Q3 = (6 + 7)/2 or Q3 = 6.5. The interquartile range is Q3 minus Q1, so IQR = 6.5
- 3.5 = 3.
Outliers are data points that are far from other data points. In other words, they’re unusual values
in a dataset. Outliers are problematic for many statistical analyses because they can cause tests to
either miss significant findings or distort real results.
7) HYPOTHESIS TESTING
The purpose of hypothesis testing is to determine whether there is enough statistical evidence in
favor of a certain belief, or hypothesis, about a parameter.
Example: Is a new drug effective in curing a certain disease? A sample of patients is randomly
selected. Half of them are given the drug while the other half are given a placebo. The conditions
of the patients are then measured and compared
1. T-test is used to estimate population parameter, i.e. population mean, and is also used for
hypothesis testing for population mean. Though, it can only be used when we are not aware of
population standard deviation. If we know the population standard deviation, we will use Z-test.
For eg. Suppose a data suggests that the average height of boys between 10-16 years in city X is
6 Feet. So, we want to test this hypothesis,whether the height of boys between 10-16 years in city
X is less than, more than, or equal to 6 Feet. For doing so, we will take some samples, say 2000,
and find out the height of boys between age 10 to 16 years. We will calculate the standard
deviation of the 2000 boys, and calculate the t-statistic=
u= pop mean
n= sample size
df= n-1
Once we calculate t-statistic, we will compare it with the critical value. Suppose, we take α=.05,
as it is two tailed test, α/2= .025, we then look at the table value for t, with degrees of
freedom =n-1, 2000-1, and α/2=0.25 which is=±1.96.
Once we get the t-value, we will compare whether our t-statistic is greater than +1.96 or less than
-1.96. . If it is greater than +1.96 or less than -1.96, we reject the null hypothesis, which means,
that the average height of boys in city X is not equal to 6 feet. If our t-statistic is between ±1.96,
we fail to reject the null hypothesis, which means, that the average height of boys in city X is
equal to 6 feet. This is when we conduct hypothesis testing.
Eg. Suppose,a large conglomerate like TCS(Indian IT company) which has employees more than
300,000. So, TCS wants to estimate average over time an employee works for the company, in a
week. So, it might not be possible to get required data(hypothetical situation, though these days it
might be possible) from all employees. Therefore, the company takes a sample, say 3000, and
finds the number of extra hours of work employees have done in week. With the help of the
sample mean and sample standard deviation; for the entire population- one can estimate the
range of average number of extra hours of work, employees have done in week.
Confidence interval to find out the range= x̅±tα/2,n-1 *S/√n ≤Ų≤ x̅±tα/2,n-1* S/√n.
3. t-statistic is also used for finding out the difference in two population mean with the help
of sample means.
For eg, suppose, if we want to understand buying behaviour of customers from two cities for a
particular product. We want to understand whether there is any difference in buying behaviour in
these cities,or is it similar.
F-statistic
Z statistic or t-statistic is used to estimate population parameters- population mean & proportion.
It is also used for testing hypothesis for population mean or population proportion.
Unlike Z-statistic or t-statistic, where we deal with mean & proportion, Chi-square or F-test is
used for finding out whether there is any variance within the samples. F-test is the ratio of
variance of two samples.
Eg. Suppose, in a manufacturing plant there are 2 machines producing same products, and the
management wants to understand, whether there is any variability among the products produced
by these two machines. Researcher will take samples from both the machines and find out the
variability, and test it against the null hypothesis, i.e. the prescribed limit.
The Chi-Square test is a statistical procedure used by researchers to examine the differences
between categorical variables in the same population. For example, imagine that a research
group is interested in whether or not education level and marital status are related for all people
in the U.S. After collecting a simple random sample of 500 U.S. citizens, and administering a
survey to this sample, the researchers could first manually observe the frequency distribution of
marital status and education category within their sample. The researchers could then perform a
Chi-Square test to validate or provide additional context for these observed frequencies
The Central Limit Theorem states that the sampling distribution of the sample means approaches
a normal distribution as the sample size gets larger — no matter what the shape of the population
distribution. This fact holds especially true for sample sizes over 30.
The central limit theorem tells us that no matter what the distribution of the population is, the
shape of the sampling distribution will approach normality as the sample size (N) increases.
This is useful, as the research never knows which mean in the sampling distribution is the same
as the population mean, but by selecting many random samples from a population the sample
means will cluster together, allowing the research to make a very good estimate of the population
mean.
A sample is a subset of individuals from a larger population. Sampling means selecting the group
that you will actually collect data from in your research. For example, if you are researching the
opinions of students in your university, you could survey a sample of 100 students.
Probability sampling involves random selection, allowing you to make statistical inferences
about the whole group.
Non-probability sampling involves non-random selection based on convenience or other criteria,
allowing you to easily collect initial data.
The population is the entire group that you want to draw conclusions about.
The sample is the specific group of individuals that you will collect data from
The population can be defined in terms of geographical location, age, income, and many other
characteristics.
It can be very broad or quite narrow: maybe you want to make inferences about the whole adult
population of your country; maybe your research focuses on customers of a certain company,
patients with a specific health condition, or students in a single school.
It is important to carefully define your target population according to the purpose and
practicalities of your project.
If the population is very large, demographically mixed, and geographically dispersed, it might be
difficult to gain access to a representative sample.
Sampling frame
The sampling frame is the actual list of individuals that the sample will be drawn from. Ideally, it
should include the entire target population (and nobody who is not part of that population).
Example
You are doing research on working conditions at Company X. Your population is all 1000
employees of the company. Your sampling frame is the company’s HR database which lists the
names and contact details of every employee.
Sample size
The number of individuals in your sample depends on the size of the population, and on how
precisely you want the results to represent the population as a whole.
You can use a sample size calculator to determine how big your sample should be. In general,
the larger the sample size, the more accurately and confidently you can make inferences about
the whole population.
Probability sampling means that every member of the population has a chance of being selected.
It is mainly used in quantitative research. If you want to produce results that are representative of
the whole population, you need to use a probability sampling technique.
In a simple random sample, every member of the population has an equal chance of being
selected. Your sampling frame should include the whole population.
To conduct this type of sampling, you can use tools like random number generators or other
techniques that are based entirely on chance.
Example
You want to select a simple random sample of 100 employees of Company X. You assign a
number to every employee in the company database from 1 to 1000, and use a random number
generator to select 100 numbers.
2. Systematic sampling
Systematic sampling is similar to simple random sampling, but it is usually slightly easier to
conduct. Every member of the population is listed with a number, but instead of randomly
generating numbers, individuals are chosen at regular intervals.
Example
All employees of the company are listed in alphabetical order. From the first 10 numbers, you
randomly select a starting point: number 6. From number 6 onwards, every 10th person on the
list is selected (6, 16, 26, 36, and so on), and you end up with a sample of 100 people.
If you use this technique, it is important to make sure that there is no hidden pattern in the list
that might skew the sample. For example, if the HR database groups employees by team, and
team members are listed in order of seniority, there is a risk that your interval might skip over
people in junior roles, resulting in a sample that is skewed towards senior employees.
3. Stratified sampling
This sampling method is appropriate when the population has mixed characteristics, and you
want to ensure that every characteristic is proportionally represented in the sample.
You divide the population into subgroups (called strata) based on the relevant characteristic (e.g.
gender, age range, income bracket, job role).
From the overall proportions of the population, you calculate how many people should be
sampled from each subgroup. Then you use random or systematic sampling to select a sample
from each subgroup.
Example
The company has 800 female employees and 200 male employees. You want to ensure that the
sample reflects the gender balance of the company, so you sort the population into two strata
based on gender. Then you use random sampling on each group, selecting 80 women and 20
men, which gives you a representative sample of 100 people.
4. Cluster sampling
Cluster sampling also involves dividing the population into subgroups, but each subgroup should
have similar characteristics to the whole sample. Instead of sampling individuals from each
subgroup, you randomly select entire subgroups.
If it is practically possible, you might include every individual from each sampled cluster. If the
clusters themselves are large, you can also sample individuals from within each cluster using one
of the techniques above.
This method is good for dealing with large and dispersed populations, but there is more risk of
error in the sample, as there could be substantial differences between clusters. It’s difficult to
guarantee that the sampled clusters are really representative of the whole population.
Example
The company has offices in 10 cities across the country (all with roughly the same number of
employees in similar roles). You don’t have the capacity to travel to every office to collect your
data, so you use random sampling to select 3 offices – these are your clusters.
In a non-probability sample, individuals are selected based on non-random criteria, and not every
individual has a chance of being included.
This type of sample is easier and cheaper to access, but it has a higher risk of sampling bias, and
you can’t use it to make valid statistical inferences about the whole population.
Non-probability sampling techniques are often appropriate for exploratory and qualitative
research. In these types of research, the aim is not to test a hypothesis about a broad population,
but to develop an initial understanding of a small or under-researched population.
1. Convenience sampling
A convenience sample simply includes the individuals who happen to be most accessible to the
researcher.
This is an easy and inexpensive way to gather initial data, but there is no way to tell if the sample
is representative of the population, so it can’t produce generalizable results.
Example
You are researching opinions about student support services in your university, so after each of
your classes, you ask your fellow students to complete a survey on the topic. This is a convenient
way to gather data, but as you only surveyed students taking the same classes as you at the same
level, the sample is not representative of all the students at your university.
Similar to a convenience sample, a voluntary response sample is mainly based on ease of access.
Instead of the researcher choosing participants and directly contacting them, people volunteer
themselves (e.g. by responding to a public online survey).
Voluntary response samples are always at least somewhat biased, as some people will inherently
be more likely to volunteer than others.
Example
You send out the survey to all students at your university and a lot of students decide to complete
it. This can certainly give you some insight into the topic, but the people who responded are
more likely to be those who have strong opinions about the student support services, so you can’t
be sure that their opinions are representative of all students.
3. Purposive sampling
This type of sampling involves the researcher using their judgement to select a sample that is
most useful to the purposes of the research.
It is often used in qualitative research, where the researcher wants to gain detailed knowledge
about a specific phenomenon rather than make statistical inferences. An effective purposive
sample must have clear criteria and rationale for inclusion.
Example
You want to know more about the opinions and experiences of disabled students at your
university, so you purposefully select a number of students with different support needs in order
to gather a varied range of data on their experiences with student services.
4. Snowball sampling
If the population is hard to access, snowball sampling can be used to recruit participants via other
participants. The number of people you have access to “snowballs” as you get in contact with
more people.
Example
You are researching experiences of homelessness in your city. Since there is no list of all
homeless people in the city, probability sampling isn’t possible. You meet one person who
agrees to participate in the research, and she puts you in contact with other homeless people that
she knows in the area.
Type 1 error, in statistical hypothesis testing, is the error caused by rejecting a null
hypothesis when it is true. Type 1 error is caused when the hypothesis that should have been
accepted is rejected. Type I error is denoted by α (alpha) known as an error, also called the level
of significance of the test. This type of error is a false negative error where the null hypothesis is
rejected based on some error during the testing. If Type I error is fixed at 5 percent, it means that
there are about 5 chances in 100 that the null hypothesis, H0, will be rejected when it is true. For
this, let us take a hypothesis where a player is trying to find the relationship between him
wearing new shoes and the number of wins for his team. Here, if the number of wins for his team
is more when he was wearing his new shoes is more than the number of wins for his team
otherwise, he might accept the alternative hypothesis and determine that there is a relationship.
However, the winning of his team might be influenced by just chance rather than his shoes which
results in type 1 error. In this case, he should’ve accepted the null hypothesis because the
winning of a team might happen due to chance or luck.
Type II error is the error that occurs when the null hypothesis is accepted when it is not true.
In simple words, Type II error means accepting the hypothesis when it should not have been
accepted. The type II error results in a false negative result. In other words, type II is the error of
failing to accept an alternative hypothesis when the researcher doesn’t have adequate power. The
Type II error is denoted by β (beta) and is also termed as the beta error .If Type II error is fixed
at 2 percent, it means that there are about two chances in 100 that the null hypothesis, H0, will be
accepted when it is not true. For this, let us take a hypothesis where a shepherd thinks there is no
wolf in the village and he wakes up all night for five nights to determine the existence of the
wolf. If he sees no wolf for five nights, he might assume that there is no wolf in the village where
the wolf might exist and attack on the sixth night. In this case, when the shepherd accepts that no
wolf exists, a type II error results where he agrees with the null hypothesis even when it is not
true.
14) WHAT IS LINEAR REGRESSION?
Linear regression is a basic and commonly used type of predictive analysis. The overall idea of
regression is to examine two things: (1) does a set of predictor variables do a good job in
predicting an outcome (dependent) variable? (2) Which variables in particular are significant
predictors of the outcome variable, and in what way do they–indicated by the magnitude and sign
of the beta estimates–impact the outcome variable? These regression estimates are used to
explain the relationship between one dependent variable and one or more independent variables.
The simplest form of the regression equation with one dependent and one independent variable
is defined by the formula y = c + b*x, where y = estimated dependent variable score, c =
constant, b = regression coefficient, and x = score on the independent variable.
Naming the Variables. There are many names for a regression’s dependent variable. It may be
called an outcome variable, criterion variable, endogenous variable, or regress and. The
independent variables can be called exogenous variables, predictor variables, or regressors.
Three major uses for regression analysis are (1) determining the strength of predictors, (2)
forecasting an effect, and (3) trend forecasting.
15) P-VALUE <0.05 WHAT DOES IT MEAN? A p-value less than 0.05 (typically ≤ 0.05) is
statistically significant. It indicates strong evidence against the null hypothesis, as there is less
than a 5% probability the null is correct (and the results are random). Therefore, we reject the
null hypothesis, and accept the alternative hypothesis.
16) R-SQUARED VALUE? R-squared is a statistical measure of how close the data are to the
fitted regression line. It is also known as the coefficient of determination, or the coefficient of
multiple determination for multiple regression. 0% indicates that the model explains none of the
variability of the response data around its mean.
P value less than 0.05 of independent variables can also be used to determine the significance
19) HOW DO YOU TEST WHETHER THE REGRESSION MODEL IS SIGNIFICANT?
If your regression model contains independent variables that are statistically significant, a
reasonably high R-squared value makes sense. The statistical significance indicates that changes
in the independent variables correlate with shifts in the dependent variable. Correspondingly, the
good R-squared value signifies that your model explains a good proportion of the variability in
the dependent variable.
Correlation measures the degree of relationship between two variables. Regression analysis is
about how one variable affects another or what changes it triggers in the other.
Auto correlation is a characteristic of data which shows the degree of similarity between the
values of the same variables over successive time intervals
The autocorrelation function can be used for the following two purposes:
22) MULTICOLLINEARITY?
o The coefficient estimates can swing wildly based on which other independent variables are
in the model. The coefficients become very sensitive to small changes in the model.
o Multicollinearity reduces the precision of the estimate coefficients, which weakens the
statistical power of your regression model. You might not be able to trust the p-values to
identify independent variables that are statistically significant.
Multicollinearity could occur due to the following problems:
• Multicollinearity could exist because of the problems in the dataset at the time of
creation. These problems could be because of poorly designed experiments, highly
observational data, or the inability to manipulate the data:
o For example, determining the electricity consumption of a household from the
household income and the number of electrical appliances. Here, we know that
the number of electrical appliances in a household will increase with household
income. However, this cannot be removed from the dataset
• Multicollinearity could also occur when new variables are created which are dependent
on other variables:
o For example, creating a variable for BMI from the height and weight variables
would include redundant information in the model
• Inaccurate use of dummy variables can also cause a multicollinearity problem. This is
called the Dummy variable trap:
o For example, in a dataset containing the status of marriage variable with two
unique values: ‘married’, ’single’. Creating dummy variables for both of them
would include redundant information. We can make do with only one variable
containing 0/1 for ‘married’/’single’ status.
VIF determines the strength of the correlation between the independent variables. It is predicted
by taking a variable and regressing it against every other variable.
R^2 value is determined to find out how well an independent variable is described by the other
independent variables. A high value of R^2 means that the variable is highly correlated with the
other variables. This is captured by the VIF which is denoted below:
So, the closer the R^2 value to 1, the higher the value of VIF and the higher the multicollinearity
with the particular independent variable.
DMOT
1) What is the theme of DMOT course? Science of optimality – getting best optimal solutions.
4) What is a Decision Variable? The variables whose values determines the solution of the
objective function is known as decision variables.
5) What is a Surplus Variable? A variable that is subtracted in the LHS of constraints (of ≥
type) to transform the inequality to equality.
6) What is an Artificial Variable? A variable that is added in order to obtain the IBFS (basic
feasible solution) it is to be added only in greater than or equal to inequality.
7) What are the limitations of graphical method of solving LPP? Graphical method is limited
to linear programming models with only two decision variables.
9) Define the Duality Principle in LPP. For every LPP there is a unique associated LPP with
same optimal solution, the original problem is primal and the another is Dual.
10) How will you solve a LPP when it has more number of constraints and fewer number
of decision variables? Convert the primal into Dual ---- and solve using simplex method.
13) What do you mean by Unbalanced Transportation Problem? When total supply is not
equal to the total demand, then it is said to be unbalanced transportation problem.
15) State any two methods of finding a feasible solution in a Transportation Problem.
16) How will you check the optimality of the solution in a Transportation Problem? Modi
(u-v) method.
17) When a transportation problem is said to be degenerating. When the number of basic
cells is less than “m+n-1”.
18) What do you mean by Traveling Salesman Problem? TSP is a special type of assignment
problem, in which the major objective is to minimize the travelling cost of the sales person by
assigning the locations (order of visiting)
19) If a salesman has to visit n cities, what is the possible number of round trips? (n-1)!
22) How will you check the optimal solution in an Assignment Problem?
Hungarian method.
BRM
7) Validity vs reliability?
Validity is how close is your observed score to the true score while reliability is the extent to
which a scale produces consistent results if repeated measurements are made.
11) Different types of measurement scales? (Nominal, Ordinal, Interval and Ratio)
Nominal scale
• The numbers serve only as labels or tags for identifying and classifying objects.
• The numbers do not reflect the amount of the characteristic possessed by the objects.
• The only permissible operation on the numbers in a nominal scale is counting.
• Only a limited number of statistics, all of which are based on frequency counts, are
permissible, e.g., percentages, and mode.
• Ex of nominal scale: Student id, Players jersey number, buy/did not buy
Ordinal scale
• A ranking scale in which numbers are assigned to objects to indicate the relative
extent to which the objects possess some characteristic.
• Can determine whether an object has more or less of a characteristic than some other
object, but not how much more or less.
• In addition to the counting operation allowable for nominal scale data, ordinal scales
permit the use of statistics, e.g., mode, median, range.
• Ex: Rank brands from most admired to least admired (1 to 3 or 1 to 5)
Rank your three favorite movies
Interval Scale
• Numerically equal distances on the scale represent equal values in the characteristic being
measured.
• The location of the zero point is not fixed. Both the zero point and the units of
measurement are arbitrary.
• Statistical techniques that may be used include all of those that can be applied to nominal
and ordinal data, and in addition the arithmetic mean, standard deviation, correlations,
ANOVA, t tests, regressions.
• Ex: On a scale of 1 to 10, how you will rate your boss? (1= very bad, 10=excellent)
Ratio Scale
• Possesses all the properties of the nominal, ordinal, and interval scales.
• It has an absolute zero point.
• All statistical techniques can be applied to ratio data.
Ex: Sales, revenue, market share, Amount spent on last purchase (Any data which can be a
zero)
12) Hypothesis?
A hypothesis (plural hypotheses) is a precise, testable statement of what the researcher
predict will be the outcome of the study. The basic idea of a hypothesis is that there is no pre-
determined outcome.
A null hypothesis is a statement of the status quo, one of no difference or no effect. If the
null hypothesis is not rejected, no changes will be made.
An alternative hypothesis is one in which some difference or effect is expected. Accepting the
alternative hypothesis will lead to changes in opinions or actions.
• In single cross-sectional designs, there is only one sample of respondents and information
is obtained from this sample only once.
• In multiple cross sectional designs there are two or more samples of respondents, and
information from each sample is obtained only once.
Often, information from different samples is obtained at different times.
The cost of normal loss is considered as part of the cost of production in which it occurs. If
normal loss units have any realisable scrap value, the process account is f credited by that
amount. If there is no abnormal gain, then there is no necessity to maintain a separate account for
normal loss.
• The output of one process becomes the raw material of another process
• The total cost of each process is divided by the normal output of that process to find out
the cost per unit of that process
• Industries are producing gas, electricity, water, ice, steel, paper, cement, rubber, bread,
etc.
• Industries are producing spare parts, fittings, equipment, fertilizer industries, etc.
• Industries involved in box making, paper mills, biscuit factories, oil refining, milk dairy,
meat product factory.
15)What is the purpose of Overhead Absorption Rate?
Overhead absorption rate is a rate charged to cost unit intended to account for the overhead at
a predetermined level of activity. On the basis of direct labour hours, direct labour cost or
machine hours, overhead is attributed to a product or service.
Purpose: They enables overheads to be absorbed immediately after production. They make it
easier to estimate total and per unit product or job cost.
• Financial statements are written records that convey the business activities and the
financial performance of a company.
• The balance sheet provides an overview of assets, liabilities, and stockholders' equity as a
snapshot in time.
• The income statement primarily focuses on a company’s revenues and expenses during a
particular period. Once expenses are subtracted from revenues, the statement produces a
company's profit figure called net income.
• The cash flow statement (CFS) measures how well a company generates cash to pay
its debt obligations, fund its operating expenses, and fund investments.
11) Depreciation will be provided on the Assets, even when Asset is not used - True
12) Security Deposit received from a Building Contractor engaged for Constructing our Building
will be considered as Non Current Asset
15)The base amount for Vertical Analysis of Income Statement will be Net Sales
DEFINITIONS
Profit is a short sighted gauge of success. What is more important is sustainability. Sustainability
is the characteristic of being able to exist indefinitely. This includes employees, availability of
raw materials, machinery and other value-adding elements.
There are generally six steps to developing an effective analysis of financial statements.
4)What is IFRS
Two methods are available to prepare a statement of cash flows: the indirect and direct methods.
The Financial Accounting Standards Board (FASB) prefers the direct method, while many
businesses prefer the indirect method. Regardless of which method you use, the bottom-line cash
balance is the same, and it has to equal the amount of cash you show on the balance sheet.
Three Sections of the Statement of Cash Flows:
Operating Activities: The principal revenue-generating activities of an organization and other
activities that are not investing or financing; any cash flows from current assets and current
liabilities. (Direct and Indirect Method
Investing Activities: Any cash flows from the acquisition and disposal of long-term assets and
other investments not included in cash equivalents
Financing Activities: Any cash flows that result in changes in the size and composition of the
contributed equity capital or borrowings of the entity (i.e., bonds, stock, dividends)
Classification by activities provides information that allows users to assess the impact of
those activities on the financial position of the enterprise. This information also helps in
evaluating the inter-relationships between these activities.
• To calculate gross profit on your income statement, you use the formula:
Gross Profit = Net Sales – Cost of Goods Sold
• To calculate operating income, you use the formula:
Operating Income = Gross Profit – Operating Expense
• To calculate net income, you use the formula:
Net Income = Operating Income + Non-Operating Items
In order to arrive at conclusions regarding the performance of the current financial year as well
as to assist planning the upcoming financial year’s budget.
Horizontal and vertical analysis are two main types of analysis methods used for this purpose.
The key difference between horizontal and vertical analysis is that horizontal analysis is a
procedure in financial analysis in which the amounts in financial statements over a certain period
of time is compared line by line in order to make related decisions whereas vertical analysis is
the method of analysis of financial statements where each line item is listed as a percentage of
another item.
A horizontal analysis, also referred to as ‘trend analysis’, is a procedure in the financial analysis
where the amounts of financial information over a certain period of time is compared line by line
in order to make related decisions.
Vertical analysis is the method of analysis of financial statements where each line item is listed
as a percentage of another item to conduct useful decision making. Here, each line item on the
income statement is expressed as a percentage of sales revenue and each line item on the balance
sheet is expressed as a percentage of total assets.
Vertical Analysis Formula (Income Statement) = Income Statement Item / Total Sales *
100
Vertical Analysis Formula (Balance Sheet) = Balance Sheet Item / Total Assets
(Liabilities) * 100
CORPORATE FINANCE
1)ANNUITY DUE: It is the series of regular payments at equal time interval at beginning of
each period. EG: Monthly rent payment
ORDINARY ANNUITY: It is the series of regular payments at equal time interval at end of
each period. Eg: Interest payment for loan
• It is used to identify the relationship between the expected returns and risk of the security.
• expected return= risk free rate+beta*(market return- risk free rate)
• market risk premium= market return- risk free rate
ASSUMPTIONS IN CAPM:
Markets are ideal—no transaction fees, taxes, inflation, or short selling restrictions. All investors
are averse to risk. Markets are highly efficient.
8)REAL RETURN
Real return is the return an investor receives after considering the inflation.
rights issue at 1:2 means for every 2 share u can get 1 share
A group of securities forming the index. These securities can be either bond instruments
or equity instruments. An index fund is a portfolio of stocks or bonds designed to mimic the
composition and performance of a financial market index. Index funds have lower expenses and
fees than actively managed funds. Index funds follow a passive investment strategy.
12) How would you construct your portfolio in a best possible way?
Optimum portfolio should minimize the risk and maximize the returns.
Portfolio should be well diversified with bonds and stocks. Based on individual securities risk,
investments should be made.
13) what are the ways to mitigate the systematic risk?
Systematic risk is the risk due to external factors like politics, economy etc. Unsystematic risk is
the risk due to company internal factors.
Eg: allocating portion of amount in real estate, fixed deposits, bonds and stocks etc.
14)Loan amortization
An amortized loan is a type of loan that requires the borrower to make scheduled,
periodic payments that are applied to both the principal and interest. An amortized loan payment
first pays off the interest expense for the period; any remaining amount is put towards reducing
the principal amount
• Corporate finance is the area of finance that deals with providing money for
businesses and the sources that provide them. These sources provide capital to
corporations to pay for structural improvements, expansion, and other value-
added projects and enterprises.
• Corporate finance mainly tells the investments decision in a business and also
sources for funding to maximize the shareholders’ value.
Profit maximization is the short term goal in the business. So it may lead to poor product
quality and there may be possibility of losing customers.
Poor product quality may affect brand image.
To avoid this short term profit maximization should be in align with the company long
term goals.
5) AGENCY PROBLEM
Conflict of interest between the managers and shareholders. Managers needs to achieve the
organization goal and also look for personal gain. Shareholders look for profit and dividends.
REASONS:
• Information asymmetry
• Managers put their personal interest rather than company goal.
• Internal audit
• Changes in salaries & payments of managers.
• Good corporate governance
EXTERNAL MEASURES:
• It is also called as investment decisions. Capital budgeting techniques give the decisions
made by the top level management with respect to amount of funds deployed to the long
term projects.
• This decision can be made with Net present value, Internal rate of return, Profitability
index, payback period, discounted payback period, accounting rate of return.
• Net present value = Present value of cash inflow- present value of cash outflow
• If NPV >1, then company can invest in those projects, If NPV< 1, then company should
not invest in those projects.
• If IRR> COST OF CAPITAL, then company can invest in those projects, If IRR< Cost of
capital, then company should not invest in those projects.
• COST OF CAPITAL IS COST INCURRED TO RAISE THE FUNDS FOR
INVESTMENT
• DPB, PB should be less. DPB, PB tells the time period for the return of our investment.
7) SOME OF CURRENT ASSETS AND CURRENT LIABILITIES:
• current assets- cash and cash equivalents, accounts receivables, prepaid expenses,
inventory, advances to employees/suppliers
• current liabilities – short term debt, accounts payable, accrued interest, current matruity
in long term debt
Liquidity tells the how the company can quickly convert its assets into cash.
Liquidity for companies typically refers to a company's ability to use its current assets to meet its
current or short-term liabilities. The current ratio (also known as working capital
ratio) measures the liquidity of a company and is calculated by dividing its current assets by its
current liabilities.
• if nwc is +ve, then company can able to manage its short term obligations.
• if nwc is –ve, it shows the company inability to meet its short term obligations
EVA is the company performance measure that compares the net operating profit to the total cost
of capital.
Annuity due is when the first payment is received / paid today and Deferred Annuity is when the
same is done at the end of one unit time (may be a day , month or year , as per the scenario
12) ANNUITY:
It is the stream of cash flow for infinite period of time. Eg: CONSOL
Systematic risk is the risk due to external factors like politics, economy etc. Unsystematic risk is
the risk due to company internal factors.
Eg: allocating portion of amount in real estate, fixed deposits, bonds and stocks etc.
It is the firm ability to use fixed operating costs to magnify the effect of changes in sales on
EBIT.
18)FINANCIAL LEVERAGE
It indicates how much business is dependent on the debt that it has issued.
Beta is the measure of volatility or systematic risk of stocks with respect to market.
Company issuing the shares for public in stock exchange for the first time.
Balance Sheet is the financial statement of a company which includes assets, liabilities,
equity capital, total debt, etc. at a point in time. Balance sheet includes assets on one side, and
liabilities on the other.
26)CURRENT RATIO
It compares a company's most short-term assets to its most short-term liabilities to see if a
company has enough cash to pay its immediate liabilities, such as short-term debt. The acid-test
ratio disregards current assets that are difficult to liquidate quickly such as inventory.
ROA tells that how well the company generating profit from its assets.
ROE tells how well the company generating profit from its equity investment.
Discounting gives the present value of future cash flows while compounding is give the future
value of the investment.
30)RISK PREMIUM
Risk premium is the minimum amount of money by which the expected return on a risky asset
(such as stock) must exceed the known return on a risk- free asset
CAPM graph is drawn between the beta and expected returns. Beta in X axis and Excepted
return in Y axis.
33)MARKET CAPITALIZATION:
Market capitalization is the total market value of the company outstanding shares.
34)LISTING
It is the listing of company shares in any official stock exchange such as NSE OR BSE.
It is regulated by SEBI
35)MUTUAL FUNDS
A mutual fund is a company that pools money from many investors and invests the money in
securities such as stocks, bonds, and short-term debt. The combined holdings of the mutual
fund are known as its portfolio. Investors buy shares in mutual funds.
CATEGORIES OF MUTUAL FUNDS- equity funds, fixed income funds, hybrid funds
Gilt-edged securities are high-grade investment bonds offered by governments and large
corporations as a method of borrowing funds. The issuing institutions typically boast strong track
records of consistent earnings that can cover dividend or interest payments.
37)TREASURY BILLS
Treasury bills or T-bills, which are money market instruments, are short term debt instruments
issued by the Government of India and are presently issued in three tenors, namely, 91 day, 182
day and 364 day. Treasury bills are zero coupon securities and pay no interest.
38)SEBI
39) If you deposit 2000 rupees with 8% interest expectations, in how many years it can be
doubled (approx..)
(briefly)
For businesses it is an important strategic tool. This elasticity measure can help determine
whether or not it is a good move to increase or decrease selling prices, or to substitute one
product for another to generate greater revenues
Cross (price) elasticity of demand (XED) measures the responsiveness of quantity demanded for
one good to a change in the price of another good
The cross elasticity of demand is an economic concept that measures the responsiveness in the
quantity demanded of one good when the price for another good changes. Also called cross-price
elasticity of demand, this measurement is calculated by taking the percentage change in the
quantity demanded of one good and dividing it by the percentage change in the price of the other
good.
• The cross elasticity of demand is an economic concept that measures the responsiveness
in the quantity demanded of one good when the price for another good changes.
• The cross elasticity of demand for substitute goods is always positive because the
demand for one good increase when the price for the substitute good increases.
• Alternatively, the cross elasticity of demand for complementary goods is negative.
In economics, the elasticity of demand refers to how sensitive the demand for a product is to
changes in price of another product.
4) What is the difference between short-run and long-run production function?
The short run production function can be Long run production function indicates the
understood as the time period over which time period, over which the firm can change
the firm is not able to change the quantities the quantities of all the inputs.
of all inputs
6) What is supernormal profit? How much supernormal profit a competitive firm earns in
the long-run?
• Supernormal profit is all the excess profit a firm makes above the minimum return
necessary to keep a firm in business.
• Supernormal profit is calculated by Total Revenue – Total Costs (where total cost
includes all fixed and variable costs, plus minimum income necessary for the owner to be
happy in that business.
• Normal profit is defined as the minimum level of profit necessary to keep a firm in that
line of business. This level of normal profit enables the firm to pay a reasonable salary to
its workers and managers. The definition of normal profit occurs when AR=ATC
(average revenue = average total cost)
• Supernormal profit is defined as extra profit above that level of normal profit.
• Supernormal profit is also known as abnormal profit.
1. Apple. In 2015, Apple was the world’s most profitable company with profits of $53.4
billion. It also had cash reserves of $216bn. This is accumulated profit saved in their bank
accounts. The supernormal profit of Apple comes from its very strong brand loyalty and
products which have sold well, despite high prices.
2. JP Morgan Chase & Co. In 2015, J P Morgan Chase made profits of $24.4 billion.
7) How price elasticity is related with price discrimination in the monopoly market?
How Price Discrimination Works. ... The markets cannot overlap so that consumers who
purchase at a lower price in the elastic sub-market could resell at a higher price in
the inelastic sub-market. The company must also have monopoly power to make price
discrimination more effective.
Price discrimination is a selling strategy that charges customers different prices for the same
product or service based on what the seller thinks they can get the customer to agree to.
Price Elasticity is a measure of the effect of a price change or a change in the quantity supplied
on the demand for a product or service.monopoly market: A market structure characterized by a
single seller, selling a unique product in the market. In a monopoly market, the seller faces no
competition, as he is the sole seller of goods with no close substitute. He enjoys the power of
setting the price for his goods. ...)
predatory price cutting, the practice has been defined as temporary selling, at prices below its
costs, by a firm (or concerted group of firms) to drive out or crush a competitor. For
convenience, the two firms will be called aggressor and rival, or predator and victim.
Deadweight loss occurs when supply and demand are not in equilibrium, which leads to market
inefficiency. Market inefficiency occurs when goods within the market are either overvalued or
undervalued. While certain members of society may benefit from the imbalance, others will be
negatively impacted by a shift from equilibrium.
When consumers do not feel the price of a good or service is justified when compared to the
perceived utility, they are less likely to purchase the item.
For example,
overvalued prices may lead to higher profit margins for a company, but it negatively affects
consumers of the product.
For inelastic goods — meaning demand does not change for that particular good or service when
the price goes up or down—the increased cost may prevent consumers from making purchases in
other market sectors. In addition, some consumers may purchase a lower quantity of the item
when possible. For elastic goods —meaning sellers and buyers quickly adjust their demand for
that good or service if the price changes — consumers may reduce spending in that market sector
to compensate or be priced out of the market entirely.
If the market price is below average cost at the profit-maximizing quantity of output, then the
firm is making losses. If the market price that a perfectly competitive firm faces is below average
variable cost at the profit-maximizing quantity of output, then the firm should shut down
operations immediately.
GDP measures the value of goods and services produced within a country's borders, by
citizens and non-citizens alike. GNP measures the value of goods and services produced
by only a country's citizens but both domestically and abroad.
In addition to tax policy, interest rate policy is also believed to have a significant impact
on the MPC, specifically whether credit is readily available or more tightly restricted.
Readily available credit and lower interest rates are believed to increase the MPC since
this makes it easier for consumers to finance purchases and to obtain financing at
attractive rates.
4) What is multiplier?
In economics, a multiplier broadly refers to an economic factor that, when increased or changed,
causes increases or changes in many other related economic variables. ... The term multiplier is
usually used in reference to the relationship between government spending and total national
income.
The formula for the simple spending multiplier is 1 divided by the MPS.
progressive tax—A tax that takes a larger percentage of income from high-income groups than
from low-income groups.
proportional tax—A tax that takes the same percentage of income from all income groups.
6) Why GST was introduced in India?
One of the main reasons for GST being introduced in India is the tax burden that falls both on
companies and consumers. With the current tax system, there are multiple taxes added at each
stage of the supply chain, without taking credit for taxes paid at previous stages.
In India, money supply is regulated by the Reserve bank of India which is the central
bank through various fiscal and monetary policies of the government.
repo rate is the rate at which the RBI lends to commercial banks by purchasing securities
while bank rate is the lending rate at which commercial banks can borrow from the RBI
without providing any security.
9) What is the impact on price level if RBI decides to increase the Cash Reserve Ratio?
The reserve ratio is the amount of reserves - or cash deposits - that a bank must hold on to
and not lend out. The greater the reserve requirement, the less money that a bank can
potentially lend - but this excess cash also staves off a banking failure and shores up its
balance sheet. Still, when the reserve ratio increases, it is
considered contractionary monetary policy, and when it decreases expansionary.
The first problem with the CPI is the substitution bias. As the prices of goods and
services change from one year to the next, they do not all change by the same
amount. The number of specific items that consumers purchase changes depending
upon the relative prices of items in the fixed basket.
OM
1. Why should one study operations management?
set of activities that creates value in the form of goods and services by transforming
inputs into outputs.
Operations managers are responsible for managing activities that are part of the production
of goods and services. Their direct responsibilities include managing both the operations process,
embracing design, planning, control, performance improvement, and operations strategy.
It is the period of time over which an item/product is developed, brought to market and
eventually removed from the market.
4STAGES OF PLC – Introduction , growth, maturity, decline
Product service
Products are Tangible i.e product one can services are Intangible i.e. service we can
touch, smell, see and wish to buy Example: experience. Example: flying to a particular
aircraft is product destination is service
We can store product for future We cannot store service for future
Quality of products is homogeneous i.e. While quality of services is heterogeneous.
Quality of product can not vary with time i.e. Quality of service can vary with time and
person.
The consumer can access the product (a car, A consumer will never know how good the
washing machine, etc.) and see/test it. service is until after he gets it.
5. Define productivity
Productivity is the quantitative relation between what we produce and what we use
as a resource to produce them.
Productivity = output / input
6. What is a qualitative forecasting model, and when is its use appropriate?
These types of forecasting methods are based on judgments, opinions, intuition,
emotions, or personal experiences of expert.
They are usually applied to intermediate- or long-range decisions.
METHODS
*Jury of Executive Opinion
*Delphi Method
*Sales Force Composite
*Market Survey
7. What is the basic difference between a simple moving average and weighted moving average?
simple moving average weighted moving average
A moving-average forecast uses a specific Weights based on experience and decision of
number of historical actual data values to expert
generate a forecast.
We consider only latest data for Weighted moving averages assign a heavier weighting
forecasting to more current data points since they are more
relevant than data points in the distant past.
Moving average method is useful if The forecast for next period (t+1) will be equal
market to a weighted average of a specified number of
demand will stay fairly steady over time. the most recent observations.
8. What are the methods used to determine the accuracy of any given forecasting method?
Moving Average
Weighted moving average
Mean Absolute Percent Error (MAPE)
Mean Average Deviation (MAD)
Mean squared error (MSE)
Trend projection always have positive slope linear regression can also have a negative slope.
In trend projection the independent variable in linear regression the independent variable
is always time need not be time, can be any variable.
14. What are the two basic questions that deal with inventory management?
how much to order.
when to order.
Vital Inventory
Essential Inventory
Desirable Inventory
• Vital inventory: Inventory that consistently need to be kept in stock.
• Essential inventory: Keeping minimum stock of these inventory is enough.
• Desirable inventory: Operations can run with or without these inventories i.e. it is optional.
17. Describe the difference between a fixed-quantity (Q) and a fixed-period (P) inventory control system.
Fixed-quantity (Q) inventory control system. fixed-period (P) inventory control system
This is also called continuous review system. orders are placed after a fixed interval of time.
The material is ordered every time when
inventory drops to a certain level.
That certain level is called the reorder point.
The reorder point (ROP) depends on the lead Inventory is reviewed at periodic intervals
time for delivery and usage rate. Ie the ordering irrespective of the levels to which inventory
cost and the holding cost. drops.
In this system the maximum and minimum The order quantity is different at each time.
inventory levels are fixed.
e.g pharmaceuticals and grocery stores.
18. What is Kanban System?
Kanban is inventory control system to control the supply of inventory.
It is Japanese word which means visual signal or card.
When raw materials or stocked items runs low during the manufacturing process, an
employee takes item’s reorder card to manager, who order the needed amount of
materials.
The new supplies arrived before stock has run out and production continue without
hindrance
19. What are the major assumptions of the basic EOQ model?
Demand for an item is known and constant over time.
Lead time is known and constant.Lead Time: The time between placement and receipt
of theorder.
Quantity discounts are not considered.
Stock-outs are not allowed.
The quantity ordered arrives at once.
Ordering cost and holding cost are variable cost.
Inventory level is zero when new order is just received
.
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