NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Collective Investment Vehicles
Under SEBI's framework, a Category III Alternative Investment Fund (AIF) is best described as a fund that:
A Category III AIF employs diverse or complex trading strategies and may use leverage, including through listed or unlisted derivatives. Hedge funds are typical examples. Funds backing start-ups or social ventures belong to Category I, not Category III.
- AInvests only in start-ups and social ventures with no leverage
- BEmploys diverse or complex trading strategies and may use leverage, including through derivativesCorrect
- CInvests only in government securities
- DIs open to only non-resident investors
Explanation
Category III AIFs, such as hedge funds, employ diverse or complex trading strategies and may use leverage. Investment in start-ups and social ventures relates to Category I, so option A is wrong.
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