Skip to content

NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Overview of Alternative Investment Funds (AIFs)

Which category of AIF is permitted to employ diverse or complex trading strategies, including leverage and investment in listed or unlisted derivatives, and does not receive any special incentives or concessions from the government?

Category III AIF is correct. These funds, such as hedge funds, use diverse or complex trading strategies and may employ leverage, including investment in listed or unlisted derivatives. They receive no special government incentives, unlike Category I funds, while Category II funds do not typically borrow beyond limited operational needs.

  1. ACategory I AIF
  2. BCategory II AIF
  3. CCategory III AIFCorrect
  4. DCategory I infrastructure fund

Explanation

Category III AIFs, such as hedge funds, employ diverse or complex trading strategies and may use leverage, including through derivatives. Category I funds get incentives for socially desirable sectors, and Category II funds generally do not use leverage beyond day-to-day operational needs. Hence only Category III fits.

Did you get it right without looking?

One question tells you little. A timed set on Overview of Alternative Investment Funds (AIFs) shows your real accuracy, how long you take and where you lose marks.

Practise Overview of Alternative Investment Funds (AIFs)Free diagnostic mock

More Overview of Alternative Investment Funds (AIFs) questions