n NISM Certifications
X NISM Series X
Medium

Where should the focus be to ensure alignment of interests between investors and sponsors/managers in an AIF?

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

    Employee Stock Options Plan (ESOP) for the management team

  2. B

    Tax deductibility on management fees

  3. C

    Policies for promoting the management team

  4. Management fee and additional return (carry)

    Correct answer

Why this is the answer

The primary concern for aligning interests is around fee structures, carried interest, and incentives that motivate managers to maximize investor returns.

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