Please answer true or false: (All i got for now, i’ll post more later) 1. GIPS were established to enhance the application of global accounting standards. 2. GIPS require firms to show GIPS-compliant history for a minimum of ten years, or since inception of the firm or composite if in existence less than ten years. 3. GIPS require managers to include all actual fee-paying and non-fee-paying discretionary portfolios in composites defined according to similar strategy and/or investment objective. 4. In cases where applicable local or country-specific law or regulation conflicts with the GIPS standards, the Standards REQUIRE FIRMS to comply with the local law or regulation and make full disclosure of the conflict. 5. FIRM ABC has prepared and presented this report in compliance with the Global Investment Performance Standards (GIPS®) and the CFA Institute. 6. If the parent company claims GIPS compliance, then all subsidiaries and divisions are automatically GIPS compliant. 7. PTN, Inc., is an investment consulting firm. It has used Global Investment Performance Standards (GIPS) since its inception two years ago. PTN claims to be in compliance with GIPS. 8. FIRMS are encouraged to undertake the verification process, defined as the review of a FIRM’S performance measurement processes and procedures by an independent third-party verifier. 9. PORTFOLIO valuations MUST be based on MARKET VALUES (not cost basis or book values). 10. For periods prior to 1 January 2001, PORTFOLIOS MUST be valued at least quarterly. For periods between 1 January 2001 and 1 January 2010, PORTFOLIOS MUST be valued at least monthly. For periods beginning 1 January 2010, FIRMS MUST value PORTFOLIOS on the date of all LARGE EXTERNAL CASH FLOWS. 11. For periods beginning 1 January 2005, FIRMS MUST use SETTLEMENT DATE ACCOUNTING. 12. Accrual accounting must be used for fixed-income securities and all other assets that accrue interest income. 13. Returns from cash and cash equivalents held in portfolios must be included in total-return calculations. 14. Firm X currently claims compliance with the Global Investment Performance Standards (GIPS) but uses settlement-date accounting. Beginning January 1, 2005 must begin using trade-date accounting and recalculate historical performance of its composites. 15. For periods beginning 1 January 2005, FIRMS MUST use approximated rates of return that adjust for daily-weighted EXTERNAL CASH FLOWS. 16. For periods beginning 1 January 2010, FIRMS MUST value PORTFOLIOS on the date of all LARGE EXTERNAL CASH FLOWS. 17. Formula for Modified Dietz: Return = EMV-BMV+CF/ BMV + S (CFxW) ***s = summation 18. Composites must be asset weighted using end-of-period weightings. 19. From a firm’s handbook: " The performance of the equity portion of the balanced accounts, excluding cash, was combined with the equity composite results." 20. All actual, fee-paying, discretionary portfolios must be included in at least one composite, and nondiscretionary portfolios are permitted to be included in a firm’s composites.
- FALSE (fair and representative performance presentation and global comparability) 2. FALSE (5 years or since inception, then add until 10 years is reached) 3. FALSE (all actual fee paying - disclaimer: non-fee paying can be included with appropriate disclosure) 4. TRUE 5. FALSE (no reference to CFA. only one statement is allowable) 6. TRUE 7. FALSE (only one statement is allowable to claim GIPS compliance) 8. TRUE 9. TRUE 10. TRUE 11. FALSE (trade data) 12. TRUE 13. TRUE 14. FALSE (no exceptions and only one allowable statement) 15. ? Poor wording. They can use approximated up until Jan 1, 2010. But TWRR is preferred. 16. TRUE 17. FALSE (-CF in numerator) 18. FALSE (beg of period or beg of period modified by weighted CFs) 19. FALSE (carve-outs must include cash) 20. FALSE (non-discretionary portfolios are not allowed to be included in a firm’s composites)
- false 2. false (min. 5 years) 3. false (non-fee paying is optional) 4. true 5. true (not sure about CFAI) 6. false 7. false (bad question) 8. true 9. true 10. true 11. false (trade date) 12. true 13. true 14. false 15.true 16. true 17. no clue and I don’t care 18. false (beg. of period) 19. false (must include cash) 20. true How bad i am?
1 F 2 F 3 F 4 T 5 F 6 T 7 F 8 T 9 T 10 T 11 F 12 T 13 T 14 F 15 F 16 T 17 F 18 F 19 F 20 F
The answers: 1. False 2. False (5 yrs) 3. False (only fee paying are required, but non-fee optional if disclosure is given) 4. True 5. False- no reference to CFA 6. False- just because parent is compliant, doesn’t mean subs are as well 7. False - inv consulting firms cannot claim GIPS compliance 8. True 9. True 10. True 11. False - Trade date 12. True 13. True 14. False- don’t need to recalculate 15. True 16. True 17. False (-CF in numerator) 18. False (beginning period) 19. False - carve outs require cash 20. False -cannot include non-discretionary Nice work!!!
passthismofo Wrote: ------------------------------------------------------- > 1. false > 2. false (min. 5 years) > 3. false (non-fee paying is optional) > 4. true > 5. true (not sure about CFAI) > 6. false > 7. false (bad question) > 8. true > 9. true > 10. true > 11. false (trade date) > 12. true > 13. true > 14. false > 15.true > 16. true > 17. no clue and I don’t care > 18. false (beg. of period) > 19. false (must include cash) > 20. true > > How bad i am? Crap I confused non-discretionary with non-fee paying for Q20. These are the stupid questions that would kill me on the exam.
Thanks for the effort of grouping all the questions. I think you cover about everything we need to know (except RE and PE which are missing…) 1 F 2 T 3 F 4 T 5 F 6 F 7 T 8 T 9 T 10 T 11 F 12 T 13 T 14 F 15 T 16 T 17 F 18 F 19 F 20 F
woohoo I pass… VA is now compliant with GIPS except for question 6. Question 15 was thrown out.
No worries, i’m going to try and post some more later.
cdogstu77 Wrote: ------------------------------------------------------- > No worries, i’m going to try and post some more > later. Please do cd…very useful! thx
Good one cd. Thanks. Was a good review.
what is up with # 6? If parent claims compliance, the subsidiaries don’t have to claim as well, do they? Any input on this one? I see conflicting answers above.
leonmail Wrote: ------------------------------------------------------- > what is up with # 6? If parent claims compliance, > the subsidiaries don’t have to claim as well, do > they? > > Any input on this one? I see conflicting answers > above. Has to do with the definition of the firm. A well defined entity within the a group can be GIPS compliant, but that does not automotically qualify all subs.
- F 2. F 3. F 4. T 5. F 6. F 7. F 8. T 9. T 10. T 11. F 12. T 13. T 14. F 15. T 16. T 17. Hmmm… F? 18. F 19. F 20. F
Is number 12 true? I put false, but I guess its all securities that generate interest income must use accrual accounting, but equity securities that accrue dividend income are only recommended to use accrual accounting until 2010, when its required?? Don’t have the book in front of me, can anyone confirm?
ConfusedbyCFA Wrote: ------------------------------------------------------- > Is number 12 true? I put false, but I guess its > all securities that generate interest income must > use accrual accounting, but equity securities that > accrue dividend income are only recommended to use > accrual accounting until 2010, when its > required?? > > Don’t have the book in front of me, can anyone > confirm? Yes, I believe #12 is true.