NISM Series XIX-C AIF Managers Certification Exam - 28

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Q 1. How does a risk-neutral investor differ from both risk-averse and risk-seeking investors?

a) Risk-neutral investors assign utility scores based on their unique risk aversion.

b) Risk-neutral investors avoid risk altogether.

c) Risk-neutral investors have no preference for higher or lower-risk opportunities.

d) Risk-neutral investors demand a higher risk premium for bearing more risk.
 
Q 2. What is the maximum number of investors allowed in a single scheme of an AIF?

a) 500

b) 750

c) 1000

d) 2000
 
Q 3. How is the expected return of a portfolio calculated when combining risky assets with a risk-free asset?

a) This is the weighted average of the returns of risky assets

b) It is the sum of the returns of the risky assets

c) It is equal to the return of the risk-free asset

d) It is equal to the risk-free rate
 
Q 4. What significant implications does the availability of a risk-free asset have on portfolio choices?

a) It increases transaction costs

b) It decreases diversification benefits

c) It reduces the need for risk management

d) It leads to market inefficiencies
 
Q 5. Which theory is considered dominant for the valuation of risky assets?

a) Efficient Market Hypothesis

b) Behavioral Finance

c) Arbitrage Pricing Theory

d) Random Walk Theory
 
Q 6. What is the primary characteristic that distinguishes an Angel Fund from other types of funds?

a) Focus on publicly traded stocks

b) Investment exclusively in government securities

c) Fundraising from angel investors

d) Investment primarily in commodities
 
Q 7. How are SMEs defined in the context of SME Funds?

a) Defined by the Securities and Exchange Board of India (SEBI)

b) Defined by the Reserve Bank of India (RBI)

c) Defined by the Ministry of Finance

d) Defined by the Ministry of Corporate Affairs
 
Q 8. What is the minimum investment amount required for investors in Category II Alternative Investment Funds (AIFs)?Â

a) INR 1 crore

b) INR 25 lakh

c) INR 10 crore

d) INR 50 lakh
 
Q 9. What is the likely decision of Mr. X regarding the allocation of funds?

a) Allocate the entire amount to Category I AIF

b) Allocate the entire amount to Category II AIF

c) Allocate the entire amount to Category III AIF "A"

d) Allocate the funds equally between Category III AIF "A" and "B"
 
Q 10. Who is credited with launching the first hedge fund?

a) Warren Buffett

b) George Soros

c) Alfred Winslow Jones

d) Carl Icahn
 
Q 11. In the Indian scenario, how might additional returns be paid?

a) On an annual basis

b) On a deal-by-deal basis

c) every month

d) On an aggregate portfolio basis
 
Q 12. What does the clawback right entitle investors to do?

a) Recover any performance fees taken by the manager during the life of the investment

b) Increase the management fee

c) Withdraw funds early without penalty

d) Minimize investor returns
 
Q 13. How does "Dry Powder" affect the fund's investment strategy?

a) It limits the fund's investment opportunities

b) It increases the fund's investment risk

c) It allows the fund to capitalize on market opportunities

d) It encourages the fund to prioritize short-term gains
 
Q 14. What is the procedure for disclosing conflicts, whether present or potential, in an AIF?

a) Disclose only to investors

b) Disclose only the Compliance function

c) Disclose the Compliance function and investors

d) None of the above
 
Q 15. What happens if an investor fails to honor a drawdown notice?

a) The fund manager absorbs the loss

b) Other investors cover the shortfall

c) The fund distributes profits to remaining investors

d) The investor receives additional benefits
 
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