UPSC Prelims 2025— Question 1

This question tests the UPSC concept of Alternative Investment Funds within Capital Markets & Investment. The correct answer is option B, which corresponds to “Only two”. The key point is to read each statement or alternative literally and distinguish the constitutional, institutional, scientific, geographical or economic rule being tested from plausible-sounding distractors. Option A — “Only one” — is assessed against the underlying concept; it is correct only when it satisfies the condition stated in the question. Option B — “Only two” — is similarly tested against the same rule rather than against a superficial association. Option C — “Only three” — can be attractive because it often combines statements that are individually familiar, but a single incorrect statement makes a combination option incorrect. Option D — “All the four” — must also be checked independently; UPSC frequently uses an absolute word, an incorrect institutional attribution, an incorrect chronology, or an over-broad statement as the elimination point. For this PYQ, the decisive reasoning is therefore the distinction captured by the keyed option B. The question should be approached by first identifying the subject domain, then verifying each statement separately, and finally mapping the valid statements to the answer code. This also illustrates an important Prelims technique: do not select an option merely because one statement is unquestionably correct. Where the question asks how many statements are correct or which combination is correct, every component has to survive verification. The distractors are useful for revision because they identify the nearby concepts that can be confused with the tested one. In practice, an aspirant should retain the underlying principle rather than memorise the option letter. The final answer in this database follows the consolidated Set-A answer-key reference used for verification, while the question wording and options are based on the uploaded UPSC paper scan.