NISM Series XIX-C AIF Managers Certification Exam - 19

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Q 1. When do Management Fees typically accrue in an AIF?

a) From the date of investor subscription

b) From the date of the Final Close

c) From the date of the First Close

d) From the date of fund dissolution
 
Q 2. Which of the following represents the Mean (ï R) of historical returns?

a) ∑ Ri / n

b) ∑ Ri * n

c) ∑ Ri - n

d) ∑ Ri * R
 
Q 3. How is Gross IRR and Net IRR used to assess AIF performance?

a) They measure the distribution of capital by the fund

b) They provide insights into the fund's cash flow profile

c) They calculate the total return on investment

d) They measure the volatility of returns in the fund
 
Q 4. How does YTM differ from Return on Investment (ROI)?

a) YTM calculates the effective interest rate on a bond until maturity, while ROI measures the total return on investment.

b) YTM considers the periodicity of cash flows, while ROI does not.

c) YTM accounts for market fluctuations, while ROI does not.

d) YTM measures returns over the holding period, while ROI calculates the annualized rate of return.
 
Q 5. What is the significance of calculating net return (pre-incentives) in an AIF?

a) It determines the fund's profitability

b) It helps in assessing the impact of management fees on returns

c) It indicates the fund's risk-adjusted return

d) None of the above
 
Q 6. What is the primary purpose of adjusting the nominal rate of return for expected inflation?

a) To guarantee a positive real rate of return

b) To ensure a consistent nominal rate of return

c) To calculate the real rate of return

d) To determine the expected rate of return
 
Q 7. What example illustrates exchange rate risk?

a) A bond paying interest in the investor's home currency

b) A bond paying interest in a foreign currency

c) A stock investment unaffected by currency changes

d) A commodity investment with fixed returns
 
Q 8. What is the relationship between risk and return?

a) Negative relationship: higher risk leads to higher return

b) Positive relationship: higher risk leads to higher return

c) No relationship between risk and return

d) Linear relationship: constant return for every unit increases in risk
 
Q 9. Which investment has almost no liquidity risk?

a) Treasury bills

b) Stocks

c) Corporate bonds

d) Commodities
 
Q 10. How many countries are covered by the global bond indices offered by FTSE Russell?

a) 50

b) 100

c) 150

d) 250
 
Q 11. How has the use of indices evolved?

a) They have become less relevant for portfolio evaluation

b) They are now used primarily for active portfolio management

c) They are no longer used as benchmarks

d) They have become more complex and difficult to understand
 
Q 12. How does the Investment Manager of an AIF typically outline the targeted market sectors and market-caps of companies?

a) Through regulatory filings

b) Through annual reports

c) Through the Private Placement Memorandum (PPM)

d) Through shareholder meetings
 
Q 13. How are sectoral indices useful for investors?

a) They help in reducing transaction costs

b) They provide insights into changes in trading frequency

c) They serve as benchmarks for evaluating the performance of sectoral portfolios

d) They increase market volatility within sectors
 
Q 14. How are securities weighted in a fundamental index?

a) Based on historical performance

b) Based on market volatility

c) Based on market capitalization

d) Based on fundamental factors like book value, cash flow, dividends, sales, profits, net assets
 
Q 15. What eligibility factors must stocks satisfy to be considered for index inclusion?

a) Listing history of at least six months and traded on every trading day during the six-month reference period

b) Listing history of at least one year and traded on every trading day during the one-year reference period

c) Listing history of at least three months and traded on every trading day during the three-month reference period

d) Listing history of at least six months and traded on every trading day during the twelve-month reference period

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