NISM Series XIX-C AIF Managers Certification Exam - 37

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Q 1. Who formalized the Efficient Market Hypothesis (EMH) and organized empirical evidence in 1970?

a) Eugene Fama

b) Robert Shiller

c) Harry Markowitz

d) John Bogle
 
Q 2. What type of information is encompassed by the semi-strong form of the Efficient Market Hypothesis (EMH)?

a) Historical information only

b) Publicly available information only

c) Insider information only

d) Both historical and current publicly available information
 
Q 3. What is the purpose of the Portfolio Optimization process?

a) To identify the most profitable investments

b) To maximize returns regardless of risk

c) To construct portfolios with desirable risk-return characteristics

d) None of the above
 
Q 4. How is the Ex-Ante Risk of an individual security calculated?

a) By taking the square root of the variance of expected returns

b) By dividing the variance of expected returns by the standard deviation

c) By multiplying the variance of expected returns by the standard deviation

d) By subtracting the variance of expected returns from the standard deviation
 
Q 5. How does the Ex-Ante Risk relate to the variance of expected returns?

a) Ex-Ante Risk is equal to the variance of expected returns

b) Ex-Ante Risk is the square root of the variance of expected returns

c) Ex-Ante Risk is the reciprocal of the variance of expected returns

d) Ex-Ante Risk is half the variance of expected returns
 
Q 6. What is one assumption of the Arbitrage Pricing Theory (APT)?

a) All investors have the same risk-return preferences

b) The stochastic process generating asset returns can be expressed as a linear function of a set of factors

c) Market portfolio contains all risky assets and is mean-variance efficient

d) Unique risk cannot be diversified away
 
Q 7. Who were the individuals credited with developing the CAPM?

a) Harry Markowitz

b) Eugene Fama

c) Jack Treynor, William Sharpe, John Lintner, Jan Mossin

d) Robert Shiller
 
Q 8. What does it mean if a security's estimated return plots below the SML?

a) It is fairly valued

b) It is undervalued

c) It is overvalued

d) It is illiquid
 
Q 9. Which committee's recommendations led to the revision of SEBI regulations in 2000?

a) Narasimham Committee

b) Raghuram Rajan Committee

c) Bimal Jalan Committee

d) Urjit Patel Committee
 
Q 10. What is the primary focus of a Private Equity Fund?

a) Investing in government securities

b) Investing primarily in debt instruments

c) Investing primarily in equity or equity-linked instruments of investee companies

d) Investing in publicly traded stocks
 
Q 11. What is the primary characteristic of a Specified AIF?

a) Investing in government securities

b) Employing diverse or complex trading strategies

c) Investing primarily in start-ups and early-stage ventures

d) Not undertaking leverage or borrowing
 
Q 12. Which type of investor is best suited for Category I AIFs such as Angel and VC funds?

a) Institutional investors

b) Family offices

c) High-net-worth individuals seeking high-risk alternative returns

d) Pension funds
 
Q 13. Which of the following risks are included in the material risks that AIFs should be able to identify and report to their investors?

a) Market risk

b) Inflation risk

c) Operational risk

d) Credit risk
 
Q 14. What is the role of a trustee in an Alternative Investment Fund (AIF)?

a) Making investment decisions

b) Managing day-to-day operations

c) Safekeeping of securities

d) None of the above
 
Q 15. What is the purpose of the 'catch up' clause in distribution terms?

a) To delay distributions to investors

b) To increase management fee

c) To ensure fair distribution between investors and manager

d) To maximize investor returns
 
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