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 Which documents must be included in a distributor’s kit?

  • A. Note on FATCA compliance
  • B. Copies of the Fund Constitution
  • C. Investor Presentation
  • D. All of the above Correct Answer
Explanation:
A complete kit must have the fund's legal documents, presentations, compliance notes, and FAQs for investors.

Marks: 1

Q2 Who signs the "Contribution Agreement" in a Trust-based AIF?

  • A. The Manager and the Investors
  • B. The AIF and the Trustees
  • C. The Sponsor and the Manager
  • D. The Trustee, the Investor, and the Manager Correct Answer
Explanation:
This contract binds the trustee (who holds the fund), the investor (who gives money), and the manager (who runs it).

Marks: 1

Q3 Can foreign investors buy units of an Indian AIF?

  • A. Only if they are Indian citizens living abroad
  • B. Only if they invest in gold
  • C. No, never
  • D. Yes, through the "Automatic" or "Approval" routes Correct Answer
Explanation:
India welcomes foreign money into AIFs, but there are specific paths (routes) to follow to ensure it's legal.

Marks: 1

Q4 What happens when an AIF is "Wound Up"?

  • A. It is closed down, all assets are sold, and the cash is given back to investors Correct Answer
  • B. It moves its office to a new city
  • C. It gets more money from the government
  • D. It starts a second fund
Explanation:
Winding up is the end of the fund's life cycle. Everyone takes their profits and goes home.

Marks: 1

Q5 The FIRR is a measure of return based on the ___________. (NISM workbook)

  • A. accounting profit of an investment
  • B. profit potential of an investment
  • C. percentage of gross margin
  • D. time value of money Correct Answer
Explanation:
The Financial Internal Rate of Return (FIRR) is a strong metric that measures investment returns taking into consideration the time value of money.

Marks: 1

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