NISM Series XIX-C AIF Managers Certification Exam - 33

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Q 1. Offshore funds are formed in countries that have:

a) Strict capital controls

b) Bilateral Investment Promotion and Protection Agreements (BIPA) with India

c) No tax regulations

d) Limited investment opportunities
 
Q 2. How are professional fees paid by AIFs typically taxed according to Indian regulations?

a) Tax-exempt

b) Taxed at 10%

c) Taxed at 18%

d) None of the above
 
Q 3. What does the computation of Gross IRR involve?

a) Include all cash inflows and outflows at the investor level

b) Deducting taxes from the total returns

c) Calculating returns before deducting expenses at the fund level

d) Excluding cash inflows and outflows from the calculation
 
Q 4. Why should investors check the quantum of incentive fees being charged by the Investment Manager?

a) To negotiate lower fees

b) To maximize their returns

c) To avoid high payouts impacting net returns

d) None of the above
 
Q 5. What does it mean if the Treynor ratio shows a high value for an investment?

a) The investment offers a relatively high return with low systematic risk

b) The investment offers a low return with high systematic risk

c) The investment offers a low return with low systematic risk

d) None of the above
 
Q 6. What type of skewness is preferred by investors when analyzing the returns of an AIF?

a) Positive Skewness

b) Negative Skewness

c) Skewness value of zero

d) Skewness value of -1
 
Q 7. How are Set-up Costs typically amortized in an AIF?

a) Over the first 12 months of the fund's operation

b) Over the entire life of the AIF

c) Over the first 60 months of the fund's operation

d) Over the first 24 months of the fund's operation
 
Q 8. Which of the following offshore jurisdictions provides tax benefits on income accrued and received in India, based on Double Tax Avoidance Agreements (DTAA)?

a) Seychelles

b) Panama

c) Singapore

d) None of the above
 
Q 9. How do investors and Investment Managers view the Hurdle Rate differently?

a) Investors prefer a higher Hurdle Rate, while Investment Managers prefer a lower Hurdle Rate

b) Investors prefer a lower Hurdle Rate, while Investment Managers prefer a higher Hurdle Rate

c) Both investors and Investment Managers prefer a lower Hurdle Rate

d) Investors and Investment Managers have the same view on the Hurdle Rate
 
Q 10. What is the purpose of the High-Water Mark in an AIF?

a) To ensure investors receive a minimum return

b) To maximize the incentive fees earned by the Investment Manager

c) To prevent payment of incentive fees on losses made in any year

d) To minimize operational expenses
 
Q 11. How is YTM different from the coupon rate of a bond?

a) YTM considers the market price of the bond, while the coupon rate does not

b) YTM accounts for the timing of cash flow, while the coupon rate does not

c) YTM is fixed over the life of the bond, while the coupon rate may vary

d) YTM is expressed as an annual percentage, while the coupon rate is a fixed percentage of the face value
 
Q 12. What type of distribution is characterized by a positive skewness?

a) Symmetric distribution

b) Negatively skewed distribution

c) Normal distribution

d) Exponential distribution
 
Q 13. Why must investors in AIFs rely on the investment manager for management and investment decisions?

a) Due to regulatory requirements

b) Due to limited rights to participate in management

c) To minimize fund expenses

d) None of the above
 
Q 14. What is the primary concern regarding fund structure and governance in AIF investments?

a) Investment performance

b) Regulatory compliance

c) Fiduciary duty

d) None of the above
 
Q 15. When are performance or incentive fees mostly calculated for Category III AIFs?

a) At the end of each financial year

b) After every investment made by the fund

c) After successful exits from portfolio companies or at the end of the term of the fund

d) Monthly

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