Exp) Option b is the correct answer.

An Alternative Investment Fund (AIF) refers to any fund established or incorporated in India, which is a privately pooled investment vehicle that collects funds from sophisticated investors (Indian or foreign) and invests them according to a defined investment policy for the benefit of its investors.As per SEBI (Alternative Investment Funds) Regulations, 2012 – Regulation 3(4), AIFs are classified into three broad categories i.e. Category I,II and III

Option I is incorrect: Stocks such as equity shares are traditional investment instrument representing the ownership of an investor

Option II is correct: Hedge Funds is a category III AIFs which employ diverse or complex trading strategies and may employ leverage including through investment in listed or unlisted derivatives

Option III is incorrect: Bonds are a type of debt instrument through which an investor lends money to a company or government in exchange for regular interest payments, without receiving any ownership stake in the entity.

Option IV is correct: Venture capital is a Category I AIFs which invest in start-up or early stage ventures or social ventures or SMEs or infrastructure or other sectors or areas which the government or regulators consider as socially or economically desirable

Source: https://www.sebi.gov.in/sebi_data/attachdocs/1471519155273.pdf