Mock Test 2 for XAT: 95 Questions with Solutions & Analysis

Attempt the Mock Test 2 for XAT: 95 exam-level questions, detailed solutions and performance analysis. First questions free.

Paper breakdown

95 questions · 95 marks · 143.81 minutes. Quantitative Aptitude and Data Interpretation (QA & DI): 28 · Verbal Ability and Logical Reasoning (VALR): 26 · Decision Making (DM): 21 · General Knowledge (GK): 20

Free sample questions from Mock Test 2

Question 1 · Quantitative Aptitude and Data Interpretation (QA & DI) · 2023 MCQ

Amit has forgotten his 4-digit locker key. He remembers that all the digits are positive integers and are different from each other. Moreover, the fourth digit is the smallest and the maximum value of the rst digit is 3. Also, he recalls that if he divides the second digit by the third digit, he gets the rst digit.
How many different combinations does Amit have to try for unlocking the locker?

A.
2
B.
1
C.
4
D.
5
E.
3

Correct Answer:

Step-by-Step Solution

Key idea: digit constraints with a multiplicative relation; enumerate small cases.

Step 1: Digits $d_{1}, d_{2}, d_{3}, d_{4} \in {1, \dots, 9}$ , all distinct.

Step 2: $d_{1} \leq 3$ and $d_{2} = d_{1} \cdot d_{3}$ . Also $d_{4}$ is the smallest of the four.

Step 3: $d_{1} = 1 \Rightarrow d_{2} = d_{3}$ , violating distinctness. So $d_{1} \in {2, 3}$ .

Step 4: $d_{1} = 2$ : $d_{2} = 2 d_{3}$ . Try $d_{3} \in {1, \dots, 4}$ (since $d_{2} \leq 9$ ):

$d_{3} = 1 \Rightarrow d_{2} = 2 = d_{1}$ ✗
$d_{3} = 2 \Rightarrow d_{2} = 4, d_{1} = 2 = d_{3}$ ✗
$d_{3} = 3 \Rightarrow d_{2} = 6$ . Digits ${2, 6, 3}$ , so $d_{4} = 1$ (smallest). Key 2631 ✓
$d_{3} = 4 \Rightarrow d_{2} = 8$ . Digits ${2, 8, 4}$ , so $d_{4} \in {1, 3}$ . Keys 2841, 2843 ✓

Step 5: $d_{1} = 3$ : $d_{2} = 3 d_{3}$ . Try $d_{3} \in {1, 2, 3}$ :

$d_{3} = 1 \Rightarrow d_{2} = 3 = d_{1}$ ✗
$d_{3} = 2 \Rightarrow d_{2} = 6$ . Digits ${3, 6, 2}$ , so $d_{4} = 1$ . Key 3621 ✓
$d_{3} = 3 \Rightarrow d_{2} = 9, d_{1} = 3 = d_{3}$ ✗

Step 6: Total valid keys = 4.

Answer: 4 (option C).

Question 2 · Quantitative Aptitude and Data Interpretation (QA & DI) · 2022 MCQ

If both the sequences x, a1, a2, y and x, b1, b2, z are in A.P. and it is given that $y > x$ and $z < x$ , then which of the following values can $\frac{b _{1} - b _{2}}{a _{1} - a _{2}}$ possibly take?

A.
2
B.
5
C.
-3
D.
1
E.
0

Correct Answer:

Step-by-Step Solution

Key idea: This is an Arithmetic Progression (A.P.) property question involving the signs of common differences.

Step 1: Analyze the first A.P.

The sequence $x, a_{1}, a_{2}, y$ is an A.P. with 4 terms.

Let the common difference be $d_{a}$ .

The terms are $x, x + d_{a}, x + 2 d_{a}, x + 3 d_{a}$ .

So, $y = x + 3 d_{a}$ .

We are given $y > x$ , which implies $x + 3 d_{a} > x ⟹ 3 d_{a} > 0 ⟹ d_{a} > 0$ .

The difference $a_{1} - a_{2} = (x + d_{a}) - (x + 2 d_{a}) = - d_{a}$ .

Since $d_{a} > 0$ , $a_{1} - a_{2} < 0$ (it is negative).

Step 2: Analyze the second A.P.

The sequence $x, b_{1}, b_{2}, z$ is an A.P. with 4 terms.

Let the common difference be $d_{b}$ .

Similarly, $z = x + 3 d_{b}$ .

We are given $z < x$ , which implies $x + 3 d_{b} < x ⟹ 3 d_{b} < 0 ⟹ d_{b} < 0$ .

The difference $b_{1} - b_{2} = (x + d_{b}) - (x + 2 d_{b}) = - d_{b}$ .

Since $d_{b} < 0$ , $b_{1} - b_{2} > 0$ (it is positive).

Step 3: Evaluate the ratio.

We need the sign of $\frac{b _{1} - b _{2}}{a _{1} - a _{2}}$ .

Numerator: positive.

Denominator: negative.

Therefore, the ratio must be negative.

Step 4: Check the options.

The options are 2, 5, -3, 1, 0.

The only negative value is -3.

Answer: C

Question 3 · Quantitative Aptitude and Data Interpretation (QA & DI) MCQ

Find the remainder when $3 1^{32} + 3 2^{31}$ is divided by 9.

A.
1
B.
3
C.
5
D.
7

Correct Answer:

Step-by-Step Solution

Key idea: This is an Advanced Remainders question that uses negative remainders and cyclicity to simplify large power towers.

Step 1: Reduce the bases modulo 9.

$31 = 3 \times 9 + 4 ⟹ 31 \equiv 4 (mod 9)$ .

$32 = 3 \times 9 + 5 ⟹ 32 \equiv 5 (mod 9)$ .

So, we need to find $(4^{32} + 5^{31}) (mod 9)$ .

Step 2: Find the cycle for powers of 4 modulo 9.

$4^{1} \equiv 4$

$4^{2} = 16 \equiv 7$

$4^{3} = 64 \equiv 1$

The cycle length is 3.

Since $32 = 3 \times 10 + 2$ , we have $4^{32} \equiv 4^{2} \equiv 7 (mod 9)$ .

Step 3: Find the cycle for powers of 5 modulo 9.

$5^{1} \equiv 5$

$5^{2} = 25 \equiv 7$

$5^{3} = 125 \equiv 8 \equiv - 1$

The cycle length is 6.

Since $31 = 6 \times 5 + 1$ , we have $5^{31} \equiv 5^{1} \equiv 5 (mod 9)$ .

Step 4: Add the remainders.

$4^{32} + 5^{31} \equiv 7 + 5 = 12 \equiv 3 (mod 9)$ .

Answer: 3.

Question 4 · Verbal Ability and Logical Reasoning (VALR) · 2023 MCQ

Common Description: Socrates believed that akrasia(meaning procrastination) was, strictly speaking, impossible, since we could not want what is bad for us; if we act against our own interests, it must be because we don’t know what’s right.
Loewenstein, similarly, is inclined to see the procrastinator as led astray by the “visceral” rewards of the present. As the nineteenthcentury Scottish economist John Rae put it, “The prospects of future good, which future years may hold on us, seem at such a moment dull and dubious, and are apt to be slighted, for objects on which the daylight is falling strongly, and showing us in all their freshness just within our grasp.” Loewenstein also suggests that our memory for the intensity of visceral rewards is de cient: when we put off preparing for that meeting by telling ourselves that we’ll do it tomorrow, we fail to take into account that tomorrow the temptation to put off work will be just as strong.
Ignorance might also affect procrastination through what the social scientist Jon Elster calls “the planning fallacy.” Elster thinks that people underestimate the time “it will take them to complete a given task, partly because they fail to take account of how long it has taken them to complete similar projects in the past and partly because they rely on smooth scenarios in which accidents or unforeseen problems never occur.” Which of the following statements can be BEST inferred from the passage about procrastination?

A.
It is a success of self-regulation and planning.
B.
It is a mistake that happens due to myopic vision and linear thinking.
C.
It is an act against our own interests because of our ignorance.
D.
It is a tendency of postponing the present work to the future.
E.
It is an irrational delay of task despite potentially negative consequences.

Correct Answer:

Step-by-Step Solution

Key idea: This is a reading comprehension inference question, recognizable because it asks what can be "BEST inferred" about a concept (procrastination) from the entire passage.

Step 1: Synthesize the views on procrastination presented. Socrates: acting against our own interests because we don't know what's right (ignorance). Loewenstein: led astray by present visceral rewards (a form of ignorance of future intensity). Elster: ignorance affects procrastination via the planning fallacy.

Step 2: Notice the common thread. All three perspectives tie the failure to act in our best interest to a lack of knowledge or misjudgment (ignorance). Socrates explicitly states it is because "we don't know what's right," and Elster explicitly mentions "Ignorance might also affect procrastination."

Step 3: Evaluate the options.

Option C ("It is an act against our own interests because of our ignorance") perfectly synthesizes Socrates' core premise and Elster's explicit statement, making it the strongest inference supported by the text's philosophical framing.
Option E is a general definition of procrastination but misses the specific philosophical emphasis on "ignorance" that the passage builds through Socrates and Elster.

Answer: C

Question 5 · Verbal Ability and Logical Reasoning (VALR) · 2025 MCQ

Read the following excerpt carefully.

When each_________________ generation grows up, it looks down on the next as if we all forget what it feels like to be______________. When most____________ think about their own youthful indiscretions, they do so with a wink and a laugh. But when the same people think about those in today’s generation doing something similar, they _________________sound the alarm about a decline in morality in next generation. From the options below, choose the one that meaningfully fills up the blanks.

A.
young, young, seniors, carefully
B.
old, older, youngsters, sincerely
C.
succeeding, next, people, naturally
D.
preceding, succeeding, folks, cautiously
E.
successive, young, adults, hypocritically

Correct Answer:

Step-by-Step Solution

Key idea: Multi-blank contextual questions often hinge on identifying a central thematic contrast and standard collocations.

Step 1: Analyze the fourth blank. The sentence contrasts how people view their own past indiscretions ("wink and a laugh") with how they view the current generation's similar actions ("sound the alarm about a decline in morality"). This double standard is the precise definition of acting "hypocritically".

Step 2: Analyze the first and second blanks. "When each successive generation grows up, it looks down on the next as if we all forget what it feels like to be young." This is a well-known thematic statement. "Successive" and "young" fit perfectly.

Step 3: Analyze the third blank. "When most adults think about their own youthful indiscretions..." "Adults" is the correct demographic counterpart to "young" and "next generation".

Step 4: Verify option E: "successive, young, adults, hypocritically". It maintains the logical flow, grammatical correctness, and thematic contrast flawlessly.

Answer: E

Question 6 · Verbal Ability and Logical Reasoning (VALR) · 2026 MCQ

Read the following sentences carefully.

The hybrid workplace is failing to live up to expectations in a number of ways.
By one estimate, spending an average of three days each week in the office can limit encounters between any two workers by 64% compared with pre-pandemic norms.
Many people hanker after the socializing, camaraderie and shared experience, even if getting used to it may take time.
For one thing, it is no substitute for the buzz and the chatter of the pre-pandemic office.
Even small amount of remote work can have a big impact on the frequency of face-to-face interactions in the office.

Which of the following options BEST arranges the above sentences in a logical sequence?

A.
5,1,2,4,3
B.
1,4,3,5,2
C.
1,4,2,5,3
D.
2,5,3,4,1
E.
3,4,5,2,1

Correct Answer:

Step-by-Step Solution

Key idea: This is a thematic expansion sequencing question, recognizable by an opening claim followed by specific points of failure, each supported by elaboration or data.

Step 1: Identify the opening sentence. Sentence 1 introduces the main topic and claim: "The hybrid workplace is failing to live up to expectations in a number of ways."

Step 2: Sentence 4 directly follows 1 using the transition phrase "For one thing", which explicitly signals the first of the "number of ways" mentioned in 1. It states the hybrid workplace "is no substitute for the buzz and the chatter".

Step 3: Sentence 3 elaborates on the social aspect missing from the hybrid model: "Many people hanker after the socializing, camaraderie and shared experience..." This logically follows the lack of "buzz and chatter" in 4.

Step 4: Sentence 5 introduces the second major point of failure: "Even small amount of remote work can have a big impact on the frequency of face-to-face interactions..."

Step 5: Sentence 2 provides the specific data to support the "big impact" claimed in 5: "By one estimate, spending an average of three days each week... can limit encounters... by 64%".

Sequence: 1 -> 4 -> 3 -> 5 -> 2.

Answer: B

Question 7 · Decision Making (DM) · 2024 MCQ

Common Description: Kasta, a small industrial town hosted a steel plant and its associated ancillary companies. Most of its residents were steel plant employees from different states of the country. While the town offered employment opportunities, it lacked an airport. For those wanting to y, the nearest airport was in Michaelganj, 100 kms from Kasta. To reach the airport, people rented taxi services available at Kasta, and Prabhu was one such taxi-service provider.
Prabhu’s rates were reasonable — a trip to airport cost Rs. 2200, but for a round trip, the fare was Rs. 3000. Yet, it was not just the affordability that made him popular, his reputation for punctuality and reliability was unmatched. When it came to ensuring the safety of women travelling alone, he would always be the rst choice.
Such was his trustworthiness that even the steel plant would solicit his services when expecting solo female visitors. Moreover, whenever residents encountered issues with their personal cars, they would turn to Prabhu for help.
However, the world shifted when the COVID-19 pandemic struck. Travel restrictions and safety concerns limited Prabhu’s trips to Michaelganj for over a year and a half. Financial strain followed, with accumulating interest on his home loan. He was weighed down by debt, but things improved once COVID-19 travel restrictions were lifted. Having faced nancial hardships during COVID-19, he sought to offset his losses by raising the fare. Yet, he was aware of the stiff competition in town, where many others offered services at a similar fare as his. Prabhu decided to increase the taxi fare for all future trips. He planned to charge Rs. 3000 for a one-way trip to the airport, and Rs. 1000 more for a round trip.
Which of the following facts will BEST help Prabhu’s regular customers in accepting the increase in fare?

A.
Because, the cost of living has gone up in Kasta.
B.
Because, Prabhu is punctual and reliable.
C.
Because, Prabhu is facing nancial hardships.
D.
Because, Prabhu offers repair services to residents’ car-related issues.
E.
Because, Prabhu serves many top o cials of the steel plant.

Correct Answer:

Step-by-Step Solution

Key idea: This is a pricing ethics and value perception question. Prabhu wants to raise prices in a competitive market. He needs a justification that customers will accept based on value, not sympathy.

Step 1: Analyze the Market Context.

Prabhu operates in a town with "stiff competition" where others offer similar fares. He cannot simply raise prices without a differentiator. His differentiators are: Punctuality, Reliability, Safety (especially for women), and Trust (helping with car issues).

Step 2: Evaluate Option A (Cost of living).

Customers care about their own cost of living, not the driver's. Unless Prabhu can prove his operational costs (fuel, maintenance) rose specifically, this sounds like an excuse. It doesn't highlight his unique value.

Step 3: Evaluate Option C (Financial hardships).

Sympathy is not a sustainable business strategy. Customers pay for service, not charity. Using hardship as a reason may backfire, making customers feel manipulated.

Step 4: Evaluate Option D (Car repair services).

This is a side benefit, not the core service (taxi). While it adds value, it’s not the primary reason people hire him for airport trips. It’s a weak justification for a fare hike in the core service.

Step 5: Evaluate Option E (Serving top officials).

This is an appeal to authority/status. It doesn't benefit the regular customer. In fact, it might make regular customers feel less prioritized. It doesn't justify a price increase for them.

Step 6: Evaluate Option B (Punctuality and Reliability).

This highlights his Unique Selling Proposition (USP). In a competitive market, if Prabhu is the most reliable and safe, customers pay a premium for peace of mind. By framing the price increase around his consistent high quality (which competitors may lack), he justifies the premium as a payment for superior service assurance.

Answer: Option B is the best justification because it links the price increase to tangible value (reliability/safety) that customers already appreciate.

Question 8 · Decision Making (DM) · 2025 MCQ

Common Description:

Sundaram Stores operated in a gated community, situated about 30 Kilometers away from the main town. The store owner Mr. Sundareswaran Pichaimuthu, or Sundaram as he was called by everyone, secured a space in the gated society through a competitive bidding process. The residents’ association, led by Mr. Thangamoorthy Selvaganapathy, selected Sundaram over three other bidders, based on his willingness to pay the highest rent.

Desperate to augment his post-retirement income, Sundaram agreed to pay a very high rent, banking on the prospect of generating exceptional revenue from the gated community.

Sundaram was awarded the contract to establish the store, with provisions for a review every three years.

Feeling elated during the meeting with the residents’ association to finalize the contract, he enthusiastically committed to offering a 15% discount on all groceries and stationary, cementing goodwill and reinforcing the partnership established through the contract. The association was delightedly taken aback by his generous assurance. Sundaram hoped to make up the difference through volume.

Although his sales were strong during the initial months, he soon realized that the SUV-owning residents of the gated community primarily made their purchases at large, branded retail chains in the main town. These stores offered deeper discounts, which he could not afford to compete with. However, gradually, Sundaram store became their go-to store for daily essentials and occasional urgent big purchases such as replacing a broken mixer-grinder.

Sundaram is a happy man now. He has managed to get contracts with two more nearby gated communities. He feels like the grocery king of the suburb.

However, his happiness is short-lived as Rush’em, a new startup, begins making waves among gated communities. This app-based startup promises to deliver any grocery item within 15 minutes, leveraging its own large warehouses. Earlier, Rush’em was confined to the main town, but now, the startup has expanded its delivery services to the suburbs, including gated communities where Sundaram operates. Of course, for the suburbs, Rush’em promises delivery within 60 minutes, given the distance.

Though not an official slogan, the rumour in the market is that Rush’em’s founder inspired her employees by shouting “Rush’em or Crash’em, but Push’em through that door!” Sundaram started losing business to Rush’em. He felt rushed, pushed, and was wondering if his business would come crashing.

What should Sundaram BEST do to ensure that his revenues do not come down due to Rush’em?

A.
Sundaram should not bother since the nearest town is 30 kilometers away.
B.
Sundaram should explore starting his own delivery startup Finish’em, dedicated to the suburb, competing with Rush’em.
C.
Sundaram should employ a few helpers who will do home delivery of his products within 10 minutes across the three gated communities.
D.
Sundaram should demand that his rent be reduced to one-third since Rush’em has free access to these societies
E.
Sundaram should start giving discounts on every product he sells.

Correct Answer:

Step-by-Step Solution

Key idea: This is a competitive advantage and operational leverage question. Sundaram must counter a well-funded startup by leveraging his unique, unmatchable structural advantage.

Step 1: Analyze the competitor's weakness. Rush'em promises delivery within 60 minutes to the suburbs because they are operating from large warehouses in the main town (30 km away).

Step 2: Analyze Sundaram's unique strength. Sundaram is physically located inside the gated communities. His proximity is his ultimate moat.

Step 3: Evaluate the options based on sustainability and leverage.

Option A (Ignore): Passive and guarantees revenue loss as Rush'em captures convenience-seeking customers.
Option B (Start Finish'em): Requires massive capital, tech development, and distracts from his core retail business. High risk of failure.
Option D (Demand rent reduction): Does nothing to win back customers from Rush'em. It is a financial plea, not a competitive strategy.
Option E (Discount everything): Destroys his already thin margins. He cannot win a price war against a venture-backed startup.

Step 4: Evaluate Option C (10-minute home delivery). By employing helpers for hyper-local delivery, Sundaram can promise 10-minute delivery. This completely neutralizes Rush'em's 60-minute promise. It requires low capital (just a few helpers), leverages his existing inventory inside the community, and directly targets the convenience factor that residents value.

Answer: Option C is the best strategic move to protect and grow revenue by exploiting his unbeatable proximity advantage.

Question 9 · Decision Making (DM) MCQ

Common Description:

Read the following scenario and answer the question that follows.

Comprehension: A university syllabus explicitly states: "The use of any unauthorized AI text-generation tool for drafting assignment content is strictly prohibited and will result in a failing grade for the assignment." A student submits an essay that is exceptionally insightful, demonstrates deep critical thinking, and scores in the top 5% for originality of ideas. However, a mandatory plagiarism checker flags that 40% of the sentences were directly generated by an AI tool. The professor reviews the essay, decides the learning outcomes were clearly met, and awards the student an 'A' grade, reasoning that "the excellent outcome proves the learning objective was achieved, so the process violation is forgivable."

Which of the following is the MOST accurate critique of the professor's decision?

A.
It correctly prioritizes holistic learning outcomes over rigid, bureaucratic processes.
B.
It violates the principle of fair evaluation by introducing subjective bias based on the student's potential.
C.
It excuses a clear process violation based on a favorable outcome, undermining the consistency of established rules.
D.
It is appropriate because the student demonstrated good faith and the core ideas were original.

Correct Answer:

Step-by-Step Solution

Key idea: This is a "process over outcome" fairness question, recognizable by a clear rule violation being excused due to a high-quality final result.

Step 1: Identify the rule. The syllabus explicitly prohibits unauthorized AI text generation and mandates a failing grade.

Step 2: Identify the violation. The plagiarism checker confirmed 40% AI-generated text, which is a direct violation of the stated rule.

Step 3: Evaluate the professor's reasoning. The professor excused the violation because the outcome was excellent. This is a classic fairness trap: allowing a favorable outcome to override a clear process violation.

Step 4: Apply the fairness principle. Fair grading requires that rules are applied consistently to all students, regardless of how good the final product is. Excusing this violation creates an inconsistent standard and undermines the "clear rules" pillar of fair grading.

Answer: It excuses a clear process violation based on a favorable outcome, undermining the consistency of established rules.

Question 10 · General Knowledge (GK) MSQ

Consider the following statements regarding global pop culture and entertainment milestones:

The first feature-length computer-animated film was Toy Story (1995).
The first music video to reach 3 billion views on YouTube was a K-Pop song.
The Academy Award for Best Animated Feature was first introduced for films released in 2001.
Snow White and the Seven Dwarfs (1937) was the first cel-animated feature film.

Which of the above statements are correct?

A.
The first feature-length computer-animated film was Toy Story (1995).
B.
The first music video to reach 3 billion views on YouTube was a K-Pop song.
C.
The Academy Award for Best Animated Feature was first introduced for films released in 2001.
D.
Snow White and the Seven Dwarfs (1937) was the first cel-animated feature film.

Correct Answer:

["A","C","D"]

Step-by-Step Solution

Key idea: This is a statement_truth MSQ testing knowledge of global pop culture and entertainment milestones. Each statement must be evaluated independently.

Step 1: Evaluate Statement 1. Toy Story, released by Pixar in 1995, is widely recognized as the first feature-length computer-animated film. (Correct)

Step 2: Evaluate Statement 2. The first music video to reach 3 billion views on YouTube was "Despacito" by Luis Fonsi featuring Daddy Yankee, not a K-Pop song. (Incorrect)

Step 3: Evaluate Statement 3. The Academy Award for Best Animated Feature was introduced for films released in 2001 (awarded at the 74th Academy Awards in 2002), with Shrek being the first winner. (Correct)

Step 4: Evaluate Statement 4. Walt Disney's Snow White and the Seven Dwarfs (1937) is historically recognized as the first cel-animated feature film. (Correct)

Step 5: Identify the correct statements. Statements 1, 3, and 4 are correct.

Answer: A, C, D

Question 11 · General Knowledge (GK) MCQ

Which of the following claims regarding India's UNESCO Intangible Cultural Heritage inscriptions is IMPOSSIBLE?

A.
Kumbh Mela was inscribed in 2017.
B.
Durga Puja in Kolkata was inscribed in 2021.
C.
Yoga was inscribed in 2014.
D.
Sankirtana, the ritual singing, drumming and dancing of Manipur, was inscribed in 2013.

Correct Answer:

Step-by-Step Solution

Key idea: This is a contradiction question requiring precise recall of the years India's cultural elements were inscribed on the UNESCO Representative List.

Step 1: Evaluate Option A. Kumbh Mela was indeed inscribed on the UNESCO list in 2017. (Possible/True)

Step 2: Evaluate Option B. Durga Puja in Kolkata was inscribed in 2021. (Possible/True)

Step 3: Evaluate Option C. Traditional Yoga was inscribed on the UNESCO Representative List of the Intangible Cultural Heritage of Humanity in 2016, not 2014. (Impossible/False)

Step 4: Evaluate Option D. Sankirtana of Manipur was inscribed in 2013. (Possible/True)

Answer: Yoga was inscribed in 2014.

Question 12 · General Knowledge (GK) MCQ

Match the corporate action in List I with its accurate legal or business characteristic in List II:

List I:

Post-merger absorption
Strategic name change
Slump sale

List II:

A. Transfer of an undertaking as a going concern for a lump sum consideration, without individual asset valuation.

B. The surviving entity inherits all assets and liabilities, and the acquired entity ceases to exist as a separate legal person.

C. The legal entity remains unchanged, but the brand identity is altered to reflect new market positioning, with no transfer of assets.

A.
1-B, 2-C, 3-A
B.
1-A, 2-B, 3-C
C.
1-C, 2-A, 3-B
D.
1-B, 2-A, 3-C

Correct Answer:

Step-by-Step Solution

Key idea: This is a match-the-following question testing the legal distinctions between different corporate restructuring mechanisms.

Step 1: Analyze Item 1 (Post-merger absorption). In an absorption merger, the target company is dissolved, and the acquiring company survives, inheriting all assets and liabilities. This matches with B.

Step 2: Analyze Item 2 (Strategic name change). A name change alters only the branding. The underlying legal entity, its contracts, and its assets remain exactly the same. This matches with C.

Step 3: Analyze Item 3 (Slump sale). Under the Income Tax Act, a slump sale is the transfer of one or more undertakings as a going concern for a lump sum, without assigning individual values to assets and liabilities. This matches with A.

Step 4: Combine the matches. 1-B, 2-C, 3-A.

Answer: 1-B, 2-C, 3-A

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Mock Test 2 for XAT: 95 Questions with Solutions & Analysis

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