n NISM Certifications
X NISM Series X
Medium

The continuing interest of the sponsor in an AIF is specified to ensure the alignment of interests between investors and sponsors. This interest demonstrates the sponsor’s commitment, mitigates moral hazard, and aligns incentives, thus protecting investor interests.

Practice question from NISM Series XIX A- Alternative Investments Funds (AIF) Distributors Mock Test 4 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. Alignment of interests between investors and sponsors

    Correct answer

  2. B

    Availability of capital for leveraging at fund level

  3. C

    First claim on profit on a continuous basis

  4. D

    Risk mitigation for the sponsors through the AIF

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

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