Unit ko samjho · NISM Series XIX-A
Concepts in Alternative Investment Funds Industry
7 questions is unit mein
Sawaal aur jawaab English mein hain, kyunki NISM ka exam paper bhi English mein hota hai.
Is unit mein kya hai
- What does an investor’s capital commitment to a private capital fund usually represent?
- What is a drawdown notice in a fund that calls capital over time?
- An investor commits ₹5 crore and pays calls of ₹1.2 crore and ₹0.8 crore. Without recalls or adjustments, what remains unfunded?
- A fund charges 1.5% annually on ₹80 crore of commitments. Invested capital is ₹50 crore. What is the full-year fee before taxes?
- What does a preferred return in a private fund’s distribution terms normally establish?
- What generally distinguishes the first close from the final close of a private fund?
- A fund has ₹140 crore to distribute. Its terms first return ₹100 crore of investor capital and then pay investors ₹10 crore as their full preferred return. The remaining amount is split 80% to investors and 20% to the manager, with no catch-up or other costs. What does the manager receive?
Zaroori ideas
Practice bank se · 1
What does an investor’s capital commitment to a private capital fund usually represent?
A capital commitment is the amount the investor agrees to provide under the fund documents. It need not all be paid on the commitment date. Remember: Committed capital and contributed capital are not automatically equal.
Hint Distinguish an agreement to supply capital from money already invested. Common mistake: Assuming that the entire commitment has already been paid.
XIX-A-015Practice bank se · 2
What is a drawdown notice in a fund that calls capital over time?
A drawdown notice asks the investor to pay capital according to the agreed fund terms. Here, drawdown means a capital call rather than a decline from a price peak. Remember: In commitment-based funds, a drawdown is a call for capital.
Hint Focus on when previously committed money must actually be paid. Common mistake: Confusing a capital drawdown with a fall in investment value.
XIX-A-016Practice bank se · 3
An investor commits ₹5 crore and pays calls of ₹1.2 crore and ₹0.8 crore. Without recalls or adjustments, what remains unfunded?
The unfunded commitment is ₹3 crore because ₹2 crore has already been paid. Paid capital = ₹1.2 crore + ₹0.8 crore = ₹2 crore. Unfunded commitment = ₹5 crore − ₹2 crore = ₹3 crore. Remember: Unfunded commitment is the remaining contractual capital obligation.
Hint Separate the original promise from the amounts already contributed. Common mistake: Reporting capital already contributed as capital still to be funded.
XIX-A-017Practice bank se · 4
A fund charges 1.5% annually on ₹80 crore of commitments. Invested capital is ₹50 crore. What is the full-year fee before taxes?
The full-year management fee is ₹1.2 crore because the stated base is committed capital. Fee = ₹80 crore × 1.5% = ₹1.2 crore. The ₹50 crore invested amount does not change that contractual base. Remember: The fee percentage alone is insufficient without knowing its base.
Hint Read the fee base before using the percentage. Common mistake: Applying a fee to invested capital when the documents specify commitments.
XIX-A-018Practice bank se · 5
What does a preferred return in a private fund’s distribution terms normally establish?
A preferred return establishes a priority in the distribution of available proceeds under the agreed terms. It is not automatically a guaranteed return. Remember: A distribution priority is different from a return guarantee.
Hint Think about the order in which available proceeds are shared. Common mistake: Presenting a hurdle or preferred return as an assured annual payment.
XIX-A-019Practice bank se · 6
What generally distinguishes the first close from the final close of a private fund?
The first close admits initial commitments, while the final close normally ends the fundraising period under the fund terms. Further investors may be admitted between those milestones where permitted. Remember: Fundraising closes are not the same as investment exits.
Hint Place both events on the fundraising timeline rather than the exit timeline. Common mistake: Interpreting a fund’s final close as the winding up of its portfolio.
XIX-A-020Practice bank se · 7
A fund has ₹140 crore to distribute. Its terms first return ₹100 crore of investor capital and then pay investors ₹10 crore as their full preferred return. The remaining amount is split 80% to investors and 20% to the manager, with no catch-up or other costs. What does the manager receive?
The manager receives ₹6 crore because only ₹30 crore remains for the final split. Residual proceeds = ₹140 crore − ₹100 crore − ₹10 crore = ₹30 crore. Manager’s share = 20% × ₹30 crore = ₹6 crore. Remember: Apply a distribution waterfall in its stated order.
Hint Follow each distribution priority before applying the final split. Common mistake: Charging carried interest on returned capital or on amounts allocated to a prior hurdle.
XIX-A-021