Reading Comprehension Questions

Multiple choice

Which of the following options can be inferred about AFSPA (Armed Forces Special Powers Act) from the passage?

  1. The act provides extraordinary powers only to all officers.
  2. The Supreme Court asked the state government to repeal the act.
  3. Rather than controlling the insurgency, AFSPA has fuelled the insurgency.
  4. The act has been somewhat successful in curtailing the insurgency.

    Directions: Answer the question based on the following passage.

    The unabated protests in Manipur over the death in custody of Thangjam Manoroma Devi show that the Centre and the State Government need to address the situation with measures that go beyond token gestures. Thirty–two–year–old Manoroma was found shot dead a few hours after her arrest by personnel of the Assam Rifles on the suspicion that she was an activist of the secessionist People's Liberation Army.

    The Manoroma incident is not the first of its kind. Going by the number of atrocities reported, the security forces deployed in the State seem to conduct themselves with total impunity. In this, they are enabled by the Armed Forces (Manipur and Assam) Special Powers Act (AFSPA) of 1958, amended in 1972, and in force in the whole of Manipur since 1980. This gives the security forces not just extraordinary powers but also uncommon protection. Once an area is declared disturbed under the Act, an officer of any rank, including a non–commissioned officer, can enter and search a place without a warrant, destroy it, and carry out an arrest on reasonable suspicion that a person has committed or is about to commit a cognizable offence! It allows the killing of a person who in the opinion of the officer violates prohibitory orders. But the most shocking aspect of the Act is this: it shuts out avenues of redress by barring all legal proceedings against security forces personnel without the prior sanction of the Central Government. The Act was brought in to deal with the insurgency in the State, but its sweeping provisions have only led to a long list of human rights violations by the security forces, worsening the sense of alienation among the people of the State and fuelling the insurgency.

    The protests against the Manoroma incident are in reality an explosion of years of bottled–up rage against the actions that are covered up by this Act. It is the responsibility of the Centre to ensure that the situation does not deteriorate any further. Without doubt, the solution to the present problem in Manipur lies in taking a close and honest look at the draconian provisions of the Act and devising a political strategy to deal with the insurgency instead of depending on the armed forces to sort it out.

     

     

  1. 1 and 2 only

  2. 2 and 3 only

  3. 1 and 3 only

  4. 3 and 4 only

  5. All of the above

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Correct answer is (3).

(1) is the correct answer because the passage suggests that the act provides extraordinary powers to all officers (commissioned and non commissioned). (2) is not mentioned in the passage.  (4) is not the answer because the passage mentions that the act has not been successful to scale down the insurgency. (3) is the answer because the last lines of second paragraph mention the same. Therefore, the answer is (3).

Multiple choice

The author mentions studies of negotiated mergers in the second paragraph in order to ______.

Directions: Answer the question based on the following passage.

The 1980s have come to be regarded as the decade of corporate consolidation in the United States, with the number of mergers and their dollar value both setting records. Many public forums have questioned, on both social and economic grounds, the merits of this takeover frenzy. Even more controversial than the mergers themselves, however, is the reaction of the management of target firms. No longer is management content to be passive or to put up minimal resistance in the face of an unwelcome takeover attempt. Indeed, the responses of target managements have become as imaginative as the methods used by the would–be acquirers. These so–called antitakeover tactics have received nearly universal condemnation from government regulatory bodies, the financial press, and some academic publications. Why is there so much criticism when management resists takeovers? At the most general level, such criticism is based on studies that find a negative return to shareholders when a negotiated (friendly) merger is unsuccessful. These studies examine the cumulative return from the period just prior to the first public announcement of the proposed merger through the announcement of cancellation. Results range from a total return of –9.02 per cent to + 3.68 per cent, with an average of –2.88 percent. In unsuccessful mergers, therefore, stockholders in target firms lose on average nearly 3 per cent of the shares' value.

But looking at the returns only through the termination date can be misleading. Other studies examining the period from six months prior to an offer to six months after the offer have found that the total return averages nearly +36 per cent, even though the offer was unsuccessful. Given the typical stock market reaction to unsuccessful negotiated mergers, this is a curious finding. The explanation for this seeming anomaly emerges when firms are divided into two groups: those eventually acquired by some other bidder, and those not acquired. Firms that were not acquired eventually lost the entire 36 per cent return. But firms subsequently acquired, earned an additional 20 per cent return above the initial 36 per cent, earning shareholders a total return of 56 per cent. Those earnings compare favorably to the overall average return of 30 percent earned by shareholders & of all companies successfully acquired. These results suggest that some form of resistance by management may be desirable. Playing hard to get may influence the initial suitor to increase the bid, or it may permit time for competing bids to be submitted. It is possible, however, to have too much of a good thing. When management actions are designed solely to eliminate a takeover by a specific bidder, then shareholders may be harmed. Nevertheless, antitakeover tactics do not deserve the blanket condemnation they receive in the press.

 

  1. support the author's own position on the effects of antitakeover tactics

  2. refute a common misconception about the effects of mergers

  3. show why management has reacted to acquisition attempts in the way that it has

  4. argue that statistics can be misleading

  5. accept a common misconception about the effects of mergers

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Correct answer is (2). The answer to this question is what the central idea or theme is expressed in the passage. The author in very clear terms, has expressed that the common view prevalent in the minds of governmental bodies, financial press and publications is based on a study conducted in limited time frame, which is contradicted by another study presented and which has been claimed by the author as more valid in the current context.

Multiple choice

In spite of everything, Anne's childhood was happy because ________.

Directions: Answer the given question based on the following passage.

Now, let us speak of one of the most prolific writers of her time, Anne Silvia Spencer. Her writings and pieces of work very aptly reflect not only the social set–up of that age but also what she thought about the same. Her writings give us a clear view of what kind of a human being she was. The most famous of her works, her autobiography, “The story of a simple girl” presents to us the way she acquired great heights as an author.

Her father, Charles Spencer, was, as Anne later wrote, a very peculiar person. Heir to a fortune, educated at Harrow and Cambridge, he was nevertheless a complete domestic tyrant. After bearing him ten children, his gentle wife had little strength left for struggle against him, and the children never dared oppose his wishes.

Yet Anne’s childhood was happy. She romped and studied with her eldest brother, learnt Greek and French, read widely and wrote poetic tragedies. Her own tragedy began at fifteen with a cough and an injury to her back, which resulted in increasingly bad health. Then her mother died. Four years later, her father decided to sell the country home. The large family moved from house to house until her father bought No. 72 Deer Haven. There Anne's health grew worse, and she became a creature of the shadows and silence.

As the years passed, the family grew used to her withdrawn life. She had a certain independence, for an uncle had left her a small income. But her brothers and sisters were at the mercy of Mr. Spencer's harsh rules, which hung over the household like thunder in heavy weather. Chief among them was the absolute refusal to let his daughters marry. He prevented the marriage of Anne’s gay, dance–loving sister, Helena, and the scenes that followed broke Anne’s heart. Yet she remained devoted to her father. It was devotion that served to strengthen the walls of her prison.

She didn’t talk much to her siblings and definitely not to her father. Irrespective of her solitary existence, she was pretty fond of her brothers and siblings. As per her feelings for her father, she herself could not decide (as she writes in her autobiography) whether she had a feeling of loathe or veneration for her father.

  1. her father was not very cruel to her as she had inherited some income from her uncle

  2. her mother was alive

  3. she had some intellectual interests and she was healthy

  4. her illness had not yet crippled her

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Correct answer is (3).

The lines, "She romped and studied with her eldest brother, learnt Greek and French, read widely and wrote poetic tragedies. Her own tragedy began at fifteen with cough and an injury to her back, which resulted in increasingly bad health", tell that both intellectual interests and health were factors in her happy childhood and not health alone. Therefore, correct option is (3) and not (4).

Multiple choice

The author regards the studies mentioned in the second paragraph as misleading. Which of the following reasons are not responsible for that?

  1. They employ an overly restrictive time frame.
  2. They look only at return to shareholders.
  3. They do not examine hostile takeovers.

    Directions: Answer the question based on the following passage.

    The 1980s have come to be regarded as the decade of corporate consolidation in the United States, with the number of mergers and their dollar value both setting records. Many public forums have questioned, on both social and economic grounds, the merits of this takeover frenzy. Even more controversial than the mergers themselves, however, is the reaction of the management of target firms. No longer is management content to be passive or to put up minimal resistance in the face of an unwelcome takeover attempt. Indeed, the responses of target managements have become as imaginative as the methods used by the would–be acquirers. These so–called antitakeover tactics have received nearly universal condemnation from government regulatory bodies, the financial press, and some academic publications. Why is there so much criticism when management resists takeovers? At the most general level, such criticism is based on studies that find a negative return to shareholders when a negotiated (friendly) merger is unsuccessful. These studies examine the cumulative return from the period just prior to the first public announcement of the proposed merger through the announcement of cancellation. Results range from a total return of –9.02 per cent to + 3.68 per cent, with an average of –2.88 percent. In unsuccessful mergers, therefore, stockholders in target firms lose on average nearly 3 per cent of the shares' value.

    But looking at the returns only through the termination date can be misleading. Other studies examining the period from six months prior to an offer to six months after the offer have found that the total return averages nearly +36 per cent, even though the offer was unsuccessful. Given the typical stock market reaction to unsuccessful negotiated mergers, this is a curious finding. The explanation for this seeming anomaly emerges when firms are divided into two groups: those eventually acquired by some other bidder, and those not acquired. Firms that were not acquired eventually lost the entire 36 per cent return. But firms subsequently acquired, earned an additional 20 per cent return above the initial 36 per cent, earning shareholders a total return of 56 per cent. Those earnings compare favorably to the overall average return of 30 percent earned by shareholders & of all companies successfully acquired. These results suggest that some form of resistance by management may be desirable. Playing hard to get may influence the initial suitor to increase the bid, or it may permit time for competing bids to be submitted. It is possible, however, to have too much of a good thing. When management actions are designed solely to eliminate a takeover by a specific bidder, then shareholders may be harmed. Nevertheless, antitakeover tactics do not deserve the blanket condemnation they receive in the press.

     

  1. 1 only

  2. 2 and 3 only

  3. 1 and 3 only

  4. None of the above

  5. All of the above

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Correct answer is (2). The answer to this question is available in the line of second paragraph where the term 'misleading' has appeared. The line, 'But looking at returns only through the termination date can be misleading very clearly' specifies the author's view on studies referenced in first passage being conducted in a very restrictive time frame.

Multiple choice

The author suggests that many commentators on mergers would agree with which of the following views?

  1. The current trend towards greater corporate consolidation cannot continue indefinitely at its present pace.
  2. The current climate of acquisition favours the interests of management over those of the shareholder.
  3. The social consequences of the current takeover frenzy far outweigh any possible economic benefits.
  4. Antitakeover tactics are justified only when attempts at a negotiated merger have failed.

    Directions: Answer the question based on the following passage.

    The 1980s have come to be regarded as the decade of corporate consolidation in the United States, with the number of mergers and their dollar value both setting records. Many public forums have questioned, on both social and economic grounds, the merits of this takeover frenzy. Even more controversial than the mergers themselves, however, is the reaction of the management of target firms. No longer is management content to be passive or to put up minimal resistance in the face of an unwelcome takeover attempt. Indeed, the responses of target managements have become as imaginative as the methods used by the would–be acquirers. These so–called antitakeover tactics have received nearly universal condemnation from government regulatory bodies, the financial press, and some academic publications. Why is there so much criticism when management resists takeovers? At the most general level, such criticism is based on studies that find a negative return to shareholders when a negotiated (friendly) merger is unsuccessful. These studies examine the cumulative return from the period just prior to the first public announcement of the proposed merger through the announcement of cancellation. Results range from a total return of –9.02 per cent to + 3.68 per cent, with an average of –2.88 percent. In unsuccessful mergers, therefore, stockholders in target firms lose on average nearly 3 per cent of the shares' value.

    But looking at the returns only through the termination date can be misleading. Other studies examining the period from six months prior to an offer to six months after the offer have found that the total return averages nearly +36 per cent, even though the offer was unsuccessful. Given the typical stock market reaction to unsuccessful negotiated mergers, this is a curious finding. The explanation for this seeming anomaly emerges when firms are divided into two groups: those eventually acquired by some other bidder, and those not acquired. Firms that were not acquired eventually lost the entire 36 per cent return. But firms subsequently acquired, earned an additional 20 per cent return above the initial 36 per cent, earning shareholders a total return of 56 per cent. Those earnings compare favorably to the overall average return of 30 percent earned by shareholders & of all companies successfully acquired. These results suggest that some form of resistance by management may be desirable. Playing hard to get may influence the initial suitor to increase the bid, or it may permit time for competing bids to be submitted. It is possible, however, to have too much of a good thing. When management actions are designed solely to eliminate a takeover by a specific bidder, then shareholders may be harmed. Nevertheless, antitakeover tactics do not deserve the blanket condemnation they receive in the press.

     

  1. 1 and 4 only

  2. 2 and 4 only

  3. 3 and 4 only

  4. 4 only

  5. None of these

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Correct answer is (4). The basis of criticism of antitakeover by many commentators and critics is given in the following line from first paragraph - 'At most general level, such criticism is based on studies that find a negative return to shareholders when a negotiated merger is unsuccessful.' This illustration validates (4) as the correct answer.

Multiple choice

Which of the following options, if true, would most seriously weaken the author's conclusion about the benefits of management resistance to takeovers?

  1. A third category of mergers, comprising firms that underwent several unsuccessful bids before being acquired, shows a rate of return to shareholders somewhere between the rates for the other two categories.
  2. When acquisitions are studied over a two-year period, companies that resisted takeover attempts show the same return to shareholders as companies that did not resist.
  3. The 56 per cent return to shareholders earned when companies are acquired after an unsuccessful takeover bid, is an average that includes companies whose stock declined in value as well as companies whose stock gained in value.
  4. Of the companies whose managements resisted acquisition attempts, about fifty per cent experienced an increase in stock prices and fifty per cent suffered a decrease in stock prices.

    Directions: Answer the question based on the following passage.

    The 1980s have come to be regarded as the decade of corporate consolidation in the United States, with the number of mergers and their dollar value both setting records. Many public forums have questioned, on both social and economic grounds, the merits of this takeover frenzy. Even more controversial than the mergers themselves, however, is the reaction of the management of target firms. No longer is management content to be passive or to put up minimal resistance in the face of an unwelcome takeover attempt. Indeed, the responses of target managements have become as imaginative as the methods used by the would–be acquirers. These so–called antitakeover tactics have received nearly universal condemnation from government regulatory bodies, the financial press, and some academic publications. Why is there so much criticism when management resists takeovers? At the most general level, such criticism is based on studies that find a negative return to shareholders when a negotiated (friendly) merger is unsuccessful. These studies examine the cumulative return from the period just prior to the first public announcement of the proposed merger through the announcement of cancellation. Results range from a total return of –9.02 per cent to + 3.68 per cent, with an average of –2.88 percent. In unsuccessful mergers, therefore, stockholders in target firms lose on average nearly 3 per cent of the shares' value.

    But looking at the returns only through the termination date can be misleading. Other studies examining the period from six months prior to an offer to six months after the offer have found that the total return averages nearly +36 per cent, even though the offer was unsuccessful. Given the typical stock market reaction to unsuccessful negotiated mergers, this is a curious finding. The explanation for this seeming anomaly emerges when firms are divided into two groups: those eventually acquired by some other bidder, and those not acquired. Firms that were not acquired eventually lost the entire 36 per cent return. But firms subsequently acquired, earned an additional 20 per cent return above the initial 36 per cent, earning shareholders a total return of 56 per cent. Those earnings compare favorably to the overall average return of 30 percent earned by shareholders & of all companies successfully acquired. These results suggest that some form of resistance by management may be desirable. Playing hard to get may influence the initial suitor to increase the bid, or it may permit time for competing bids to be submitted. It is possible, however, to have too much of a good thing. When management actions are designed solely to eliminate a takeover by a specific bidder, then shareholders may be harmed. Nevertheless, antitakeover tactics do not deserve the blanket condemnation they receive in the press.

     

  1. 1 and 2 only

  2. 2 and 3 only

  3. 1, 2, and 4 only

  4. 2 and 4 only

  5. None of these

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Correct answer is (4). The study supported by author shows that the firms, which resisted takeover provided, better returns than those, which did not resist takeover. The correct answer to this shall be option (2) which tends to negate the above stated fact. (1) is incorrect because the third category of mergers shall have fewer returns than those claimed above. (2) Is correct because net effect described above in one year is lost in two years of study. Option (3) makes the contention of the author stronger and not weaker. (4) Weakens the author's contention.

Multiple choice

Which among the followings is/are the extraordinary powers provided by the AFSPA? I. Power to kill a person suspected of violating prohibitory orders, anywhere. II. No legal proceedings against security forces personnel. III. Power to enter and search any place.

Directions: Answer the question based on the following passage.

The unabated protests in Manipur over the death in custody of Thangjam Manoroma Devi show that the Centre and the State Government need to address the situation with measures that go beyond token gestures. Thirty–two–year–old Manoroma was found shot dead a few hours after her arrest by personnel of the Assam Rifles on the suspicion that she was an activist of the secessionist People's Liberation Army.

The Manoroma incident is not the first of its kind. Going by the number of atrocities reported, the security forces deployed in the State seem to conduct themselves with total impunity. In this, they are enabled by the Armed Forces (Manipur and Assam) Special Powers Act (AFSPA) of 1958, amended in 1972, and in force in the whole of Manipur since 1980. This gives the security forces not just extraordinary powers but also uncommon protection. Once an area is declared disturbed under the Act, an officer of any rank, including a non–commissioned officer, can enter and search a place without a warrant, destroy it, and carry out an arrest on reasonable suspicion that a person has committed or is about to commit a cognizable offence! It allows the killing of a person who in the opinion of the officer violates prohibitory orders. But the most shocking aspect of the Act is this: it shuts out avenues of redress by barring all legal proceedings against security forces personnel without the prior sanction of the Central Government. The Act was brought in to deal with the insurgency in the State, but its sweeping provisions have only led to a long list of human rights violations by the security forces, worsening the sense of alienation among the people of the State and fuelling the insurgency.

The protests against the Manoroma incident are in reality an explosion of years of bottled–up rage against the actions that are covered up by this Act. It is the responsibility of the Centre to ensure that the situation does not deteriorate any further. Without doubt, the solution to the present problem in Manipur lies in taking a close and honest look at the draconian provisions of the Act and devising a political strategy to deal with the insurgency instead of depending on the armed forces to sort it out.

 

 

  1. All of the above

  2. None of the above

  3. II and III

  4. III only

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Correct answer is (2). Statement I is wrong because the mentioned power has been provided only in areas declared 'disturbed' under the act. Statement II is wrong because legal proceedings can be initiated with the prior sanction of central government. Statement III is wrong because the power mentioned has only been provided in areas declared 'disturbed' under the act.

Multiple choice

What can be inferred about the author?

Directions: Answer the question based on the following passage.

My parents were atto rneys: my father, a criminal lawyer and my mother, a negligence lawyer. They were the perfect left–brain/right–brain combination, my father was intuitive and my mother, all reason – qualities that, when balanced, matter the most in business.

The first five years of my life, we lived in Shanghai, China (my father was then in Army Intelligence). My clearest memories are of riding around in a rickshaw with my amah (nanny) and “grazing” at street food stalls (much to my mother’s horror). Because life was so dangerous then (fear of being “shanghai’d”), I was sent off to Sacred Heart Convent day school (much to my Orthodox Jewish grandmother’s horror).

When we fled the closing Red Curtain (the last plane out), we moved back to our apartment on Eleventh Street, between First and Second avenues in Manhattan. In the years dominated by the middle–class flight to the suburbs, I was the quintessential city kid. I’ve since wondered whether being outside the mainstream later helped me view mainstream America with a more objective eye.

Growing up, I spent more time with my maternal grandparents than I did at home. My grandmother was born in America, while my grandfather had come from Russia (claiming, convincingly, that he’d escaped on a horse). They lived a few blocks away from us, where they owned some tenements. My grandfather’s maxim was: If you can’t watch it, don’t’ buy it. So I’d sit out with him on Second Avenue in bentwood chairs to help him “watch” their buildings.

And that’s where I began to learn about marketing.

He had a haberdashery store and together we would decorate the front windows. Then we’d take our chairs back outside and wait. Few customers walked by without being hooked by our display, we’d pick up our chairs and go inside again to re–do the window. Repositioning a tie at a jauntier angle or changing the colour of a shirt, I learned, could convey a different message.

Meanwhile, my grandmother was upstairs in their apartment above the store, keeping the books. Every noontime, like clock–work, she’d take over running the store from my grandfather and they’d pass one another on the stairs, rarely exchanging a word–a marvelous business shorthand. After lunch, they’d again slip by each other in virtual silence, as they returned to their respective posts. I often think of them when I give my TrendView seminars and mention the trend of Cashing Out: theirs was the perfect Mom–and–Pop business, honest and human–scale, a business that ran so well it transcended language.

It was also my grandmother’s job to collect the monthly rents; I’d “help” her with that, too. On the first day of the month, the tenants would drop by to pay their rents – all of eight, twelve, twenty dollars a month. She’d sit at the mahogany table in her dining room, and chat with them in Yiddish, Russian, some German, and Ukrainian.

The business worked. It was personal and hands–on, incorporating family and an occasional friend. There was built–in–child care for my sister Mechele and me. Family dinner conversations centered around daily problems and solutions – work was never something that stopped at 5 p.m. We talked about the real estate business, the store, my parents’ legal cases. Everybody knew everything, and we all helped out where we could. The objective was deceptively simple: get the work done and appreciate the process.

Years later, when I started to formulate the blueprint for BrainReserve, I structured it instinctively around what I had learned from my family. I began my filling up the ranks of the company with my sister and her friends and my friends. Many of my former colleagues were horrified. If you want to be a marketing consultant, act like one, they told me. Give your staff important–sounding titles. Develop a scientific approach [cut–and–dried) to what you’re doing. Don’t share any information with outsiders. And you must hire some M.B.A.’s.

Instead, I hired my best friend, Lys Marigold, a journalist, who turned out to be a genius at generating Big Ideas, at knowing something about everything, and at translating marketing into English. She worked with us for ten years, always claiming that she was only there “temporarily,” and when she left to spend more time in Europe, we were all devastated. It has turned out fine though – we just fax her in Amsterdam with questions and drag her back into the office whenever she comes home. She came home to work on this book.

My sister, Mechele Flaum, now manages BrainReserve – she runs operations, does strategic planning, and oversees client contentment. Plus, following the family heritage, she’s still watching over our grandparents’ buildings.

The point is that I never wanted a traditional corporation, with each employee sitting robotically in his or her office. I tried to create a community for thinking – for I believe what inspires productivity the most is freedom –and freedom begets creativity. Having a free and flexible environment provides a place where people can work together to focus on the future.

  1. He is an MBA.

  2. He runs his family business.

  3. He runs a business more like a family.

  4. He believes that one can run a business without a formal command and order procedure.

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Correct answer is (4). Although it is not clearly mentioned but there are certain lines that can attribute these characters to writer. Go through the seventh paragraph in lines Every noontime, like clock-work, she'd take over running the store from my grandfather and they'd pass one another on the stairs, rarely exchanging a word-a marvellous business shorthand. After lunch, they'd again slip by each other in virtual silence, as they returned to their respective posts. I often think of them when I give my Trend View seminars and mention the trend of Cashing Out, theirs was the perfect Mom-and-Pop business, honest and human-scale, a business that ran so well it transcended language. We can easily reject choice (1) for not being mentioned in passage at any point. Choice (2) is false as it is clearly mentioned that he started his own company BRAIN RESERVE. Choice (3) is little tricky although he runs business with help of his family but he hired some people who were not part of his family like his friend.

Multiple choice

According to the passage, under which of the following conditions firms on the average yield the greatest return to their shareholders?

  1. When they decline any initial offer from a second bidder.
  2. When they resist all takeover attempts.
  3. When they are successfully acquired on the initial takeover bid.
  4. When they are acquired by another bidder after an initial unsuccessful takeover bidder.

    Directions: Answer the question based on the following passage.

    The 1980s have come to be regarded as the decade of corporate consolidation in the United States, with the number of mergers and their dollar value both setting records. Many public forums have questioned, on both social and economic grounds, the merits of this takeover frenzy. Even more controversial than the mergers themselves, however, is the reaction of the management of target firms. No longer is management content to be passive or to put up minimal resistance in the face of an unwelcome takeover attempt. Indeed, the responses of target managements have become as imaginative as the methods used by the would–be acquirers. These so–called antitakeover tactics have received nearly universal condemnation from government regulatory bodies, the financial press, and some academic publications. Why is there so much criticism when management resists takeovers? At the most general level, such criticism is based on studies that find a negative return to shareholders when a negotiated (friendly) merger is unsuccessful. These studies examine the cumulative return from the period just prior to the first public announcement of the proposed merger through the announcement of cancellation. Results range from a total return of –9.02 per cent to + 3.68 per cent, with an average of –2.88 percent. In unsuccessful mergers, therefore, stockholders in target firms lose on average nearly 3 per cent of the shares' value.

    But looking at the returns only through the termination date can be misleading. Other studies examining the period from six months prior to an offer to six months after the offer have found that the total return averages nearly +36 per cent, even though the offer was unsuccessful. Given the typical stock market reaction to unsuccessful negotiated mergers, this is a curious finding. The explanation for this seeming anomaly emerges when firms are divided into two groups: those eventually acquired by some other bidder, and those not acquired. Firms that were not acquired eventually lost the entire 36 per cent return. But firms subsequently acquired, earned an additional 20 per cent return above the initial 36 per cent, earning shareholders a total return of 56 per cent. Those earnings compare favorably to the overall average return of 30 percent earned by shareholders & of all companies successfully acquired. These results suggest that some form of resistance by management may be desirable. Playing hard to get may influence the initial suitor to increase the bid, or it may permit time for competing bids to be submitted. It is possible, however, to have too much of a good thing. When management actions are designed solely to eliminate a takeover by a specific bidder, then shareholders may be harmed. Nevertheless, antitakeover tactics do not deserve the blanket condemnation they receive in the press.

     

  1. 1 and 2 only

  2. 2 only

  3. 3 and 4 only

  4. 4 only

  5. None of these

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Correct answer is (4). (1) is incorrect because no statistics on returns of firms declining the second offer has been provided in the passage. (2) is incorrect because these kinds of firms have been described of not giving any additional earning on these stocks. (3) is incorrect because these kinds of firms have an average loss of about 3 percent. (4) is correct as in the last paragraph, the author has explicitly illustrated the case of these kinds of firms earning their shareholders a return of around 56 percent.

Multiple choice
  1. Low mortality rates.

  2. Easy life style.

  3. Better security services.

  4. More intellectual information.

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The clue for this question lies in the sentence -“ the abolition of disease ...... change the answers into acts”. Of all the options, only 'better security services' are not included in this passage. Hence, (3) is the answer.

Multiple choice
  1. Man has made great progress in the field of sciences.

  2. Ancients were not as wise as present day man.

  3. Modern science has enabled man to change.

  4. What is modern is always better than what was past.

  5. Our ancestors had always been against the idea of changing themselves.

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

This passage mentions the achievements a modern man has made over the time but at the same time it also emphasizes that this has made him wiser than his ancestors. Therefore, it draws the comparison, which is explicit from option (4). Hence, (4) is the answer.

Multiple choice
  1. Truth always triumphs over persecution, whatever experience or history has proved.

  2. Truth and evil are never suppressed by legal or social penalties.

  3. Truth can never be extinguished.

  4. Persecution has often suppressed truth for years but when rediscovered in a time in which it is subjected to little or no persecution, it will be established.

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Two points have been emphasized in this passage. The statements “But . . . . . . of either” explains one point that many a times truth has been put down by persecution. And the statements “the real advantage . . . . . . to suppress it” highlights another point -- that in course of time, someone rediscovers it and when rediscovered in a time in which it is subjected to little or no persecution, it will be established. Hence, (4) forms the answer.

Multiple choice
  1. The “Casbah Gate” is a well known “Bab el Aassa” gateway constructed by Matisse.

  2. Matisse is renowned for its paintings and architecture.

  3. When painting or constructing the same design, Matisse is famous for using same hues.

  4. Matisse paintings are remarkable in giving the viewer the distinct sensory impressions of one experiencing the scene first hand.

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Matisse is a renowned painter. “Casbah Gate” is one of his painting. His paintings give the viewer the distinct sensory impressions as one is actually experiencing it. This makes (4) the only correct option and hence, the answer.

Multiple choice

According to the passage, what is the implication of the line: “economy favoured … end of the 1990s? (line 11).

Directions: Answer the question based on the following passage.

In 1991, the U.S. economy pulled out of a yearlong recession and entered a period of sustained economic growth that was to become the longest boom in the nation’s history by the start of the twenty-first century. Fueled by the technology revolution, the development of the Internet, and globalization, a flurry of entrepreneurial activity led to the rise of new businesses (albeit some short-lived) and the rapid expansion of existing ones. The economy favored the American worker with national unemployment rates at around 4 percent toward the end of the 1990s, their lowest since the late 1960s, drawing former welfare recipients, minorities, and the long-term unemployed into the workforce in unprecedented numbers. Demand for highly skilled workers also surged as the computer age gathered force, creating a new class of “overnight” millionaires. Though many Americans have clearly benefited from this expansion, commentators are alarmed by what they contend is the widening gap between high-wage earners and the rest of the workforce. According to former secretary of labor Robert Reich, “[In 2000,] the richest 2.7 million (10) Americans, comprising the top 1 percent, . . . [had] as many after-tax dollars to spend as the bottom 100 million put together, and . . . [they had] 40 percent of the nation’s wealth.” Unquestionably, the “new economy” has increased earnings for highly skilled workers—law firms, investment banks, and computer companies have spared no expense in attracting and holding on to employees in a tight labor market, where entry-level salaries have reached upwards of \$120,000.

While the wages of skilled workers have increased, however, the wages of low-income workers have actually fallen over the past 30 years. The federal minimum wage, when adjusted for inflation, was worth nearly two dollars less in 1999 than in 1968, according to a study on low-wage earners by Jared Bernstein and John Schmitt of the Economic Policy Institute. Explain Bernstein and Schmitt, “Back in 1968, full-time work at the minimum wage put a . . . [one-parent family with two children] about \$1300 (in 1999 dollars) above the poverty line… [In 1999,] that same family (20) would be \$2700 below the line.” As reported by the Bureau of Labor Statistics, 4.4 million out of the 130 million workers nationwide earned the minimum wage in 1999. Over 20 million Americans are considered low-wage workers, earning under \$7.15 an hour, and many of them are parents supporting families.

In response to the stagnating wages of low-wage workers and the widening income gap between rich and poor Americans, unions, community groups, and religious organizations have begun promoting the idea of a “living wage,” defined as the wage necessary for one earner to support a family of four above the poverty line of \$17,000 a year. This wage works out to about \$8.20 an hour for a forty-hour workweek. The living wage idea is based on the belief that in a society that discourages dependency and where work is highly regarded, no one should work full-time and still struggle to keep a family out of poverty. In 1994, Baltimore was one of the first cities to enact a living-wage ordinance, establishing a government-mandated hourly wage of \$7.70 for contractors and subcontractors doing (30) business with the city. Since that time, numerous cities around the country have passed living wage ordinances, with hourly wages ranging from around \$8 to $11. Advocates are also pushing for federal living wage legislation to replace the minimum wage on a national scale. 

Living-wage proponents argue that the insufficient federal minimum wage is in part responsible for the large number of working poor in the United States. David Moberg, a senior fellow of the Nation Institute, a liberal research organization, argues that in paying low wages, businesses are in fact being subsidized by taxpayers, who must make up the difference in workers’ low pay and lack of health insurance with medical care, food stamps, and tax credits. Contends Moberg, “Why should businesses be allowed to slough off these costs onto taxpayers? And if taxpayers are ultimately paying the wages of contract employees anyway, why not simply pay the employees a living wage directly?” Contrary to conventional economists who believe that raising the minimum wage reduces employment and (40) hurts the poor, Moberg asserts “employers compensate for higher wages by managing better, . . . saving on turnover and recruitment expenses, and gaining productivity from a more motivated work force.” 

Opponents contend that living wage laws are not the right approach to correct the income gap between high-wage and low-wage workers. According to a report on the American workforce by the Hudson Institute, a conservative policy research organization, education is the key to better wages; the earnings of college-educated workers are substantially higher than those with only a high school diploma. In addition, fears that economic inequality is rising are based on “‘static’ snapshots of income distribution at a particular moment in time,” according to the report. It is more realistic, in the opinion of the authors, to examine whether low wage earners are increasing their earnings over time. Concludes the Hudson Institute, “Data from . . . [a] U.S. Treasury Department . . . study [finds that] 86 percent of those in the lowest income bracket in 1979 moved up to a higher bracket within nine years. Two-(50) thirds of these Americans moved into the top three quintiles, and 15 percent of them moved all the way up into the top quintile of earners.” 

Critics further argue that under the artificially high wages proposed by living wage advocates, low-skilled workers will have a harder time finding work in the first place, let alone moving up the income ladder, as businesses shed workers they can no longer afford to keep on the payroll. W. Michael Cox, a senior vice president and economist at the Federal Reserve Bank in Dallas, and Richard Alm, a business reporter at the Dallas Morning News, assert, “If government dictum replaces market reality, jobs will be lost or never created… What’s worse, local governments’ intervention in the free market sends an anti-business signal: Don’t come here. Go elsewhere. And companies will do that, taking their jobs and tax payments with them.” As the living wage movement expands to more cities, and threatens to move onto state and national levels, Cox and Alm foresee drastic consequences for America’s economy, (60) with slower business growth and higher rates of unemployment.

  1. The low unemployment rates can hardly be qualified by any external factors.

  2. The decrease in unemployment clearly proved to be an unstable and non-permanent phenomenon.

  3. This can be a perfect example of the age-old principle of supply and demand.

  4. The boom of the century can be qualified by the lowest unemployment rates of the time.

  5. This trend shows not just a quantitative improvement in unemployment stats, but also a qualitative one.

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

(4) is the right option and it can be derived form the following lines of the passage: “The economy favoured the American worker with national unemployment rates at around 4 percent ….... and the long-term unemployed into the workforce in unprecedented numbers" (line 11).

Multiple choice

All of the following can be the reasons behind the concept of living wages, except

Directions: Answer the question based on the following passage.

In 1991, the U.S. economy pulled out of a yearlong recession and entered a period of sustained economic growth that was to become the longest boom in the nation’s history by the start of the twenty-first century. Fueled by the technology revolution, the development of the Internet, and globalization, a flurry of entrepreneurial activity led to the rise of new businesses (albeit some short-lived) and the rapid expansion of existing ones. The economy favored the American worker with national unemployment rates at around 4 percent toward the end of the 1990s, their lowest since the late 1960s, drawing former welfare recipients, minorities, and the long-term unemployed into the workforce in unprecedented numbers. Demand for highly skilled workers also surged as the computer age gathered force, creating a new class of “overnight” millionaires. Though many Americans have clearly benefited from this expansion, commentators are alarmed by what they contend is the widening gap between high-wage earners and the rest of the workforce. According to former secretary of labor Robert Reich, “[In 2000,] the richest 2.7 million (10) Americans, comprising the top 1 percent, . . . [had] as many after-tax dollars to spend as the bottom 100 million put together, and . . . [they had] 40 percent of the nation’s wealth.” Unquestionably, the “new economy” has increased earnings for highly skilled workers—law firms, investment banks, and computer companies have spared no expense in attracting and holding on to employees in a tight labor market, where entry-level salaries have reached upwards of \$120,000.

While the wages of skilled workers have increased, however, the wages of low-income workers have actually fallen over the past 30 years. The federal minimum wage, when adjusted for inflation, was worth nearly two dollars less in 1999 than in 1968, according to a study on low-wage earners by Jared Bernstein and John Schmitt of the Economic Policy Institute. Explain Bernstein and Schmitt, “Back in 1968, full-time work at the minimum wage put a . . . [one-parent family with two children] about \$1300 (in 1999 dollars) above the poverty line… [In 1999,] that same family (20) would be \$2700 below the line.” As reported by the Bureau of Labor Statistics, 4.4 million out of the 130 million workers nationwide earned the minimum wage in 1999. Over 20 million Americans are considered low-wage workers, earning under \$7.15 an hour, and many of them are parents supporting families.

In response to the stagnating wages of low-wage workers and the widening income gap between rich and poor Americans, unions, community groups, and religious organizations have begun promoting the idea of a “living wage,” defined as the wage necessary for one earner to support a family of four above the poverty line of \$17,000 a year. This wage works out to about \$8.20 an hour for a forty-hour workweek. The living wage idea is based on the belief that in a society that discourages dependency and where work is highly regarded, no one should work full-time and still struggle to keep a family out of poverty. In 1994, Baltimore was one of the first cities to enact a living-wage ordinance, establishing a government-mandated hourly wage of \$7.70 for contractors and subcontractors doing (30) business with the city. Since that time, numerous cities around the country have passed living wage ordinances, with hourly wages ranging from around \$8 to $11. Advocates are also pushing for federal living wage legislation to replace the minimum wage on a national scale. 

Living-wage proponents argue that the insufficient federal minimum wage is in part responsible for the large number of working poor in the United States. David Moberg, a senior fellow of the Nation Institute, a liberal research organization, argues that in paying low wages, businesses are in fact being subsidized by taxpayers, who must make up the difference in workers’ low pay and lack of health insurance with medical care, food stamps, and tax credits. Contends Moberg, “Why should businesses be allowed to slough off these costs onto taxpayers? And if taxpayers are ultimately paying the wages of contract employees anyway, why not simply pay the employees a living wage directly?” Contrary to conventional economists who believe that raising the minimum wage reduces employment and (40) hurts the poor, Moberg asserts “employers compensate for higher wages by managing better, . . . saving on turnover and recruitment expenses, and gaining productivity from a more motivated work force.” 

Opponents contend that living wage laws are not the right approach to correct the income gap between high-wage and low-wage workers. According to a report on the American workforce by the Hudson Institute, a conservative policy research organization, education is the key to better wages; the earnings of college-educated workers are substantially higher than those with only a high school diploma. In addition, fears that economic inequality is rising are based on “‘static’ snapshots of income distribution at a particular moment in time,” according to the report. It is more realistic, in the opinion of the authors, to examine whether low wage earners are increasing their earnings over time. Concludes the Hudson Institute, “Data from . . . [a] U.S. Treasury Department . . . study [finds that] 86 percent of those in the lowest income bracket in 1979 moved up to a higher bracket within nine years. Two-(50) thirds of these Americans moved into the top three quintiles, and 15 percent of them moved all the way up into the top quintile of earners.” 

Critics further argue that under the artificially high wages proposed by living wage advocates, low-skilled workers will have a harder time finding work in the first place, let alone moving up the income ladder, as businesses shed workers they can no longer afford to keep on the payroll. W. Michael Cox, a senior vice president and economist at the Federal Reserve Bank in Dallas, and Richard Alm, a business reporter at the Dallas Morning News, assert, “If government dictum replaces market reality, jobs will be lost or never created… What’s worse, local governments’ intervention in the free market sends an anti-business signal: Don’t come here. Go elsewhere. And companies will do that, taking their jobs and tax payments with them.” As the living wage movement expands to more cities, and threatens to move onto state and national levels, Cox and Alm foresee drastic consequences for America’s economy, (60) with slower business growth and higher rates of unemployment.

  1. increasing gap between rich and poor

  2. equal opportunities for all workers

  3. indirect increase in productivity

  4. reducing the poverty amongst the present work force

  5. that it has been promoted and favoured by various groups

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

(2) is the right choice as it is the only incorrect statement among the other choices. It cannot be obtained from anywhere in the passage.