NISM Series 19A Mock Test 3: Free AIF Distributors Paper

How this mock is marked

• 50 questions, one mark each.
• 60 minutes on the clock. That is the real exam's pace: 120 minutes for 100 questions.
• A wrong answer loses one tenth of a mark. A blank loses nothing.
• You pass with 60% or more.
• Submit to see your score and the chapters to work on. Then check each right answer and why it is right.

What this paper covers

50 questions from 13 chapters. Each chapter gets a share that follows our question bank.

• Overview of Alternative Investments: 2 questions.
• Alternative Investment Funds in India: 2 questions.
• Concepts in Alternative Investment Funds Industry: 3 questions.
• Regulatory Framework – Indian Context: 5 questions.
• Alternative Investment Fund Structuring: 5 questions.
• Risk and Return – Investor and Fund Perspective: 5 questions.
• Investment Process and Governance of Funds: 5 questions.
• Fund Due Diligence – Investor Perspective: 7 questions.
• Legal Documents and Negotiations – Investor Perspective: 5 questions.
• Fund Monitoring, Reporting and Exit: 3 questions.
• Valuation: 3 questions.
• Taxation – India specific: 2 questions.
• Good Practices: 3 questions.

By level: Beginner 15 · Intermediate 25 · Advanced 10.

Chapter split of Mock 3

How Mock 3 shares its questions between chapters and levels. This split belongs to this paper. The other mocks of this exam have their own.

• Overview of Alternative Investments: Beginner 1 · Intermediate 1 · Advanced 0.
• Alternative Investment Funds in India: Beginner 1 · Intermediate 1 · Advanced 0.
• Concepts in Alternative Investment Funds Industry: Beginner 1 · Intermediate 1 · Advanced 1.
• Regulatory Framework – Indian Context: Beginner 1 · Intermediate 3 · Advanced 1.
• Alternative Investment Fund Structuring: Beginner 2 · Intermediate 3 · Advanced 0.
• Risk and Return – Investor and Fund Perspective: Beginner 1 · Intermediate 2 · Advanced 2.
• Investment Process and Governance of Funds: Beginner 1 · Intermediate 3 · Advanced 1.
• Fund Due Diligence – Investor Perspective: Beginner 2 · Intermediate 4 · Advanced 1.
• Legal Documents and Negotiations – Investor Perspective: Beginner 1 · Intermediate 3 · Advanced 1.
• Fund Monitoring, Reporting and Exit: Beginner 1 · Intermediate 1 · Advanced 1.
• Valuation: Beginner 1 · Intermediate 2 · Advanced 0.
• Taxation – India specific: Beginner 0 · Intermediate 1 · Advanced 1.
• Good Practices: Beginner 2 · Intermediate 0 · Advanced 1.

3 sample questions, with answers

These 3 questions are not in Mock 3, so reading them spoils nothing here. They come from Mock 2 of this exam. Each one shows the hint, the answer and why every wrong option is wrong.

1. Q1Capital calls of ₹18 lakh and ₹22 lakh fall before any receipts. Available cash is ₹25 lakh. What funding shortfall must be addressed?

   • A

     Option A. ₹3 lakh

     Why it is wrong: ₹3 lakh compares available cash only with the second call and ignores the first.

   • B

     Option B. ₹40 lakh

     Why it is wrong: ₹40 lakh is the total amount due before deducting the available cash.

   • C

     Option C. ₹7 lakh

     Why it is wrong: ₹7 lakh is the cash left after only the first call and ignores the second call.

   • D

     Option D. ₹15 lakh — Correct answer

   Answer: D. The funding shortfall is ₹15 lakh because total calls exceed available cash. Calls = ₹18 lakh + ₹22 lakh = ₹40 lakh. Shortfall = ₹40 lakh − ₹25 lakh = ₹15 lakh. Remember: Liquidity planning must include all relevant commitments, not just the next call.

   Hint, shown before you answer in practice mode: Aggregate the obligations falling before the next cash inflow. Common mistake: Assessing each capital call separately against the same available cash.

   XIX-A-096mediumnumerical

   Study this unit

2. Q2A feeder’s attributable master-fund payout is ₹20 lakh before ₹4 lakh master-level charges. Feeder charges are ₹1 lakh. What reaches investors before tax?

   • A

     Option A. ₹16 lakh

     Why it is wrong: ₹16 lakh deducts the master-level charges but ignores the feeder charges.

   • B

     Option B. ₹19 lakh

     Why it is wrong: ₹19 lakh deducts only the feeder charges and ignores the master-level charges.

   • C

     Option C. ₹24 lakh

     Why it is wrong: ₹24 lakh incorrectly adds the master charges rather than deducting the stated costs.

   • D

     Option D. ₹15 lakh — Correct answer

   Answer: D. Investors receive ₹15 lakh before tax after both stated layers of charges. Master-level net payout = ₹20 lakh − ₹4 lakh = ₹16 lakh. Investor payout = ₹16 lakh − ₹1 lakh = ₹15 lakh. Remember: Calculate investor cash after every applicable structural layer.

   Hint, shown before you answer in practice mode: Account for each stated charge once, at the layer where it arises. Common mistake: Stopping the calculation at the master fund’s net payout.

   XIX-A-051hardnumerical

   Study this unit

3. Q3An investor pays ₹100 lakh today and receives ₹112 lakh exactly one year later, with no other cash flows. What is the annual return?

   • A

     Option A. 112%

     Why it is wrong: 112% expresses the ending amount as a percentage of the starting amount, without subtracting the original capital.

   • B

     Option B. 1.12%

     Why it is wrong: 1.12 is the value multiple, not a percentage return of 1.12%.

   • C

     Option C. 12% — Correct answer

   • D

     Option D. 10.71%

     Why it is wrong: 10.71% divides the gain by the ending value rather than the starting investment.

   Answer: C. The annual return is 12% because the one-year gain is ₹12 lakh on ₹100 lakh. Return = (₹112 lakh − ₹100 lakh) ÷ ₹100 lakh × 100 = 12%. With only these two cash flows one year apart, the annual internal rate of return is also 12%. Remember: Do not confuse ending value, value multiple and percentage gain.

   Hint, shown before you answer in practice mode: Measure the gain relative to the amount initially invested. Common mistake: Using the ending investment value as the denominator for return.

   XIX-A-055mediumnumerical

   Study this unit

Practise the chapters you missed

Your result shows which chapters need more work. Open a chapter on the NISM Series XIX-A practice page. Check each answer and read why it is right.