PREVIOUS YEAR SOLVED PAPERS - June 2019
- Option : B
- Explanation : Shopping Products: They are purchased after due shopping efforts. The shopping efforts include search and comparison of goods on the basis of price, quality, suitability etc.
Examples: Furniture, Television, Washing Machine, Music systems.
Characteristics:
(i) The shopping products are generally of durable nature;
(ii) The unit price as well as profit margin of shopping products is generally high;
(iii) Customers compare the prices of products of different companies before making selection.
(iv) Purchases of shopping products are generally pre-planned;
(v) Lot of persuasive effort is needed to convince the buyers to purchase such products, for this services of retailers are availed.
73. Which one of the following analyses is suitable for risk-return analysis in financial decisions?
- Option : A
- Explanation : William F. Sharpe and John Linter developed the Capital Asset Pricing Model (CAPM). The model is based on the portfolio theory developed by Harry Markowitz. The model emphasises the risk factor in portfolio theory is a combination of two risks, systematic risk and unsystematic risk. The model suggests that a security’s return is directly related to its systematic risk, which can not be neutralised through diversification. The combination of both types of risks stated above provides the total risk. The total variance of returns is equal to market related variance plus company’s specific variance. CAPM explains the behaviour of security prices and provides a mechanism whereby investors could assess the impact of a proposed security investment on the overall portfolio risk and return. CAPM suggests that the prices of securities are determined in such a way that the risk premium or excess returns are proportional to systematic risk, which is indicated by the beta coefficient. The model is used for analysing the risk-return implications of holding securities. CAPM refers to the manner in which securities are valued in line with their anticipated risks and returns. A risk-averse investor prefers to invest in risk-free securities. For a small investor having few securities in his portfolio, the risk is greater. To reduce the unsystematic risk, he must build up well-diversified securities in his portfolio.
74. Which of the following is NOT a main stage in a customer relationship life cycle?
- Option : C
- Explanation : Customer Life Cycle is typically has 3 phases—Acquisition, Growth and Retention.
Customer Acquisition: Focus is targeting & reaching out to prospects, explaining them about the products and services and onboarding the customers.
Customer Development/Build/Growth: In this phase organizations leverage the existing relationship for growing the engagement with newly acquired customers or existing customers. So, the focus is both on increasing level of engagement on the existing product or relationship (i.e., spend/balance build on credit card) and identifying customers’ needs & soliciting for a right product (i.e., cross sell a credit card to mortgage customers).
Customer Retention: The most valuable customers are the most sought after customers by the competitors. The organizations have to develop strategies to manage and retain the most valuable customers. Acquiring a new customer is 3-5 times more costly, but still organizations are finding difficult to retain their customers.
