n NISM Certifications
X NISM Series X
Medium

What is a significant risk faced by a foreign investor when investing in an India-focused Alternative Investment Fund?

Practice question from NISM Series XIX A- Alternative Investments Funds (AIF) Distributors Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Big Non-Performing Assets (NPAs) of Indian banks

  2. Depreciation of the Indian currency

    Correct answer

  3. C

    The huge liability of the Reserve Bank of India towards the Indian Government

  4. D

    Unlimited Liability

Why this is the answer

Currency depreciation can adversely affect the returns of foreign investors when they repatriate profits in foreign currency, making it a key risk in India-focused AIF investments.

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