CFAI Exam 3 Question11

Don’t have the question but this is the answer: The time-weighted rate of return is calculated by computing the quarterly holding period returns and linking those returns into an annual return: 1.0909 x 0.9286 x 1.3333 x 0.9762 = 1.3185. 1.3185 - 1 = 0.3185 or 31.85%. My question is why aren’t they calculating the geometric mean? aren’t they missing one step? (1.3185)^.25? I noticed a few details that were tested in the practice exams that weren’t in the schweser study notes like the 8 topics under verification for GIPS. This is very discomforting. Also I noticed that the CFAI questions are much tricker then the book 6 questions since they aren’t straightfwd calculations and that’s what i’m been preparing for. Scored 65% on the first exam then 55% on Exam 3. ugh dsfiu320r9u309rjk;sdlm;.,cv/,.smd;oidsafjh94e8uhg9eughfoifjofjsfjds

these are quarterly returns – so you do not do the ^.25 part

You need to calculate GM, buth the answer that you will get is quarters. you need to annualize it by ^4. This effectively negates the 4th root (or whatever thats called)

gotcha…thanks guys

You’re not talking about the eight major sections of the GIPS Standards on Page 64, are you?

Q4 in Exam 2. LOS 3&4.g. Verification procedures include a) definition of the firm; b) composite construction; c) nondiscretionary accounts; d) sample account selection; e) account review; f), performance measurement calculation; g) disclosures; and h) maintenance of records. Calculation methodology and presentation and reporting are provisions of the Global Investment Performance Standards (GIPS), not the verification process. Is this is the Schweser notes?

> dsfiu320r9u309rjk;sdlm;.,cv/,.smd;oidsafjh94e8uhg9 > eughfoifjofjsfjds what’s the answer to this Econ question?

agenka Time weighted return: Schweser notes - Take the geometric mean if the investment period is greater than a year. GIPS: You can download the complete GIPS material from the CFAI website, however according to my understanding (and what is says the CFAI study material) this specific GIPS question and the entire section on Verification should not be applicable for Level 1.

canbok, that’s how i read it to…that we don’t need to know it. but i guess that’s not right. great…another 166 pages to read before saturday

Or just know these 8 points and hope for the best… Good luck