MCQs on SEBI (Alternative Investment Funds) Regulations,

2012

Question What is an 'Alternative Investment Fund'?

Type multiple_choice
A privately pooled investment vehicle not covered under certain SEBI
Option
regulations
Option A real estate investment trust
Option Any fund investing solely in stocks
Option A government-owned investment institution
Option A publicly traded mutual fund regulated by SEBI
“Alternative Investment Fund” means any fund established or incorporated in
India in the form of a trust or a company or a limited liability partnership or a
body corporate which,-
Solution
• is a privately pooled investment vehicle which collects funds from
investors, whether Indian or foreign, for investing it in accordance with a
defined investment policy for the benefit of its investors.

Which of the following is NOT a category under 'Category I - Alternative

Question
Investment Fund'?
Type multiple_choice
Option Venture capital funds
Option Social impact funds
Option Hedge funds
Option SME funds
Option Infrastructure funds
“Category I - Alternative Investment Fund” which invests in
· start-up or
· early-stage ventures or
· social ventures or
· SMEs or
· infrastructure or other sectors or areas which the government or regulators
Solution
consider as socially or economically desirable and shall include
• venture capital funds,
• SME Funds,
• social impact funds,
• infrastructure funds,
• special situation funds.
 Which entity is NOT eligible as a 'Startup' according to the eligibility criteria in
Question
Alternative Investment Fund?
Type multiple_choice
Option A limited liability partnership formed 8 years ago
Option A company registered as an LLP with turnover of INR 90 Crores
Option A partnership firm working towards innovation
Option An entity formed by splitting up an existing business
Option A private limited company with a turnover of INR 50 Crores
Eligibility Criteria for Startup Recognition:
· The Startup should be incorporated as a private limited company or
registered as a partnership firm or a limited liability partnership.
· Turnover should be less than INR 100 Crores in any of the previous financial
years.
Solution · An entity shall be considered as a startup up to 10 years from the date of its
incorporation.
· The Startup should be working towards innovation/ improvement of existing
products, services and processes and should have the potential to generate
employment/ create wealth. An entity formed by splitting up or reconstruction
of an existing business shall not be considered “Startup”.

What is the maximum number of years an entity can be considered a 'Startup'

Question
from its date of incorporation in AIF?
Type multiple_choice
Option 4 years
Option 6 years
Option 8 years
Option 10 years
Option 12 years
An entity shall be considered as a startup up to 10 years from the date of its
Solution
incorporation.

Which of the following investment is not allowed by 'Infrastructure funds'

Question
registered with SEBI?
Type multiple_choice
Unlisted securities of investee companies engaged in or formed for the
Option
purpose of operating, developing or holding infrastructure projects
 Partnership interests of investee companies engaged in or formed for the
Option
purpose of operating, developing or holding infrastructure projects
Listed debt instruments of investee companies engaged in or formed for the
Option
purpose of operating, developing or holding infrastructure projects
Securitized debt instruments of investee companies engaged in or formed for
Option
the purpose of operating, developing or holding infrastructure projects
Listed equity of infrastructure companies engaged in or formed for the
Option
purpose of operating, developing or holding infrastructure projects
“Infrastructure fund” means an Alternative Investment Fund which invests
primarily in unlisted securities or partnership interest or listed debt or
Solution securitized debt instruments of investee companies or special purpose
vehicles engaged in or formed for the purpose of operating, developing or
holding infrastructure projects.

Question What defines a 'social impact fund' in AIF?

Type multiple_choice
Option An infrastructure fund involved in public projects
Option A venture capital fund focusing on new technologies
Option A hedge fund aiming for high returns
A fund investing primarily in securities of social ventures and meeting social
Option
performance norms
Option A fund investing solely in large corporations
“social venture” means a trust, society or company or venture capital
undertaking or limited liability partnership formed with the purpose of
Solution
promoting SOCIAL WELFARE OR SOLVING SOCIAL PROBLEMS OR PROVIDING
SOCIAL BENEFITS.

Question Under which act is Small and medium enterprise?

Type multiple_choice
Option Limited Liability Partnerships Act,2008
Option Micro, Small and Medium Enterprises Development Act 2006
Option Securities and Exchange Board Act,1992
Option Startup India Act,2016
Option Companies Act, 2013
“SME” means SMALL AND MEDIUM ENTERPRISE and shall have the same
Solution meaning as assigned to it under the Micro, Small and Medium Enterprises
Development Act 2006 as amended from time to time.
Question What type of activities are 'venture capital funds' primarily involved in?
Type multiple_choice
Option Investing in real estate
Option Trading in the stock market
Option Investing in government bonds
Option Investing in unlisted securities of startups and early-stage ventures
Option Providing loans to small businesses
“venture capital fund” means an Alternative Investment Fund which invests
primarily in unlisted securities of start-ups, emerging or early-stage venture
Solution capital undertakings mainly involved in new products, new services,
technology or intellectual property right based activities or a new business
model and shall include an angel fund.

Question Which of the following best defines a 'private equity fund' in AIF?
Type multiple_choice
An AIF that invests primarily in equity or equity-linked instruments of investee
Option
companies
Option An AIF that focuses on listed equity shares
Option An AIF that employs diverse trading strategies for short-term returns.
Option An AIF that invests in listed derivatives.
Option An AIF that engages in high-frequency trading.
“private equity fund” means an Alternative Investment Fund which invests
Solution primarily in equity or equity linked instruments or partnership interests of
investee companies according to the stated objective of the fund.

Which category of AIF employs diverse or complex trading strategies and may
Question
use leverage?
Type multiple_choice
Option Category I
Option Category II
Option Category III
Option Category IV
Option Category V
“Category III Alternative Investment Fund” which EMPLOYS DIVERSE OR
Solution COMPLEX TRADING STRATEGIES and may EMPLOY LEVERAGE including
through investment in listed or unlisted derivatives.
Question What is a 'hedge fund'?
Type multiple_choice
Option An AIF invests in securities with diverse risks, including derivatives.
Option An AIF focused on short-term risky investments.
Option An AIF that does not engage in any form of leverage.
Option An AIF that only invests in private companies.
Option An AIF that invests exclusively in government securities.

“Hedge fund” means an Alternative Investment Fund which employs diverse or

Solution complex trading strategies and invests and trades in securities having diverse
risks or complex products including listed and unlisted derivatives.

Which of the following is NOT an eligibility criterion for the registration of an

Question
Alternative Investment Fund?
Type multiple_choice
Option The Trust Deed is duly registered under the Registration Act, 1908 for trusts.
Option Key investment team members have relevant certifications.
Option The applicant can make public invitations to subscribe securities.
The applicant clearly describes the investment objectives at the time of
Option
registration.
Option The memorandum allows carrying on the activity of an AIF.
Eligibility Criteria

a) the memorandum of association in case of a company; or the Trust Deed in

case of a Trust; or the Partnership deed in case of a limited liability partnership
permits it to carry on the activity of an Alternative Investment Fund;

b) the applicant is prohibited by its memorandum and articles of association

or trust deed or partnership deed from making an invitation to the public to
subscribe to its securities;
c) in case the applicant is a Trust, the instrument of trust is in the form of a
Solution
deed and has been duly registered under the provisions of the Registration Act,
1908;

d) in case the applicant is a limited liability partnership, the partnership is duly

incorporated and the partnership deed has been duly filed with the Registrar
under the provisions of the Limited Liability Partnership Act, 2008;

e) in case the applicant is a body corporate, it is set up or established under the

laws of the Central or State Legislature and is permitted to carry on the
activities of an Alternative Investment Fund;
 f) the applicant, Sponsor and Manager are fit and proper persons based on the
criteria specified in Schedule II of the Securities and Exchange Board of India
(Intermediaries) Regulations, 2008.

What qualifications must at least one key personnel of the AIF manager
Question
possess as per SEBI AIF Regulation?
Type multiple_choice
Option Relevant certification from the National Institute of Securities Market (NISM).
Option A degree in marketing.
Option Experience in international banking only.
Option No specific qualifications are required.
Option A Ph.D. in any field.
The key investment team of the Manager of Alternative Investment Fund has

i. at least one key personnel with relevant certification

from the National Institute of Securities Market (NISM).

Solution ii. at least one key personnel with professional

qualification in finance, accountancy, business management, commerce,
economics, capital market or banking from a university or an institution
recognized by the Central Government or any State Government or a foreign
university, or a CFA charter from the CFA institute or any other qualification
as may be specified by the Board:

Which regulatory body's criteria determine if the applicant, sponsor, and

Question
manager of an AIF are fit and proper persons?
Type multiple_choice
Option Reserve Bank of India (RBI)
Option Ministry of Finance
Option Securities and Exchange Board of India (SEBI)
Option Insurance Regulatory and Development Authority (IRDA)
Option Foreign Investment Promotion Board (FIPB)
The Securities and Exchange Board of India (SEBI) determines if the applicant,
Solution sponsor, and manager of an Alternative Investment Fund (AIF) are fit and
proper persons.
 Within how many days must the SEBI communicate its decision to reject an
Question
AIF application?
Type multiple_choice
Option 14 days
Option 21 days
Option 30 days
Option 60 days
Option 90 days
The decision of the Board to reject the application shall be communicated to
Solution
the applicant within 30 days.

Question What is the minimum corpus required for a scheme of an AIF?

Type multiple_choice
Option 15 crore rupees
Option 10 crore rupees
Option 5 crore rupees
Option 20 crore rupees
Option 25 crore rupees
Each scheme of the Alternative Investment Fund (other than angel fund) shall
Solution
have corpus of atleast twenty crore rupees.

What is the minimum investment value in an AIF from an individual investor

Question
as per SEBI AIF Regulations?
Type multiple_choice
Option 25 lakh rupees
Option 1 lakh rupees
Option 2 lakh rupees
Option 50 lakh rupees
Option 1 crore rupees
The Alternative Investment Fund SHALL NOT ACCEPT from an investor, an
Solution
investment of VALUE LESS THAN 1 CRORE RUPEES.

What is the minimum investment value in an AIF from an individual investor

Question
(who is an employee or director of AIF) as per SEBI AIF Regulations?

Type multiple_choice
Option 25 lakh rupees
Option 1 lakh rupees
Option 2 lakh rupees
Option 50 lakh rupees
Option 1 crore rupees
Provided that in case of investors who are employees or directors of the
Solution Alternative Investment Fund or employees or directors of the Manager, the
MINIMUM VALUE of investment SHALL BE 25 LAKH RUPEES.

Question What is the maximum number of investors allowed in a scheme of an AIF?

Type multiple_choice
Option 100
Option 200
Option 500
Option 1000
Option No limit
NO SCHEME of the Alternative Investment Fund shall have MORE THAN 1000
Solution
INVESTORS.

Question How does an AIF can raise funds according to the investment conditions?
Type multiple_choice
Option IPO
Option Private placement
Option Crowdfunding
Option Public offering
Option More than one of above
The fund shall not solicit or collect funds except by way of PRIVATE
Solution
PLACEMENT.

An AIF is required to file a placement memorandum with the SEBI through

Question
prior to launch of a scheme?
Type multiple_choice
Option Through email
Option Directly by the AIF
Option By a broker
Option Online portal
Option Through a merchant banker
 The Board may communicate its comments, if any, to the merchant banker
prior to launch of the scheme and the merchant banker shall ensure that the
Solution
comments are incorporated in the placement memorandum prior to launch
of the scheme.

What fraction of unit holders by value must consent to any material alteration
Question
in the fund strategy?
Type multiple_choice
Option 1/4rd
Option 1/3nd
Option 1/2rd
Option 2/3th
Option 3/4th
Any material alteration to the fund strategy shall be made with the CONSENT
Solution OF AT-LEAST 2/3 of unit holders by VALUE of their investment in the Alternative
Investment Fund.

What is the minimum investment value for an individual investor in a Social

Question
Impact Fund in AIF?
Type multiple_choice
Option Rs 1 lakh
Option Rs 2 lakh
Option Rs 5 lakh
Option Rs 10 lakh
Option Rs 25 lakh
In case of a SOCIAL IMPACT FUND which invests only in securities of not for
profit organizations registered or listed on a social stock exchange, the
Solution
MINIMUM VALUE of investment by an individual investor shall be 2 LAKH
RUPEES.

What is the minimum continuing interest required by the Manager or Sponsor

Question
in the Category I Alternative Investment Fund?
Type multiple_choice
Option 3.5% of the corpus or 7 crore rupees, whichever is lower
Option 5% of the corpus or 10 crore rupees, whichever is lower
Option 2.5% of the corpus or 5 crore rupees, whichever is lower
Option 1.5% of the corpus or 3 crore rupees, whichever is lower
Option 4% of the corpus or 7 crore rupees, whichever is lower
 The Manager or Sponsor shall have a CONTINUING INTEREST in the Alternative
Investment Fund of NOT LESS THAN 2.5 PERCENT OF THE CORPUS OR 5 CRORE
Solution RUPEES, WHICHEVER IS LOWER, in the form of
investment in the Alternative Investment Fund and such interest shall not be
through the waiver of management fees.

For Category III Alternative Investment Funds, what is the minimum

Question continuing interest required by Manager or Sponsor in an Alternative
Investment Fund?
Type multiple_choice
Option 5% of the corpus or 10 crore rupees
Option 3% of the corpus or 6 crore rupees
Option 4% of the corpus or 8 crore rupees
Option 2.5% of the corpus or 5 crore rupees
Option 6% of the corpus or 9 crore rupees
For CATEGORY III Alternative Investment Fund, the continuing interest SHALL
Solution BE NOT LESS THAN 5% OF THE CORPUS OR 10 CRORE RUPEES, whichever is
LOWER.

What is the minimum tenure for CATEGORY I and CATEGORY II Alternative

Question
Investment Funds?
Type multiple_choice
Option 1 year
Option 2 years
Option 3 years
Option 5 years
Option 10 years
CATEGORY I Alternative Investment Fund and CATEGORY II Alternative
Investment Fund SHALL BE CLOSE ENDED and the tenure of fund or scheme
Solution
launched by such funds shall have a MINIMUM TENURE of 3
years.

By how many years can the tenure of a closed-ended Alternative Investment

Question
Fund be extended with approval?
Type multiple_choice
Option 1 year
Option 2 years
Option 3 years
Option No Maximum Limit prescribed
Option No extension allowed
Tenure.

1. CATEGORY I Alternative Investment Fund and CATEGORY II Alternative

Investment Fund SHALL BE CLOSE ENDED and the tenure of fund or scheme
launched by such funds shall have a MINIMUM TENURE of 3 years.
2. CATEGORY III Alternative Investment Fund may be OPEN ENDED OR CLOSE
ENDED
Solution
3. Extension of the tenure of the close ended Alternative Investment Fund
may be permitted up to 2 years subject to approval of 2/3 of the unit holders
by value of their investment in the Alternative Investment Fund.
➢ Provided that a large value fund for accredited investors may be permitted
to extend its tenure up to 5 years subject to the approval of 2/3 of the unit
holders by value of their investment in the large value fund for accredited
investors

What is the minimum tradable lot required for listing units of a closed-ended
Question
Alternative Investment Fund on a stock exchange?
Type multiple_choice
Option Rs 10 lakh
Option Rs 25 lakh
Option Rs 50 lakh
Option Rs 75 lakh
Option Rs 1 crore
Units of close ended Alternative Investment Fund MAY BE LISTED on stock
Solution
exchange subject to a MINIMUM TRADABLE LOT OF 1 CRORE RUPEES.

What is the maximum percentage of investable funds that CATEGORY I and II

Question
Alternative Investment Funds can invest in an investee company?
Type multiple_choice
Option 5%
Option 10%
Option 20%
Option 25%
Option 33%
Category I and II of Alternative Investment Funds shall invest not more than
Solution 25% of the investable funds in an Investee Company directly or through
investment in the units of other Alternative Investment Funds.
 Large value funds for accredited investors under CATEGORY III. Alternative
Question
Investment Funds can invest up to what percentage in an investee company?

Type multiple_choice
Option 5%
Option 10%
Option 20%
Option 25%
Option 33%
Large value funds for accredited investors of Category III Alternative
Solution
Investment Funds may invest up to 20%.

What approval percentage is required from investors by value of their

Question
investment to allow an Alternative Investment Fund to invest in associates?

Type multiple_choice
Option 1/4rd
Option 1/3nd
Option 50%
Option 2/3th
Option 75%
Alternative Investment Fund shall NOT INVEST EXCEPT WITH THE APPROVAL
OF 75% of investors by value of their investment in the Alternative
Investment Fund in
Solution i. associates; or

ii. units of Alternative Investment Funds managed or

sponsored by its Manager, Sponsor or associates of its Manager or Sponsor.

Investment by CATEGORY I and II Alternative Investment Funds in the shares of

Question entities listed on institutional trading platforms is considered as investment in
what type of securities?
Type multiple_choice
Option Unlisted securities
Option Listed securities
Option Derivatives
Option Equity derivatives
Option Fixed income securities
 Investment by Category I and Category II Alternative Investment Funds in the
shares of entities listed on institutional trading platform shall be deemed to be
Solution investment in ‘unlisted securities’ for the purpose of
these regulations.

What is the maximum duration for which Category I Alternative Investment

Question
Funds can borrow funds for temporary funding requirements?
Type multiple_choice
Option 10 days
Option 14 days
Option 21 days
Option 30 days
Option 45 days
Category I Alternative Investment Funds SHALL NOT BORROW FUNDS directly
or indirectly or engage in any leverage for the purpose of making investments
Solution or otherwise, except for borrowing funds to meet
temporary funding requirements and day-to-day operational requirements for
not more than 30 days.

Category I Alternative Investment Funds are permitted to invest at least 75%

Question
of their investable funds in:
Type multiple_choice
Option Complex financial products
Option Real estate properties
Option Government securities
Option Gold and precious metals
Option Unlisted equity shares
At least 75% of the investable funds shall be invested in unlisted equity
shares or equity linked instruments of a venture capital undertaking or in
Solution
companies listed or proposed to be listed on a SME exchange or SME segment
of an exchange.

Question What investment condition is specific to Social Impact Funds in AIF?

Type multiple_choice
Option May accept grants with a minimum amount of 10 lakh rupees
Option At least 50% invested in government bonds
Option Cannot accept grants
Option Cannot engage in hedging
Option Must invest exclusively in startups
Amount of grant that may be accepted by the fund from any person shall not
Solution
be less than 10 lakh rupees.

How many times a year can Category II Alternative Investment Funds borrow
Question
funds for temporary funding requirements?
Type multiple_choice
Option 1 occasion in a year
Option 2 occasions in a year
Option 3 occasions in a year
Option 4 occasions in a year
Option No limit
Category I Alternative Investment Funds SHALL NOT BORROW FUNDS directly
or indirectly or engage in any leverage for the purpose of making investments
Solution or otherwise, except for borrowing funds to meet
temporary funding requirements and day-to-day operational requirements for
not more than 30 days, on not more than 4 occasions in a year.

Which category of Alternative Investment Funds is permitted to deal in goods

Question
received in delivery against physical settlement of commodity derivatives?

Type multiple_choice
Option Category I
Option Category II
Option Category III
Option Category IV
Option Category V

Category III Alternative Investment Funds may DEAL IN GOODS RECEIVED IN

Solution
DELIVERY AGAINST PHYSICAL SETTLEMENT OF COMMODITY DERIVATIVES.

What is the maximum leverage a Category III AIF can employ relative to its
Question
NAV?
Type multiple_choice
Option 1 time the NAV
Option 1.5 times the NAV
Option 2 times the NAV
Option 3 times the NAV
Option No maximum limit
Category III Alternative Investment Funds MAY ENGAGE IN LEVERAGE or
borrow subject to consent from the investors in the fund and subject to a
Solution maximum limit, as may be specified by the Board (the leverage
of a Category III AIF SHALL NOT EXCEED 2 TIMES THE NAV of the fund.

What is the minimum corpus required for an angel fund as per SEBI AIF
Question
Regulation?
Type multiple_choice
Option Rs 1 crore
Option Rs 5 crore
Option Rs 10 crore
Option Rs 20 crore
Option Rs 25 crore
Solution An angel fund shall have A CORPUS OF AT LEAST 5 CRORE RUPEES.

Question Which of the following is NOT a condition to be considered an angel investor?

Type multiple_choice
Option Venture Capital Fund registered under SEBI Regulations
Option Individual with net tangible assets of at least 2 crore rupees
Option Body corporate with a net worth of at least 10 crore rupees
Option Alternative Investment Fund registered under the SEBI Regulation
Option All of the above are eligible
An INDIVIDUAL investor who has net tangible assets of at least 2 crore rupees
EXCLUDING value of his principal residence, and who
i. has early stage investment experience, or
ii. has experience as a serial entrepreneur, or
iii. is a senior management professional with at least 10 years of
Solution experience.
iv. a BODY CORPORATE with a net worth of at least 10 crore
rupees; or
v. an Alternative Investment Fund registered under these
regulations or a Venture Capital Fund registered under the SEBI (Venture
Capital Funds) Regulations, 1996.

What is the maximum number of angel investors allowed in a scheme of an

Question
angel fund?
Type multiple_choice
Option 50
Option 100
Option 200
Option 500
Option 100
Solution NO scheme of the angel fund shall have MORE THAN 200 ANGEL INVESTORS.

Question For how long can an angel fund accept investments from an angel investor?
Type multiple_choice
Option 1 year
Option 2 years
Option 3 years
Option 5 years
Option No Limit
Solution Angel funds shall accept investment, up to a MAXIMUM PERIOD OF 5 YEARS.

What is the maximum investment limit by an angel fund in a single venture

Question
capital undertaking?
Type multiple_choice
Option Rs 10 crore
Option Rs 20 crore
Option Rs 25 crore
Option Rs 50 core
Option No Limit
Investment by an angel fund in any venture capital undertaking SHALL NOT BE
Solution
LESS THAN 25 LAKH rupees and shall NOT EXCEED 10 CRORES RUPEES.

For how long must the investment by an angel fund in a venture capital
Question
undertaking be locked-in?
Type multiple_choice
Option 1 year
Option 2 years
Option 3 years
Option 5 years
Option 7 years
Investment by an angel fund in the venture capital undertaking shall be
Solution
locked-in for a period of 1 years.

What is the maximum percentage an angel fund can invest in a single venture
Question
capital undertaking across all its schemes?
Type multiple_choice
Option 10%
Option 20%
Option 25%
Option 33%
Option 50%
Angel funds shall NOT INVEST more than 25% of the total investments under
Solution
all its schemes in one venture capital undertaking.

What is the minimum continuing interest that managers or sponsors must

Question
hold in the angel fund?
Type multiple_choice
Option No minimum requirement
Option 10% of the corpus or 10 lakh rupees, whichever is lesser
Option 1% of the corpus or 23 lakh rupees, whichever is lesser
Option 2.5% of the corpus or 50 lakh rupees, whichever is lesser
Option 5% of the corpus or 20 lakh rupees, whichever is lesser

The manager or sponsor shall have a continuing interest in the angel fund of
Solution NOT LESS THAN 2.5% OF THE CORPUS OR 50 LAKH RUPEES, WHICHEVER IS
LESSER, and such interest shall not be through the waiver of management fees.

What category of Alternative Investment Fund does a 'special situation fund'

Question
fall under?
Type multiple_choice
Option Category I
Option Category II
Option Category III
Option Category IV
Option Category V
“special situation fund” means a Category 1 Alternative Investment Fund that
invests in SPECIAL SITUATION ASSETS in accordance with its investment
Solution
objectives and may act as a resolution applicant under the Insolvency and
Bankruptcy Code, 2016.

For how many calendar days must a payment default continue to qualify as a
Question
special situation asset in AIF?
Type multiple_choice
Option There is no specified period
Option 30 days
Option 60 days
Option 90 days
Option 120 days
“special situation asset” includes,- who have disclosed all the defaults relating
to the payment of interest/ repayment of principal

amount on loans from banks / financial institutions/ Systemically Important

Solution Non-Deposit taking Non-Banking Financial Companies/ Deposit taking Non-
Banking Financial Companies and /or listed or unlisted debt securities in terms
of the Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2018 and such payment default is continuing for a
period of at least 90 calendar days after the occurrence of such default.

Which authority registers an Asset Reconstruction Company that can issue

Question
security receipts included in special situation assets?
Type multiple_choice
Option Financial Stability Board (FSB)
Option Reserve Bank of India (RBI)
Option Ministry of Corporate Affairs (MCA)
Option Securities and Exchange Board of India (SEBI)
Option Ministry of Commerce
The Reserve Bank of India (RBI) registers Asset Reconstruction Companies
Solution
(ARCs) that issue security receipts.
 What is the initial tenure of the Corporate Debt Market Development Fund
Question
from its first closing?
Type multiple_choice
Option 3years
Option 5 years
Option 7 years
Option 10 years
Option 15 years
The Corporate Debt Market Development Fund shall be a CLOSE ENDED
Solution FUND, with a tenure of 15 YEARS from the date of its first closing (tenure may
be extended with the prior approval of the Board.)

Who can subscribe to the units of the Corporate Debt Market Development
Question
Fund?
Type multiple_choice
Option Retail Investors
Option Asset Management Companies
Option Corporate Entities
Option Insurance Companies
Option Any of the above
The units of the Corporate Debt Market Development Fund shall be offered
Solution to the Asset Management Companies as defined under the Securities and
Exchange Board of India (Mutual Funds) Regulations, 1996.

What is the minimum continuing interest the Manager or Sponsor must have
Question
in the Corporate Debt Market Development Fund?
Type multiple_choice
Option Rs 1 crore
Option Rs 5 crore
Option Rs 7 crore
Option Rs 10 crore
Option Rs 20 crore
The Manager or Sponsor shall have a continuing interest in the Corporate
Debt Market Development Fund of not less than 5 crore rupees in the form of
Solution investment in the fund but such continuing interest shall not
be through the waiver of management fees.

What is the maximum residual maturity allowed for corporate debt securities
Question
purchased by the Corporate Debt Market Development Fund?
Type multiple_choice
Option 3 years
Option 5 years
Option 7 years
Option 10 years
Option No maximum residual maturity
The RESIDUAL MATURITY of such securities SHALL NOT EXCEED 5 YEARS on
Solution
the date of purchase.

What is the maximum percentage of the Fund's capital that can be invested in
Question securities of any one company under the Corporate Debt Market
Development Fund?
Type multiple_choice
Option 5%
Option 10%
Option 20%
Option 25%
Option 33%
Investment by the Corporate Debt Market Development Fund in any one
Solution investee company SHALL NOT EXCEED 5% OF ITS FUND CAPITAL at the time
of investment.

What is the maximum amount of funds that Corporate Debt Market

Question
Development Fund can borrow?
Type multiple_choice
Option No borrowing allowed
Option 2 Times its Corpus
Option 3 Times its Corpus
Option 5 Times its Corpus
Option 10 Times its Corpus
The Corporate Debt Market Development Fund MAY BORROW FUNDS UP TO
Solution
10 TIMES ITS CORPUS.

How frequently must the portfolio of the Corporate Debt Market

Question
Development Fund be disclosed to the unitholders?
Type multiple_choice
Option Monthly
Option Annually
Option Daily
Option Fortnightly
Option Weekly
The portfolio of the Corporate Debt Market Development Fund shall be
Solution
disclosed to the unitholders on a FORTNIGHTLY BASIS.

How frequently must Category I and Category II Alternative Investment Funds

Question
undertake valuation of their investments?
Type multiple_choice
Option Once every three months
Option Every two years
Option Once a year
Option Once a month
Option At least once every six months
Category I and Category II Alternative Investment Funds shall undertake
Solution valuation of their investments, AT-LEAST ONCE IN EVERY 6 MONTHS, by an
independent valuer appointed by the Alternative Investment Fund.

Under what condition can the valuation period for Category I and II funds be
Question
extended to one year?
Type multiple_choice
Option Approval of at least 75% of the investors by value of their investment
Option Approval by the independent valuer
Option There is no provision to extend the valuation period
Option Approval of at least 50% of the investors
Option Approval of the Board
Provided that such period may be enhanced to one year on approval of at-
Solution least 75% of the investors by value of their investment in the Alternative
Investment Fund.

For Category III Alternative Investment Funds, how often must the Net Asset
Question
Value (NAV) be disclosed for open-ended funds?
Type multiple_choice
Option Once every two months
Option At least once a month
Option Annually
Option At least once every six months
Option At least once a quarter
 Category III Alternative Investment Funds shall ensure that calculation of the
net asset value (NAV) is independent from the fund management function of
the Alternative Investment Fund and such NAV shall
Solution
be disclosed to the investors AT INTERVALS NOT LONGER THAN A QUARTER
FOR CLOSE ENDED FUNDS and AT INTERVALS NOT LONGER THAN A MONTH
FOR OPEN ENDED FUNDS.

Who is responsible for appointing an independent valuer for valuation of

Question
investments of Alternative Investment Fund?
Type multiple_choice
Option The Sponsor
Option The Board
Option The Trustee
Option The investors
Option The Manager
The Manager shall ensure that the Alternative Investment Fund appoints an
Solution
independent valuer.

What is the maximum time allowed for the Manager to redress investor
Question
grievances under Corporate debt market development fund ?
Type multiple_choice
Option 14 calendar days
Option 21 calendar days
Option 30 calendar days
Option 45 calendar days
Option 60 calendar days
The Manager shall redress investor grievances promptly but not later than 21
Solution
calendar days from the date of receipt of the grievance.

For how long must the records be maintained after the winding up of the
Question
Alternate Investment Fund?
Type multiple_choice
Option 1 year
Option 2 years
Option 3 years
Option 4 years
Option 5 years
 The records shall be maintained for a period of 5 years after the winding up of
Solution
the fund.

What percentage of investors by value must pass a resolution to wind up an

Question
AIF set up as a trust as Corporate debt market development fund?
Type multiple_choice
Option 51%
Option 60%
Option 75%
Option 90%
Option 100%
If 75% of the investors by value of their investment in the Alternative
Solution Investment Fund pass a resolution at a meeting of unit holders that the
Alternative Investment Fund be wound up.

What is the duration of the liquidation period following the expiry of the
Question
tenure of an Alternative Investment Fund (AIF) scheme?
Type multiple_choice
Option 1 year
Option 3 years
Option 2 years
Option 4 years
Option 5 years

“liquidation period” means a period of one year following the expiry of tenure
Solution
or extended tenure of the scheme of an Alternative Investment Fund.

What defines an 'accredited investor' in terms of annual income for an

Question
individual?
Type multiple_choice
Option At least 2 crore rupees
Option At least 3 crore rupees
Option At least 5 crore rupees
Option At least 7.5 crore rupees
Option At least 10 crore rupees
“accredited investor” means any person who is granted a certificate of
accreditation by an accreditation agency who- in case of an individual, Hindu
Solution
Undivided Family, family trust or sole proprietorship has:
• annual income of at least 2 crore rupees;
 What is the minimum net worth required for a trust other than a family trust
Question
to be considered an accredited investor?
Type multiple_choice
Option 5 crore rupees
Option 7.5 crore rupees
Option 10 crore rupees
Option 25 crore rupees
Option 50 crore rupees
In case of a trust other than family trust, has net worth of at least 50 crore
Solution
rupees.