📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!

    Question

    Which category of AIF is permitted to use leverage,

    including through borrowing, for investment purposes as per SEBI regulations?
    A Category I AIF Correct Answer Incorrect Answer
    B Category II AIF Correct Answer Incorrect Answer
    C Category III AIF Correct Answer Incorrect Answer
    D Angel Fund Correct Answer Incorrect Answer
    E InVITs Correct Answer Incorrect Answer

    Solution

    Category III AIFs (such as hedge funds) are allowed to employ leverage and complex trading strategies to generate short-term returns.
    In contrast, Category I and II AIFs are generally restricted from using leverage, except for limited short-term funding requirements.

    Practice Next
    More Capital Market Questions