Reasons for Financial Crisis 2008:

Details about Financial Crisis 2008 & US Mortgage Subprime Crisis:
Analysis of Economic Crisis in 2008

The present finacial crisis in the world is attributed by the mortgage subprime crisis of US with large number of people turning into defaulters.

Before going into detailed root cause analysis of the crisis I will like to make you familiar with some of the terminologies:

  • Mortgage: Conditional transfer of a property as for security on a loan.
  • Subprime Loans: Loans which are issued with little or no downpayments.
  • Foreclosure:If a borrower fails to make timely mortgage payments to the loan servicer (a bank or other financial firm), the lender can take possession of the residence acquired using the proceeds from the mortgage, in a process called foreclosure.

Lets get to the roots of this crisis...

Though the subprime crisis became apparent in the year 2007 but it's roots lies in closing few years of 20th century. Due to faulty government policies, competitive pressure and greediness to show higher results banker's encouraged higher risk lending practices.

Many subprime mortgages were issued in USA to households with low incomes and assets, and with troubled credit histories. All such loans were issued for the purchase of residences ,to borrowers who do not meet the usual criteria for borrowing at the lowest prevailing market interest rate. Now with the decline in USA house prices in 2006-07 the financial firms who had issued subprime mortgages lost most of their value due to falling house prices..

This resulted in a large decline in the capital of many banks and USA government sponsored enterprises, tightening credit around the world and eventually resulted in the prevailing financial crisis across the world..

The main cause for the crisis could be attributed to a number of factors:
1. Inability of homeowners to make their mortgage payments
2. poor judgment by borrowers and/or lenders
3. speculation and overbuilding during the boom period
4. risky mortgage products,
5. high personal and corporate debt levels,
6. financial products that distributed and perhaps concealed the risk of mortgage default,
7. monetary policy, and
8. lack of proper government regulation

In its "Declaration of the Summit on Financial Markets and the World Economy," dated 15 November 2008, leaders of the Group of 20 cited the following causes:
"During a period of strong global growth, growing capital flows, and prolonged stability earlier this decade, market participants sought higher yields without an adequate appreciation of the risks and failed to exercise proper due diligence. At the same time, weak underwriting standards, unsound risk management practices, increasingly complex and opaque financial products, and consequent excessive leverage combined to create vulnerabilities in the system. Policy-makers, regulators and supervisors, in some advanced countries, did not adequately appreciate and address the risks building up in financial markets, keep pace with financial innovation, or take into account the systemic ramifications of domestic regulatory actions."

The impact of this crisis could have been subdued if proper measures were taken on time.

Result of CAT 2008

Result of CAT 2008 exam held on Nov 16 2008 is going to be announced on 9th January 2009 (Friday).

How to check your CAT score through SMS?
The SMS facility to check your CAT results is really simple and fast way to view your CAT scores.
Below are the deatils how to see your CAT 2008 results using SMS:
CAT score using test registration number & Date of birth
Type CAT and SMS to 57333
Type following text in your mobile :
CAT 5370082 150383 and SMS to 57333

CAT score using test registration number & application number
Type CAT and SMS to 57333
Type following text in your mobile :
CAT 5370082 123456 and SMS to 57333

Important Facts about CAT 2008
Total no. of CAT Exam takers in 2008: 2,50,000
Last year, about 2.12 lakh candidates had appeared for the CAT. In 2008 the no. of CAT aspirants has jaumped by nearly 50000.

Total no. of seats for PGDBM in7 IIMs is : 1,600
1,600 postgraduate diploma in management seats in the seven IIMs - Ahmedabad, Bangalore, Kolkata, Indore, Kozhikode, Lucknowa and Shillong. (ANI)
Students qualifying the test will be eligible for admission into IIMs at Ahmedabad, Bangalore, Kolkata, Indore, Kozhikode, Lucknow and Shillong. Besides, six new IIMs are expected to start functioning next year.

All the best!

Group Discussion: Pour your thoughts-2

Group Discussion & Personal Interview plays an important role in the admission process for most of the MBA colleges.

Apart from being able to communicate fluently what matters the most is the thoughts which you put in your speech.

Here is an oppurtunity to share your thoughts and also to know about more opinions and ideas on various topics.

Please feel free to pour in your thoughts in commnets below .....Be assured there would be surprise rewards to all those who participate :)

The Topic is:

"Present Economic Crisis: Reasons and Solutions"
Sub Prime Crisis in US,
Greed for showing Higher results by Financial Institutions
Anticipation of the crisis could have helped many.

As there were no responses on this topic , I am sharing details about the "Prevailing Financial crisis in world" just to make you aware of it.
Read it here:

This discussion is closed now.

Post your ideas below in commnets .

MBA Full Length Tests

Series of Full Length mock tests for MBA

Download MBA Full Length Test1 (with answers)

Coming up more....


MBA Preparation Materials & tips



1] A & C Hence, [3]

2] A only Hence [3]

3] D only Hence [2]

4] D only Hence [3]

5] He could not convince the doubting audience.
Hence [4]

6] Withering away of religion as a significant
element. Hence [2]

7] Concentrating on creating European links.
Hence [4]

8] Spontaneous recognition from supervisors and
managers.Hence [3]

9] May also be well advised. Hence [1]

10] Demonstrate their strength. Hence

11] String of commentaries on .Hence

12] The passage of time, curse. Hence

13] Rural, restructure Hence [4]

14] Superficial attempt at liberalisation.
Hence [1]

15] Ideological, cultural. Hence [4]

16] Irony, intends Hence [2]

17] Inspiring,win Hence [4]

18] Fascinated, oddballs. Hence [3]

19] Excitement, applause. Hence [1]

20] 2,does not

21] 5

22] 4, drop ‘a’

23] 4, drop ‘the’

24] 3, drop ‘the’

25] 5

26] 1, was nearly pink

27] 5

28] 4, the book

39] 4, was


31. 2, is

32. 2, with

33. 5

34. 2, for

35. 2, of

36. 4, for

37. 3, are

38. 4, was

39. 5

40. [4]

41. [4]

42. [2]

43.  [2]

44.  [1]

45.  [3]

46. [2]

47.  [3]

48. [4]

49. [2]

50. [1]

51. [3]

52. [3]

53. [4]

54. [4]

55. [3]

56. [4]

57. [2]

58. [4]

59. [2]

60. [2]

  1. Let the selling price be S .

  2. Cost price = C = 0.5S

    Profit = 0.5S

    0.5S = 60

    S = 120

  3. In one day A can do 1/1 work

  4. In one day B can do 1/12 work

    In one day A+B =1/10+1/12

    =22/120 =11/60

    =60/11 = 5 5/11

  5. Let the fraction be a/b

  6. b = a+5 --I

    Also, a/b+7 =1/4

    4a = b+7 --II

    Solving I+II,

    -a+b = 5

    4a-b = 7

    3a = 12

    a = 4, therefore b = 9

  7. 45, 54

  8. sum = 45+54 = 99

  9. Let the number be x

  10. 2x-1/2x = 30

    3/2x = 30

    3x = 60

    x = 20

    66. 20x+10y = 200 --I

    x+y = 15 --II

    20x+10y =200

    (-)10x+10y = 150

    10x = 50

    x = 5

67. Apples         



15*2/3 = 10 Bananas

  1. cost exclusive of excise and tax = x

  2. excise = 0.12

    Tax= 0.04

    X+0.16x = 600

    X = 600/1.16

    = 517.24

  3. x has Rs. 6.

  4. 2/3 of x = 2/3*6 = Rs. 4

    Rs. 4 = ¼ y

    Y = 4*4 = 16

  5. x+1/x = ½

  6. (x+1/x)2 = x2 + 2x1/x +

    = x2 +2 +1/x2

    = x2 + 1/x2 + 2

    = ¼+2


    = 9/4

  7. x will complete 1/20 in one day.

  8. Y will complete 1/30 in one day.

    Z will complete 1/60 in one day.

    4 days = (1/20 + 1/30 + 1/60)*4

    = (3+2+1/60)*4

    = 6/60*4

    = 4/10

    = 2/5th complete

    6 days = (1/20 + 1/60)*6

    = (3+1/60)*6

    = 4/60*6

    = 4/10 = 2/5

    total work complete = 2/5+2/5 = 4/5

    work remaining = 1/5


    = 4 days

  9. volume increase in cylinder=(volume of block
    *portion of it which is immersed)

  10. 22/7*62*4 = 5*6*7( p)

    p = 22/7*36*4


    p = 22/7*24/35

  1. Let the number be x.

  2. X2-x = 870

    X2-30x+29x-870 = 0

    (x-30)(x+29) = 0

    x = 30

  3. Let the no. of eligible voters = x

  4. Then, (0.6)(.6x) = 53040

    0.36x = 53040

    x = 54000/0.36

    x = 150000

  5. Let side of the square be x.

  6. (x+3)2 = x2 + 33




  7. A:B is 10:7.5

  8. B:C is 10:9

    A:B:C is 100:75:90

    C gets 90*88000/265=29887

  9. Expensive brand cost = 20*60=1200

  10. Expense now = 1200-450=750

    Average cost of the mixture =750/20

    Rs.30 Rs. 60

    Rs. 750/20

    450/20 150/20


  11. Instalments paid = 1575+1575 = 3150

  12. Interest = 3150-3000 = 150

    For 2 months interest = Rs.150

    Rate of interest 2.5%p.m.

    Rate of interest p.a. = 12*2.5 = 30%

  13. 4-2.8+3.5-1+x=5

  14. x=5-4+2.8-3.5+1


  15. Let the marked price be 100.

  16. Selling price =60

    Commission = 3/100*60 = 1.8

    Commission(%) Commission(Rs).





  2. 1.5*12+1.5*4:2*12:1*12







  3.     By alligation rule:




No. of 5 paise = 100/20*13

= 65 coins

No. of 10 paise =100/20*7

=35 coins

      83. By
alligation rule:

    & [2]

163.Production in 1998=456000 units

Sales=433200 units

Sales revenue=433200*6=2599200

Therefore advt. expense=2599200*4.33%


Hence [1]

164. Inventory for 1994

Production in '94=330,000

Sales=297,000 therefore inventory=33,000

Inventory for 1995

Production in 1995=340,000

Sales in 1995=306,000 therefore inventory=34000

Sales for 1996=360000

Total sales=360000+34000+33000=427000 units

Hence [1]

165. Market share=80/4=20%

Sales revenue=345,800*5=1729000

Therefore market =1,729,000/0.20=86.45lac

Hence [2]

166. Answer is [2]

167.Answer is [1]

The following table can easily explain
questions 168 to 172

Names Arti Banti Chetan Dolly
Amount Rs38.4 Rs11.6 Rs16.6 Rs33.4

168.[1]  169.[2]  170.[3] 
171.[3]  172.[1]

173. While X=0, Y=5, A=3, B=5

While X=2, Y=8, A=5, B=8

While X=4, Y=13, A=8, B=13

Hence [3]

174. While X=0, Y=5, A=3, B=5

If X is increased by 5 further values of Y will
not be calculated.

Hence [1]

175. The last value of X is 4

Hence [2]

The following table explains the
questions171 to 180

Husband Wife Surname Office
Jai Beena Parikh Air India
Girish Maya Sahni Indian Court
Jayesh Chand Natwar Ashiana
Bala Preeti Bakshi American Court
Pratap Sangeeta Joshi Jet

176. [4] 177. [4] 178. [4] 179. [3] 180. [3]

The following table explains the
questions 181 to 185

1 2 3 4 5

181. [3] 182. [4] 183. [2] 184. [1] 185. [3]

Unlimited MBA Preparation Materials & tips


General Knowledge: Test yourself

Being aware of the General happenings in and around you really puts you ahead of others.
Be it the personal Interview or the Group discsussion or any general team meeting, your general awareness will play a major role in defining your persona.

Here is a the first Quiz of the series to test your skills:

Click to enlarge

Post your answers to above quiz below as comments.
Eg 1 A , 2 B....

To regularly recieve GK updates, MBA Updates & answers to above quiz plz provide your email id in the text box below.

Group Discussion: Pour your thoughts

Group Discussion & Personal Interview plays an important role in the admission process for most of the MBA colleges.

Apart from being able to communicate fluently what matters the most is the thoughts which you put in your speech.

Here is an oppurtunity to share your thoughts and also to know about more opinions and ideas on various topics.

Please feel free to pour in your thoughts in commnets below .....Be assured there would be surprise rewards to all those who participate :)

The Topic is:
Indian Politicians are hypocrites & a threat to the nations growth.

Post your ideas below in commnets .

CAT 2008 Feedback

CAT 2008 is over, as usual surprising aspirants in its own ways.
Looking at the scores from past 3 years, I hope the cut-offs for IIMs will somewhere be:

Expected Cutoffs for IIMs : CAT 2008
DI/LR: 32
QA: 34
EU: 44

Overall Cutoff Score for CAT 2008: 115+

With a percetile of 97+ You can expect call from MDI Gurgaon.

Analysis of my percentile vs score for CAT 2007 & CAT 2006 are given below:
CAT 2006
Section-----------%Score--------- Percentile
Quantz------------- 45.65-------------- 92.83
Logic & DI ---------51.00-------------- 98.25
Verbal------------- 24.00-------------- 94.30

Total --------------40.22-------------- 98.08

CAT 2007
Section -----------%Score --------Percentile
Quantz --------------21.00-------------- 84.13
Logic & DI ----------65.63 --------------99.69
Verbal --------------14.00 --------------71.28

Total -------------- 34.87 -------------- 97.18

Click to Check Cutoffs for Various Colleges

Hope the above analysis helps you in finding your percentile for CAT 2008.

Please give your feedback in comments below.

Past GD Topis: MBA Admissions

Below is the List of topics for GD in past years at B-Schools :


• US $ is no longer a stable currency.
• Cine - stars are best applicants for politics.
• Managers do not add value to the society.
The parliamentary form of democracy has failed in India.
• 33% women reservation in parliament.
• Consumer satisfaction should be achieved at any cost.
• B-School education is only affordable to rich people.
• Democracy is the only way to a sustained economic growth.
• Should youth indulge in politics?
• Effect of internet in India.
• Liberalisation in 1991 was a forced one.
• Democracy is a luxury in India.
• Is globaliasation the fear for Indian culture?
• India Shining
• Economic reforms make richer people rich and poorer people poor.

IIM Calcutta

• Information Technology
• Industrial growth in the next millennium will depend a lot on how we tackle the environmental issues.
• Food comes first, ethics later.
• In India, democracy is nothing but politicised monarchy.
• New Delhi should not be the capital of India.
• Industrial growth and environmental care do not go hand in hand.
• TV commercials should be banned.
• To survive in the civilized world one needs to be hypocrite.
• Money is the sixth sense without which one cannot enjoy the other five.
• Advanced mathematics has no value in life.
• Efficiency and corruption go hand in hand.
• Welcome back socialism.
• Information Technology

IIM Bangalore
• The government should stop funding the IITs and the IIMs and, instead, divert the funds to primary education.
• Profit is the only business of business.
• India should be reorganised into smaller states.
• Growth and integrity are poles apart.
• Managerial skills learnt from classroom can never match those learnt from experience.
• Government should reduce defence expenditure and spend more on social sector.
• The UN has not served any purpose in the last decade.
• Religion is a private matter and should be no concern of the state.
• The government should stop funding the IITs and the IIMs and, instead, divert the funds to primary education.
• Profit is the only business of business.
• India should be reorganised into smaller states.


• Nature of paying for the environment development.
• Indian customs - discuss.
• Wisdom comes with age.
• Indian politicians are not bothered about the
. Should the defense budget be reduced?
• Mobile phones are a social waste.
• Will machine replace man one day?
• Gandhism is not relevant these days.
• Bordering world - reality or dream.
• Secularism is declining - justify.
• future of our country
• Agroeconomics
• Indian Village: a boon or a curse?
• Will the defense budget be reduced?
• Will machine replace man in future?
• Marketing of tobacco and tobacco products is unethical.
• Ethics in India are declining.
• Marketing forces the consumer to buy those products which they don't want to.


• India makes nuclear bombs, but cannot make quake resistant houses.
• Benefits of professional integrity
• Bilateralism vs Multilateralism.
• Ecology and tourism.
• Role of money in elections.
• Fast changes in Information Technology - excitement or agony?


• Advertising and ethics.
• IT - What does the future hold? Give recommendations.
• Conscription should be made compulsory.
• Why is patriotism lacking in India?
• What ails India more - corruption or overpopulation.
• What should India do to preserve its IT command over the World.]
• IT boom in India.
• Large dams are a must for India's development.
• Leaders should be followers first.
• Should the Government ban India from playing cricket matches in Sharjah? Justify.
• Why do more girls choose Human Relations Management?

IIM Kozhikode

• Women empowerment is the basis for social development.
• Science, and not rhetoric, underpins the National Policy.
• Human rights impedes economic programme.
• Subsidies for higher studies should be done away with.

• Modern cinema is a boon to the Indian society.
• Medical research on animals is immoral and should be banned.

IIM Lucknow
• Can religion be kept out of politics?
• Religious fundamentalism is more dangerous than regionalism.
• International embargo: the US is going too far.
• India - Pakistan relation: has it reached a point of no return?
• Coke and Pepsi should be driven out of India.
• Television in India is turning people to watchers rather than doers.
• Is India ready for e-commerce?
• Has the time come to eradicate nuclear weapons?
• Knowledge is the awareness of one's ignorance.
• Virtue has its own reward.
• Should we legalise drugs and alcohol consumption in India.
• Is the job of a manager to do the right things or to do things rightly?
• 'Tryst with destiny' has India redeemed its pledge?
• All education should be exclusively provided by the government.

Some Topics which Have Appeared In IIMs past few years:

• No one studies for an MBA. Everyone studies for a job.
• Do we need graduate engineers at all?
• Change what you can. Accept what you cannot.
• Political crisis and the Indian economy.
• Corruption is an economic lubricant, and hence may not be all that bad.
• The Indian economy is in shambles.
• Talk of social responsibility in the private sector is sheer hypocrisy.
• Is greed an essential human quality?
• Nature can fulfill man's need but can not his greed.
• Pollution control is a luxury for India.
• Engineers joining management is a national waste.
• The pen is mightier than the sword, but fanaticism is the mightiest of all.
• Parliamentary democracy is an obstacle in the path of growth of the Indian nation.
• Indo-Pak differences are so deep-rooted that Kashmir is only being used as an excuse.
• Violence is a prerequisite for progress.
• Is war with Pakistan inevitable?
• Women make better managers than men.
• GDs as a means of selection by the IIMs are a farce.
• Opposition to privatization will affect India's financial future
• Do computers dehumanize society?
• Success comes not so much by solving problems as by exploiting opportunities.
• All higher education in India should be privatized.
• With India being a world leader people are still dieing of starvation, comment.
• What will the present budget be like?
• Management education should make job seekers into job creators.
• To prevent India from disintegrating, more autonomy should be given to the states.
• Has the Indian political structure outlived its utility?
• Underdevelopment - fate, mismanagement or oppression?
• Management education is a luxury for a poor country like India.
• Ends justify the means.
• Our country needs more technocrats and less managers.
• Will computerization make a robot of all human beings?

Current Group Discussion topics

Test Taking Strategy for CAT & other MBA Exams

Unpredictability is the very nature of MBA exams like XAT & CAT. Amidst this unpredictability candidates are expected to demonstrate excellent time managements skills. In exams like XAT & CAT along with logical and analytical skills candidates are silently evaluated on their ability to cope up with pressure. Below are some of the simple tips which would be useful while writing the CAT and other MBA Exams:

1. How to do Smart Selection of Questions?
Read a question for few seconds, if it appears very familiar to you then only go ahead and attempt it. Remember marks allotted to each question are same. So there is no point in attempting a complex question by spending 7-8 mins whereas in the same time you could have had attempted 3 simple questions.

Tips for smartly selecting the questions:
1. Try to skip questions which are more than 6 lines long.
Reasons: Merely Reading such question will take a lot of time
2. Try to skip question from topics in which you are not too confident.
3. Avoid questions which you already know will consume a lot of time.

4. Avoid questions in which options go to two or three decimal points
E.g. A question where options are:
a.) 4,324.234
b.) 4,324.233
c.) 4,324.243
d. 4,324.235
Here you will waste a lot of time in finding the correct decimal point.

2. What Order of Sections should you attempt?
a. You should always start with a section you are most comfortable with,
Reasons: The initial few minutes of test matters a lot and you should always
try out with something which you are comfortable with which in turn will
boost your confidence level for rest of the test.

b. Don't leave a section in which you are least confident for the end.
Last few minutes of the test are generally nerve testing ones. So it won’t be good idea to attempt something you are not that that confident with in the last few minutes.
E.g.: If Ram is very much confident in DI, Good in Quantz but Ok in English
His order of attempts should be:
Practice through mock test's to find out what order works best for you.

Note: With the current online format of CAT this is no longer directly applicable. While attempting Section 1 or Section 2 of CAT candidates are advised to quickly move to the sub sections which they are mostly comfortable with and ensure that they attempt as many question as possible in their strong area. Though this still holds good for other exams like XAT, SNAP etc.

3. Do’s & Don’ts in last 5 minutes....
Never start attempting a comprehension or Logical Reasoning question(with lots of inputs) in Last 5 minutes. In last 5 mins, try to attempt questions which are short in description.

4. Always Keep sectional Cut Off in mind.
Currently exams like XAT & CAT are divided into sections like:

a) Quantitative Ability & 
b) Data Interpretation
c) Verbal Ability &
d) Logical Reasoning.

The concept of cutoff is never fixed. Also XLRIs, IIMs have not disclosed whether they have a sub sectional cut-off or not.

Knowing the facts its advisable to have while attempting a section avoid getting over enthusiastic and spend too much of time in one sub section alone. Along with the time limit also set a limit on number of question you would be attempting in a sub section.
Reasons: Many a time’s merely having a time limit doesn't helps. This is due to the fact that you never know how complex the other sections are.
You may clear the cutoff of a particular sub section in 35 mins but for other section may require 40 minutes depending on its complexity. Also if you have not planned your time well you may end up spending more time in a sub section which you are not that strong at.

E.g.: Looking at his speed  and to ensure he clears sectional cutoff RAM decides to attempt 25 questions in Section 1 (15 questions in DI & 10 in quantitative) and 25 in Section 2 (10 in English & 15 in LR.)
He also sets a time limit for each sub section: 

In Section 1: for DI 30 & 40 mins for Quantitative
In  Section 2:  25 minutes for English & 45 for Logical Reasoning. 
He was able to solve 25 questions of DI in 50 mins only.
Now instead of spending more time in DI Ram should stop here and move ahead to the next section. This will help Ram as he is not sure about the difficulty levels of other sections (and which may require more time to clear the cut-off).

Utilize mock tests to apply the above tips and find out where you need to work more.

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