NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Overview of Alternative Investment Funds (AIFs)
Which of the following is true regarding the tenure of a Category I and Category II AIF under the AIF Regulations?
Category I and Category II AIFs must be close-ended with a minimum tenure of three years. Only Category III AIFs are permitted to be open-ended, which suits their trading-oriented strategies and need for flexibility in redemptions.
- AThey must be open-ended with unlimited tenure
- BThey must be close-ended with a minimum tenure of three yearsCorrect
- CThey must be close-ended with a minimum tenure of one year
- DThey can be open-ended or close-ended at the sponsor's option
Explanation
Category I and II AIFs must be close-ended and have a minimum tenure of three years. Only Category III AIFs may be open-ended. The option of one year is incorrect for these categories.
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