Dear Readers,
Mahendras has started special quizzes for IBPS & SBI Exam so that you can practice more and more to crack the examination. This IBPS & SBI Exam special quiz series will mold your preparations in the right direction and the regular practice of these quizzes will be really very helpful in scoring good marks in the Examination. Here we are providing you the important question of reasoning ability for the IBPS & SBI Exam.
Q1-3 Read each part of the sentence to find out if there is any error in it. The error, if any, will be in one part of the sentence. The number of that part is the answer. If there is no error, mark your answer as (5).
Q1 South Korean activists floated hundreds of thousands(1)/ of leaflets across the border at North Korea(2)/ protesting Pyongyang's recent missile testing(3)/ efforts in defiance of the UN sanctions.(4)/No Error (5)
01. South Korean activists floated hundreds of thousands
02. of leaflets across the border at North Korea
03. protesting Pyongyang's recent missile testing
04. efforts in defiance of the UN sanctions
05. No Error
Q2 Bangladesh has shut down services of the country's(1)/ oldest mobile phone operator Citycell, snapping(2)/ their spectrum after the company failed to pay(3)/ outstanding dues it owes to the authorities.(4)/No Error (5)
01. Bangladesh has shut down services of the country's
02. oldest mobile phone operator Citycell, snapping
03. their spectrum after the company failed to pay
04. outstanding dues it owes to the authorities
05. No Error
Q3 Ending its long-standing opposition to the Decision(1)/ Review System (DRS), the BCCI agreed to its usage(2)/ in a trial basis during India's home Test series(3)/ against England.(4)/No Error (5)
01. Ending its long-standing opposition to the Decision
02. Review System (DRS), the BCCI agreed to its usage
03. in a trial basis during India's home Test series
04. against England
05. No Error
Q4-10 Read the following passage carefully and answer the questions given below it.
One could be forgiven for thinking that this year’s Economics Nobel for contract theory was for Law, but the all-pervasiveness of contractual relationships in our social and economic life makes the work a significant contribution to our understanding of everything “from bankruptcy legislation to political constitutions, from corporate governance to constitutional law”. To be sure, the role of incentives and conflicts of interest are not new to economics and we are familiar with concepts such as moral hazard and adverse selection. What the present work adds to the body of knowledge are two important problems with contracts, viz. informational problems and incomplete contracts. Holmström developed the informativeness principle, at the heart of which is the principal-agent relationship with its known issues of incentives, conflicts of interest and information asymmetry. These abound in our daily life — for example, workers and firms, shareholders and management, businesses and suppliers, and insurance companies and their customers. In a firm, the problem can be stated simply as one where employers are unable to explicitly monitor employee performance and therefore rely on outcomes defined by standard metrics such as profits or stock prices.
But since share prices are also influenced by factors not in the executive’s control, simply linking compensation to the firm’s share price could reward the manager for good luck and punish him for bad luck. On the other hand, if linked to the firm’s share price relative to those of similar firms in the same industry, this could provide more optimal information on efforts and outcomes. Likewise, a common profit sharing scheme that simply shares profits amongst team members only creates a free-rider problem. Holmstrom suggests that the problem can be resolved by introducing a “budget-breaker”, a third party such as a venture capitalist who assigns rewards and penalties to the team members and keeps what is left for himself. The whole of his work deals with studying the balance between risk and incentives. One early insight, according to the Nobel committee, was that high-risk industries should have more fixed salaries while stable industries should more often consider performance bonuses. The essence of the informativeness principle is that contracts should consider information relevant to employee performance, carefully weighing risks against incentives. This principle has found application in insurance contracts also, where the concepts of deductibles and co-pays provide the checks against the disinclination of the insured to take care.
Hart’s contribution is in the other problem area of contract theory — the issue of incomplete contracts; the problem can be stated as the impossibility of explicitly specifying every eventuality and what the parties should do in such case. The solution he offers is that contracts should focus on determining which party has the right to decide what to do when an eventuality occurs. This is an important insight because the problem is at the heart of nearly every contracting decision around us, especially in the public sphere — own versus lease, make versus outsource, public versus private. The crucial issue, according to Hart, is the extent to which the contracts account for the unexpected. Government foreign policy making cannot obviously be outsourced (due to the impossibility of specifying all eventualities and possible courses of actions) but a service such as municipal waste collection can be contracted out (easier to design the right cost and quality incentives). While this is a case for owning versus contracting, even in a contracting situation, it is possible to address the incompleteness issue.
Q4 How is the informative principle applicable in insurance contracts?
01. By the way of high-risk industries should have more fixed salaries and the possible amount of fixed deductions.
02. By the way of the concepts of deductibles and co-pays provide the checks against the disinclination of the insured to take care.
03. By the way of share prices are influenced by factors and co-pays provide the checks against the disinclination.
04. By the way of the resolution by introducing a “budget-breaker.”
05. By the way of the concept of new agenda of high-risk industries and disinclination of the money back to the policy holders.
Q5 What are the essential parts of the informativeness principle developed by Holmström, with regard to the principal-agent relationship?
(A) known issues of incentives
(B) conflicts of interest
(C) information asymmetry
01. Only (C)
02. Only (A)
03. Both (A) and (C)
04. Both (B) and (C)
05. All (A),(B) and (C)
Q6 When could one provide more optimal information on efforts and outcomes?
01. If the vigorous essence of the informativeness principle leads to the benefits and high percentage of gains.
02. If compensation linked to the firm’s share price relative to those of similar firms in the same industry.
03. If weighing risks against incentives would be as high as possible.
04. When the problem can be stated as the impossibility of explicitly specifying every eventuality.
05. All of the above
Q7 What kind of work is done by the venture capitalist and how does he perfom his task?
01. Venture capitalist assigns the responsibility to all the individuals in the team and then checks the working efficiency of every individual and distributes the work to everyone.
02. Venture capitalist assigns rewards and penalties to the team members and keeps what is left for himself and the whole of his work deals with studying the balance between risk and incentives.
03. Venture capitalist assigns all the profit sharing to the team members and takes nothing at all he does this task very easily.
04. Only (2) and (3)
05. Not mentioned in the passage.
Q8 What is the core stumbling block in a firm as mentioned in the passage?
01. employers are unable to explicitly monitor another employee’s success ratio as per the target completion.
02. employers are unable to explicitly monitor employee performance and therefore rely on outcomes defined by standard metrics.
03. employers are unable to explicitly monitor the key functional area for the new productive ventures.
04. Only (1) and (2)
05. Both (2) and (3)
Q9 Which of the following statement is TRUE according the passage?
01. The work is a significant contribution to our understanding of everything from corrupt legislation to economical constitutions.
02. A service such as municipal waste collection can be contracted out while this is a case for owning versus contracting.
03. Hart’s contribution is in the other problem area of contract theory — the issue of incomplete contracts.
04. Government foreign policy making can obviously be outsourced.
05. Both (2) and (3)
Q10 Which of the following statement is NOT TRUE according the passage?
01. Contracts should focus on determining which party has the right to decide what to do when an eventuality occurs.
02. Lewnin’s contribution is in the other problem area of presumption.
03. The crucial issue, according to hart, is the extent to which the contracts account for the unexpected.
04. According to the nobel committee high-risk industries should have least fixed salaries.
05. Stable industries should more often consider performance bonuses.
Answers:-
Q.1 (2)
Q.2 (3)
Q.3 (3)
Q.4 (2)
Q.5 (5)
Q.6 (2)
Q.7 (2)
Q.8 (2)
Q.9 (5)
Q.10 (4)
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