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Commerce-2014: Answer Writing Challenge – 21

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07 November 2014

1) Explain the effect of absorption costing and marginal costing on net profit of a business firm.

2) Illustrate Operating Leverage and Financial Leverage. What insights you get from these two leverages? What are their limitations?

3) “Higher capital requirements might induce banks to seek higher returns in areas that are high risk or outside their core business”. Do you agree with this observation? Justify your answer with suitable examples.

4) Critically examine with illustrations the role of Credit Rating Agencies with particular reference to their ownership structure and corporate governance