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1994. An assumption of specification analysis, which states all values of residuals which are uniformly scattered around regression line is classified as

abnormality of residuals
normality of regression
normality of residuals
abnormality of regression
✅ The correct answer is C.
An assumption of specification analysis, which states all values of residuals which are uniformly scattered around regression line is classified as normality of residuals. Residuals are the differences between the observed and predicted.

1995. In which case is the moral hazard present?

A Bank manager with moderate occasional consumption of alcohol
A race goer with betting habits and usually a heavy consumer of alcohol
A university professor asking for a large cover on his life
Where in a proposal the nominee is a near dependant of the proposer
✅ The correct answer is B.
A race goer with betting habits and usually a heavy consumer of alcohol is the moral hazard present. Moral hazard is the risk that a party has not entered into a contract in good faith or has provided misleading information about its assets, liabilities, or credit capacity.

1999. Absorption means ________.

charging overheads to cost centres
charging of overheads to cost units
charging of overheads to cost centres or cost units
allotment of overheads to different departments
✅ The correct answer is B.
Absorption means charging of overheads to cost units. It means costs is absorbed by the production (or product units )during the period or charging each unit of a product with an equitable share of overhead expenses.

2001. Economic activities are related to ___________.

Production of wealth
Satisfy ones urge
Undertaking social service
Social service
✅ The correct answer is A.
Economic activities are related to Production of wealth. The primary aim of the economic activity is the production of goods and services with a view to make them available to consumer.

188. Which of the following is a selling expense?

Any tax/freight is paid on purchases
General salaries paid to laborers
Tax & freight paid on sale
Interest on deposits
✅ The correct answer is C.
Tax & freight paid on sale is a selling expense. Selling expense (or sales expense) includes any costs incurred by the sales department.

1987. Markets where assets are bought or sold within a few days or at some future dates are classified as

spot markets
future markets
Both A and B
financial instruments
✅ The correct answer is C.
Markets where assets are bought or sold within a few days or at some future dates are classified as spot markets and future markets. The spot market is where financial instruments, such as commodities, currencies and securities, are traded for immediate delivery. Delivery is the exchange of cash for the financial instrument. A futures contract, on the other hand, is based on the delivery of the underlying asset at a future date.

1989. Political stability is the major factor concerning_______________.

exchange risk
systematic risk
non-systematic risk
country risk
✅ The correct answer is D.
Political stability is the major factor concerning country risk. Political stability in this case refers to the lack of real competition for the governing elite. The ‘politically stable’ system enforces stringent barriers to personal freedoms.
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