LIC AAO PRELIMINARY MODEL PAPER - ENGLISH

LIC AAO (PT)

English Language

Directions (Q. 1-5): Read the following passage carefully and then answer the questions given below it.
Paragraph 1: Recently, stock market investors have been hit by sharp swings in prices after news of high promoter pledging, sale of pledged shares by lending institutions and agreements between the lenders and promoters to go slow on such sales have hogged the headlines. Shares of the Essel/Zee group, Reliance ADAG group and Apollo Hospitals have dipped 15-30 per cent on such incidents. Ever approached a bank for a temporary loan because your household budget was tight? The bank is likely to have asked you to provide some collateral on the basis of which it gave you the loan. Banks usually accept assets such as property, Gold Jewellery, shares or investments held by you as collateral. Company promoters are no different. In India, many large companies still have a chunk of their shareholding controlled by their original founders or promoters.
Paragraph 2: The promoters, when in need of money, (A)—their equity shares in the company with banks, NBFCs or others to get loans against them. Promoters may then use this money to fund new ventures, add to their capital in existing ventures, carry out acquisitions or even meet personal requirements. Pledging of shares is common in those companies where the promoter holding is high Given that a large proportion of a promoter's wealth is likely to be held in the form of shares, share pledging agreements help entrepreneurs raise quick money when they need it. But there are risks to investors when promoters (B)—a very large proportion of their holdings with lenders, especially in volatile markets.
Paragraph 3: At the time of pledging shares, lenders and promoters usually agree on a minimum contract value for the shares, so that the lenders can build a margin of safety into their loans. But if a sudden adverse event or bear attack on a stock prompts it to fall sharply, the value of this collateral shrinks. The lender in such cases will ask the promoter to bring in more collateral to maintain the loan-to-collateral value. This is known as a margin call. This shortfall is either covered by the promoter paying up the difference or pledging additional shares. If the promoter fails to meet the margin call, the lender usually “invokes” the pledge, sells the pledged shares in the market and realizes his money. If multiple lenders invoke promoter pledges at the same time, it can trigger big stock price falls.

Paragraph 4: Theoretically, promoters pledging their personal holdings with lenders should not affect the operations of a company which has good cash flows or sound fundamentals. But companies with a high proportion of promoter pledging are viewed as risky by the market because it raises questions about promoters being cash strapped in their personal capacity or facing debt problems in other group ventures. In a bull market, promoter pledging may not create too many issues as higher stock prices (C)
against the loans advanced by lenders. But in bear markets, steep stock price declines can trigger margin calls that set off a downward spiral in a stock.

Paragraph 5: Investors therefore need to keep a close eye on promoter pledging, as companies with high pledging can witness high volatility in their stock prices. As an investor, you can find the information on pledged shares on the websites of the stock exchanges, SEBI has mandated that publicly listed companies need to disclose information on their pledged shares along with the shareholding pattern every quarter to NSE and BSE.

1) According to the passage on what basis do banks sanction loan to their customers?
(A) Civil Score.          (B) Collateral security.            (C) Past records of transactions done with the concerned bank.
1) Only (A)                                 2) Only (B)            3) Only C                                                                                                                    4) Only (A) and (B)
5) All (A), (B) and (C)

2) Which of the following words can be filled in both the blanks (A) and (B) to make the paragraph contextually correct and meaningful?
1) Auction
 2) Warrant                                                                                                                                                  3) undertake
4) Pledge                                                                                                                                                     5) authenticates

3. When does a margin call happen?
(A) A margin call happens when there is a sudden adverse event and the lenders demand additional money or securities so that the margin account is brought up to the minimum maintenance margin.
(B) A margin call occurs when the account value fall below the promoters' required minimum value.
(C) A margin call is triggered when the investor's equity, as a percentage of the total market value of securities, rises to a certain percentage requirement, which is called the maintenance margin.      

 1) Only (A)         
2) Only  (B))          3) Only (C)                                                                                                                                            4) Only (A) and  (B)                                         5) All (A), (B) and (C)

4. Which of the following phrases can be filled in the blank marked as (C) in paragraph 4 to make the sentence contextually correct and meaningful?
(1) close out any open positions to bring the account
(II) boost the value of the collateral
(III) use protective stop orders to limit losses                                                                                                        1)Only I                     2) Only     II                                                                                                                        3) Only III        4) Both I and  II                                                                                                                                                       5) All I, II and III

5. Which of the following words has a meaning which is opposite in meaning of the word “volatility” as used in the paragraph 5?
1) Capricious                                                                                                                                                                   2) elusive  3)  Erratic                                                                                                                                4) stable
5) Resilient                                                                                                                                                          

Directions (Q. 6-10): In each of the questions given below a part of the sentence is given in bold. It is then followed by three options. Find the alternative that can replace the given bold part to make the sentence grammatically and contextually correct. If none of the alternatives is required and the sentence is correct as it is then select option (5) as your choice.
6. Last week, in what is being seen as a crunch moment in British political history, eight Labour MPs and three Conservatives left their party to form an independent group within Parliament.
(i) In what is seen
(ii) what was to be seen
(iii) In what was seen
1) Only (i)         2) Both (i) and (iii)                                                                                                                                                
3) Both (ii) and (iii)
4) Only (iii)                                                                                                                                                        5) No correction required

7. In light of the Pulwama suicide bombing, India was not happy that the Saudi-Pakistan joint statement called for not “politicizing” UN terror listings at a time when India was trying to get Jaish chief Masood Azhar labeled as a “global terrorist”.
(i) For the sake of
(ii) In view of
(iii) In the wake of
i) Only (i)
ii) Both (i) and (iii)                                                                                                                                                               3) Both (ii) and (iii)
4) Only (iii)                                                                                                                                                        5) No correction required

8. A number of beneficiaries increased in Maharashtra from 29 lakh farmers to 53.12 lakh, the sharp rise indicative of the overall demand for income protection in a drought-hit State.                             (i) A number of beneficiaries increase
(ii) Increase in the number of beneficiaries
(iii) The number of beneficiaries increased
1) Only (i)
2) Only (ii)
3) Only (iii)
4) Both (i) and (ii)
5) No Correction required

9. SEBI's analysis of the price movement of stocks attached to derivatives, over a six-month period, revealed that 40 stocks moved more than 20 percent in a single session in that period.
(i) one single session in that
(ii) a single session over that
(iii) single session in the
I) Only (i)
2) Both (i) and (ii)                                                                                                                                                3) Both (ii) and (iii)
4) Only (ii)                                                                                                                                                            5) No correction required

10. It is possible that denial of credit could lead some to opt for cash payments while there is no incentive to keep the transaction in the GST regime.
(i) as if
 (ii) since                                                                                                                                                      (iii) for
1) Only (i)
2) Both (i) and  (iii)                                                                                                                                                  3) Both (ii) and (iii)
4) Only (ii)                                                                                                                                                          5) No correction required

Directions (Q. 11-16): Each question below has one blank, which is indicating that something has been omitted. Find out which option can be used to fill up the blank in the sentence to make it meaningfully complete.

11. The Indian government has 49 per cent stake in NIIF (National Investment and Infrastructure Fund) with the rest held by                    foreign and domestic investors such as Abu Dhabi Investment Authority, Temasek and HDFC Group.
1) Cap
2) Cloak                                                                                                                                                               3) Coverlet                                                                                                                                                   4) marquee                                                                                                                                          5) Ceiling

12. There is a clear need for big money to finance the                   infrastructure sector in the country.                                                                                                                                                         1) Fading
2) diminishing                                                                                                                                                     3) burgeoning
4) shrinking                                                                                                                                                     5) withering

13. The insurance companies should issue a proper policy document through the banks,                          of leaving the loanee farmer with just a mere challan (a receipt for premium deduction from his account) as proof for having purchased crop insurance.
1) In spite
2) In lieu                                                                                                                                                          3) In Front                                                                                                                                                       4) despite
5) instead

14. India's been performing an extraordinary in West Asia, courting the diplomatic Saudis, the Israelis and also the Iranians almost simultaneously
1) submission                                                                                                                                                         2) pirouette                                                                                                                                                     3) match
4) exchange                                                                                                                                                          5) quid pro quo

15. Visits from desert rulers are always highly                   but the prince's India trip, part of his first major tour outside the Middle East since Khashoggi's murder, had more tense moments than usual.                                                                                                                                                                  1) Choreographed                                                                                                                                                 2) Appraised                                                                                                                                               3) Criticized      4) Gyrated                                                                                                                                                 5) Rewarding

16. Investing in high-potential airports is one thing but                  money in troubled companies is another.
1) Putting
2) keep                   3) held                                                                                                                                                                 4) divest
5) accrue

Directions (Q. 17-20): In each of the questions given below four words are given in bold. These four words may or may not be in their correct Position, The sentence is then followed by options with the correct combination of words that should replace each other in order to make the sentence grammatically and contextually correct. Find the correct combination of words that replace each other. If the sentence is correct as it is then select option (5) as your choice.
17. The increasing proportion of algo tr3)ading on our (A) moves makes prices in both cash as well as derivative segment (B) susceptible to exaggerated intra-day (C) bourses. Such checks can help avert steep declines (D) caused by programmed trades.
I) A-B
2) A-C                                                                                                                                                              3) B-D and A-C                                                                                                                                              4) A-D
5) The sentence is correct.

18. Pakistan (A) relies on Saudi Arabia for everything from (B) clandestine and investments to military (C) back-up and possibly (D) aid assistance to develop nuclear technology.
1) A-B
2) A-C                                                                                                                                                                3)     B-D and A-C                                                                                                                                  4) B-D
5) The sentence is correct.

19. Coal-based power plants are not like renewable plants, (A) where most of the investment occurs (B) upfront and then the operations and maintenance (O&M) costs (C) remain relatively (D) minimal.
1) A-B     2) A-C                                                                                                                                                           3) B-D and A-C                                                                                                                                             4) A-D
5) The sentence is correct.

20. Insurance companies have (A) concerned back payouts, (B) Flagging questions on documentation (such as land record of farmers) at the claim settlement stage instead of (C) raising such issues earlier with the banks (D) held.
I) A-B          2) A-C   3) A-D and B-C                                                                                                                   4) A-D
5) The sentence is correct.

Directions (Q.21-24): Read each sentence to find out whether there is any grammatical or idiomatic 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', the answer is (5). (Ignore errors of punctuation, if any)
21. Expansion in power generation in India has been (1)/ large on the back of state financing; almost all coal power plants in India (2)/ are constructed through massive debt financing from state-owned banks, (3)/ regardless of whether the promoter is a state-owned enterprise or private company. (4)/ No error (5)

22. While the PMFBY (Pradhan Mantri Fasal Bima Yojana) is better than (1)/ its earlier avatars, (2)/ a simpler, more transparent (3)/ design is called out. (4)/ No error (5)

23. India's efforts to woo Saudi Arabia (1) / have been one of its more (2)/notable foreign policy success (3) /of the last decade. (4)/No error (5)

24. International investment in coal generation assets in India has been minuscule, (1) so coal divestment from India has been (2) largely a cosmetic announcement rather than (3) some massive withdrawal of capital. (4)/No error (5)

Directions (Q.25-30): In the following passage, some of the words have been left out, each of which is indicated by a number. Find the suitable word from the options given against each number and fill up the blanks with appropriate words to make the paragraph meaningfully complete.                         

When Security and Safety of Citizens take the back seat then criminals (25) An overworked (26), any police expert will tell you, will find it difficult to keep pace with gangs that operate in the (27) suburbs of cities. Which is why town planners need to give due weightage to security infrastructure before they allow construction companies to (28) into the countryside that (29) large metros. It must be (30) in mind that smart homes would mean a lot more when the neighbourhood is safe and secure.

25. 1) operates     2) attacks     3) Flее     4) born     5) thrive
26. 1) Force     2) personnel     3) constabulary     4) company     5) station    
27. 1) Far     2) exposed     3) near     4) extended       5) Local
28. 1) Expand      2) work     3) widen     4) function     5) rest
29. 1) Consist     2) skirt     3) Comprise     4) Observe     5) Covers
30. 1) Thought     2) likes     3) Conjures     4) Borne     5) Revolve

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ANSWERS

1.(2 )      2.(4 )      3.(4  )     4.(2  )     5.(4  )     6.(4  )     7.(4  )     8.(3  )     9.(5  )     10.(3  )

11.(4 )    12.(3 )    13.(5  )   14.(2  )   15.(1  )   16.(1  )   17.(2  )   18.(4  )   19.(5  )   20.(3  )

21.(2 )    22.(4 )    23.(3  )   24.(5  )   25.(5  )   26.(3  )   27.(4  )   28.(1  )   29.(2  )   30.(4  )

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21. 2; Replace “Large” with “Larger by”

22. 4; Replace “Out” with “For”

23. 3; Replace “Success” with “Successes”

24.  5   

25.  5

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