UPSC Prelims 2023 Q28: Indian Economy – Financial Markets & Capital Markets
- (a) Only one
- (b) Only two
- (c) Only three
- (d) All four
Answer: (c) Only three
Explanation
Intangible vs Tangible Investments
| Asset | Tangible or Intangible? | Why |
|---|---|---|
| 1. Brand recognition | Intangible | Cannot be physically touched; represents value of reputation and customer goodwill |
| 2. Inventory | Tangible | Physical goods held for sale — raw materials, WIP, finished goods. Can be touched, stored, counted. |
| 3. Intellectual property | Intangible | Patents, trademarks, copyrights — legal rights with no physical form |
| 4. Mailing list of clients | Intangible | A database of customer contacts — no physical form; valuable information asset |
Intangible: Brand recognition + Intellectual property + Mailing list = 3 out of 4
Tangible: Inventory = 1 out of 4
Only three are intangible investments.
Answer: (c) Only three.
Why each option is right or wrong
- (a) Incorrect. 'Only one' — multiple items in the list lack physical form.
- (b) Incorrect. 'Only two' — intellectual property and mailing lists are both clearly intangible.
- (c) CORRECT. Brand recognition, intellectual property, and mailing list of clients are intangible. Only inventory is a tangible investment.
- (d) Incorrect. 'All four' — inventory is a physical, tangible asset that can be seen, stored, and counted.
Key point
Intangibles = no physical form (Brand + IP + Client list = 3). Inventory = physical goods = TANGIBLE. Three of the four listed assets are intangible investments.
Remember
Brand recognition, intellectual property, and mailing list of clients are intangible investments. Inventory (physical goods) is the only tangible investment in the list. Three of the four are intangible.
Common mistakes
- Classifying mailing lists as tangible — a customer database is an intangible information asset even if stored on physical servers.
- Forgetting that brand recognition has no physical form — it exists in customers' minds and represents economic value without physical substance.
- Not immediately identifying inventory as the only tangible — physical goods are the clearest tangible investment.
Exam tip
Intangible = can't touch it. Brand (reputation), IP (patents/trademarks), databases (mailing lists), goodwill = intangible. Machinery, inventory, buildings = tangible. Quick check: can you put it in a box? No = intangible.
Sources
- NCERT Economics Class 12 — National Income Accounting
- IFRS Standards — IAS 38: Intangible Assets