n NISM Certifications
X NISM Series X
Medium

A 'Clawback mechanism' in an AIF ensures that any incentives paid to the manager based on early profits can be recovered or reversed if subsequent losses occur, maintaining fairness over the fund's life.

Practice question from NISM Series XIX A- Alternative Investments Funds (AIF) Distributors Mock Test 1 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Recover distributions to investors

  2. B

    Offset earlier losses against future profits

  3. C

    Offset manager incentives against losses

  4. Reverse incentives paid to manager in earlier years

    Correct answer

A full explanation for this question is being written. In the meantime, the correct answer is highlighted above.

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NISM Series XIX A- Alternative Investmen…