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UPSC Prelims 2025 GS Paper 1, question 1

Topic: Economy

Q1

With reference to investments, consider the following :

I. Bonds

II. Hedge Funds

III. Stocks

IV. Venture Capital

How many of the above are treated as Alternative Investment Funds?

  1. (a) Only one
  2. (b) Only twoCorrect answer
  3. (c) Only three
  4. (d) All the four

Solution.

Answer: (b) Only two

  1. Items I and III are incorrect: Bonds (debt securities) and Stocks (listed equities) are traditional financial investment instruments, not Alternative Investment Funds.
  2. Items II and IV are correct: under the SEBI (Alternative Investment Funds) Regulations, 2012, Venture Capital Funds (Category I AIF) and Hedge Funds (Category III AIF) are privately pooled investment vehicles classified as Alternative Investment Funds.