n NISM Certifications
X NISM Series X
Medium

A major risk associated with Alternative Investment Funds (AIFs) is illiquidity, as investments in unlisted securities are inherently less liquid and may face difficulties in exit or sale before fund maturity. This illiquidity risk is particularly significant for Category I and II AIFs, which are often close-ended and illiquid by design.

Practice question from NISM Series XIX A- Alternative Investments Funds (AIF) Distributors Mock Test 2 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    The risk of inadequate provisioning against NPAs

  2. B

    The risk of inadequate security creation

  3. C

    The risk of capital inadequacy

  4. Illiquidity risk

    Correct answer

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

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