NISM Series XIX-C AIF Managers Certification Exam - 2

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Q 1. How does the Long-Short Equity Strategy aim to balance market exposure?

a) By maximizing leverage

b) By minimizing leverage

c) By avoiding derivative contracts

d) By focusing on intra-day trading
 
Q 2. What distinguishes a Short-bias Strategy from a Long-short Strategy regarding net exposure?

a) Short-bias Strategy has neutral exposure

b) Long-short Strategy has net short exposure

c) Short-bias Strategy maintains net short exposure

d) Both strategies maintain equal long and short positions
 
Q 3. Which of the following areas is NOT essential for aligning interests between investors and sponsors/managers?

a) Sponsor/manager commitment

b) Management fee

c) Investment strategy

d) Co-investment opportunities
 
Q 4. Why are business continuity and disaster recovery plans crucial for AIFs?

a) To minimize regulatory scrutiny

b) To evaluate competitors' strategies

c) To manage operational risks effectively

d) To predict short-term market trends
 
Q 5. What role can distributors play in mitigating Key-Person Risk for investors?

a) By conducting on-site meetings with the investment manager and the entire team

b) By providing value-added services and bringing newer AIF schemes/products launched by lesser-known managers to the attention of investors

c) By relying on existing manager relationships

d) By minimizing investor involvement
 
Q 6. Why is the ownership structure and continuing interest of the sponsor/manager important for investors?

a) It ensures high management fees.

b) It provides preliminary comfort to potential investors.

c) It guarantees regulatory approval.

d) It maximizes investor returns.
 
Q 7. What does the term 'legal documentation' refer to in the context of an AIF?

a) Set of marketing materials

b) Binding roles and obligations of connected parties

c) Investment strategy documents

d) Investor feedback forms
 
Q 8. Why is appointing a custodian mandatory for all AIFs under existing SEBI regulations?

a) To increase operational costs for AIFs

b) To ensure compliance with offshore regulations

c) To enhance transparency in investment activities

d) To segregate assets and liabilities of different schemes
 
Q 9. What is a key covenant of the distributor outlined in the Distribution Agreement?

a) Making alterations to marketing literature without permission

b) Incurring debts on behalf of the Investment Manager without authorization

c) Offering rebates to investors to induce transactions

d) Charging advisory fees directly to investors
 
Q 10. In the case of an AIF constituted as an LLP, what is the constitutional document?

a) Trust Deed

b) Memorandum and Articles of Association

c) LLP Agreement

d) Private Placement Memorandum
 
Q 11. How are Series Assets computed for a particular Series of units in a Category III AIF?

a) By subtracting Series Liabilities from Total Assets

b) By dividing the Total Assets of the Fund by the Opening Series NAV

c) By multiplying the Total Assets of the Fund by the Opening Series NAV

d) By dividing the Opening Series NAV by the Total of all Opening Series NAV in the Fund
 
Q 12. What determines if the NAV attributable to a specific class/sub-class of units?

a) Total liabilities only

b) Total assets only

c) Total expenses only

d) Total assets and liabilities
 
Q 13. Why is it important to compute NAV per unit separately for each Series?

a) To reduce transparency

b) To simplify calculations

c) To accurately reflect differential rights and obligations

d) To hide financial information
 
Q 14. How are the value of cash in hand, bills and demand notes, and prepaid expenses determined?

a) At a discounted rate

b) At face value

c) At book value

d) None of the above
 
Q 15. Which of the following is not a type of money market instrument based on tenor?

a) Overnight market

b) Notice money market

c) Term money market

d) Monthly money market

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