Sample Questions

NISM-Series-19B: Alternative Investment Funds (Category III) 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 investment strategy involves taking long positions in under-priced stocks and short positions in over-priced stocks, with the goal of minimizing systematic risk?

  • A. Long-only Strategy.
  • B. Long-Short Strategy.
  • C. Market-Neutral Strategy. Correct Answer
  • D. Directional Strategy.
Explanation:
Market-Neutral Strategy aims to minimize systematic risk by balancing long and short exposures.

Marks: 1

Q2 A 'Large Value Fund for Accredited Investors' is an AIF or scheme in which each investor (other than the Manager, Sponsor, employees or directors) invests not less than what amount?

  • A. Rs. 1 crore
  • B. Rs. 10 crore
  • C. Rs. 50 crore
  • D. Rs. 70 crore Correct Answer
Explanation:
A Large Value Fund for Accredited Investors requires each investor (with exceptions) to invest not less than Rs. 70 crore.

Marks: 1

Q3 What type of legal document sets out the terms and conditions on which an investor will subscribe to the securities issued by an offshore fund?

  • A. Investment Management Agreement
  • B. Contribution Agreement
  • C. Investor Side Letter
  • D. Subscription Agreement Correct Answer
Explanation:
The Subscription Agreement sets out the terms and conditions for an investor subscribing to an offshore fund's securities.

Marks: 1

Q4 For joint investors who are not parent(s) and child(ren) or spouses, the minimum investment amount applies to how many persons?

  • A. Only one person
  • B. The primary investor only
  • C. Every investor acting as joint investors Correct Answer
  • D. Not more than 2 persons combined
Explanation:
For any other investors acting as joint investors, the minimum investment amount applies to every investor.

Marks: 1

Q5 If a Category III AIF treats its investment in domestic company shares as 'investments', how would any dividend income received thereon be taxed?

  • A. Taxed as 'Profits or Gains from Business or Profession'.
  • B. Taxed as 'Income from Other Sources'. Correct Answer
  • C. Exempt from taxation.
  • D. Taxed at Capital Gains rates.
Explanation:
If shares are treated as investments, dividend income is taxed as 'Income from Other Sources'.

Marks: 1

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