NISM Series XIX-C AIF Managers Certification Exam - 20
NISM Series XIX-C AIF Managers Certification Exam - 20
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Q 1. What is the purpose of creating an option pool in a company or start-up?
a) To increase the company's revenue targets
b) To allow employees to purchase shares of the company based on certain conditions
c) To dilute the investors' stake in the company
d) None of the above
Q 2. What type of exposure does a dedicated-led strategy maintain?
a) Net long exposure
b) Net short exposure
c) Neutral exposure
d) Speculative exposure
Q 3. What is the intended purpose of stewardship responsibilities for AIFs?
a) To maximize short-term profits
b) To minimize engagement with investee companies
c) To promote fund governance and protect investors' wealth
d) To decrease transparency in investment activities
Q 4. What is the purpose of constituting an Investor Advisory Committee in an AIF structure?
a) To replace the Investment Committee in decision-making
b) To provide informed guidance to the investment manager based on investor assessment
c) To minimize investor representation in fund matters
d) To eliminate the need for compliance with applicable laws
Q 5. What is the primary difference between a Directional Strategy and a Market-Neutral Strategy regarding Portfolio Beta?
a) Directional Strategy aims to minimize Portfolio Beta
b) Market-Neutral Strategy aims to maximize Portfolio Beta
c) Directional Strategy does not aim for a Portfolio Beta of zero
d) Both strategies have the same Portfolio Beta
Q 6. Which document provides legal protection and shares confidential information about the company during the initial assessment?
a) Investment strategy document.
b) Confidential Information Memorandum (CIM or IM).
c) Non-disclosure agreement (NDA).
d) Shareholder agreement.
Q 7. What are the potential downsides of the Long-Short Equity Strategy during economic downturns?
a) Increased market risk
b) Decreased market volatility
c) Enhanced capital preservation
d) Increased volatility
Q 8. What type of investors are AIFs seeking capital commitments from?
a) Individual investors only
b) Institutional investors only
c) High Networth Individuals only
d) Government entities only
Q 9. In what scenario is an Investment Advisory Agreement utilized?
a) Investing in offshore funds
b) Investing in onshore funds
c) Delegating investment management functions
d) Negotiating investor side letters
Q 10. When should changes in valuation methodology be disclosed to SEBI and investors?
a) Quarterly
b) Annually
c) Semi-annually
d) Bi-annually
Q 11. Which document outlines the investment thesis of an AIF and summarizes key participation terms for institutional investors?
a) Advisory Agreement
b) Indenture of Trust
c) Private Placement Memorandum
d) Wrapper
Q 12. What is essential to assess when reviewing the investment process during due diligence?
a) Past performance only
b) Decision-making process only
c) Checks and balances only
d) All of the above
Q 13. Which party is responsible for ensuring the quality of service in the agreement with the merchant banker?
a) AIF
b) SEBI
c) Trustee
d) Merchant banker
Q 14. What is the primary purpose of the custodian agreement in an AIF?
a) To increase operational costs
b) To limit transparency in reporting
c) To outline the custodian's role and obligations
d) To avoid regulatory compliance
Q 15. Why are units representing unit capital held in the fund by an investor issued in dematerialized mode only?
a) To complicate transaction processes
b) To reduce investor control
c) To increase transparency
d) To avoid compliance requirements