Sample Questions

NISM-Series-19A: Alternative Investment Funds (Category I and II) Distributors Mock Tests — 5 random MCQs with answers & explanations

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These 5 questions are randomly selected (standard MCQs only, not case-based).

Q1 If a fund has a "PIC" of 0.90, what does it mean?

A. 90% of the companies have failed
B. 90% of the promised capital has been collected and used Correct Answer
C. The fund is 90% through its life
D. The manager is taking a 90% fee

Explanation:

PIC stands for Paid-In Capital. 0.90 means 90% of the money investors promised has already been put into the fund.

Marks: 1

Q2 Which statement about "Co-Investments" is true?

A. They must be managed by a registered Portfolio Manager Correct Answer
B. They always have different terms for the AIF and the investor
C. They are only for Category II funds
D. They are illegal under SEBI rules

Explanation:

Co-investing (investing directly alongside the fund) is strictly regulated to protect all parties.

Marks: 1

Q3 What should every investor check before joining an AIF?

A. The manager's favorite car
B. Their own "risk appetite" (how much loss they can handle) Correct Answer
C. The current exchange rate for every country
D. The manager's high school grades

Explanation:

AIFs are risky. An investor must be sure they can handle the potential for loss and the long waiting period.

Marks: 1

Q4 True or False: You can find the MOIC (Multiple on Invested Capital) by adding the money already paid out (DPI) to the value of the remaining assets (RVPI).

A. True Correct Answer
B. False

Explanation:

MOIC tells you the total value created by the fund—both what you already got back and what is still in the fund.

Marks: 1

Q5 Why is Venture Capital considered a very high-risk way to invest?

A. Because the government might ban it
B. Because many new startups fail and close down Correct Answer
C. Because it is too easy to get your money back
D. Because it only invests in old, safe companies

Explanation:

Startups have a high "mortality rate," meaning they often go bust. If the business fails, the investor loses their money.

Marks: 1

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