I haven’t gotten to the mind maps stuff yet. I plan to do that on a three day weekend in May. But here’s another example of why I think Schweser gets lazy at level three. Check out the third practice exam, question 18.6 where it asks you to calculate the Modified Deitz method for GIPS. First, GIPS doesn’t require the use of the Deitz Method anymore. Second, I checked the 2009 level three practice exams. This question appeared as question number 22 in the third practice exam that year. So, despite the significant changes implemented in GIPS beginning in 2011, Schweser felt it was “ok” to continue using material that was sourced from a previous GIPS iteration. Third – and here’s the kicker – the answer sheet for the 2011 exam READILY ACKNOWLEDGES that the Modified Deitz method is no longer permitted/required under GIPS. As yourself: If you know something is no longer applicable to the curriculum, why would you including it as testable material?
oooooh, modified Dietz was included in Schweser’s books, shame on you Schweser.
RoastBeef Wrote: ------------------------------------------------------- > I haven’t gotten to the mind maps stuff yet. I > plan to do that on a three day weekend in May. > > But here’s another example of why I think Schweser > gets lazy at level three. Check out the third > practice exam, question 18.6 where it asks you to > calculate the Modified Deitz method for GIPS. > > First, GIPS doesn’t require the use of the Deitz > Method anymore. > > Second, I checked the 2009 level three practice > exams. This question appeared as question number > 22 in the third practice exam that year. So, > despite the significant changes implemented in > GIPS beginning in 2011, Schweser felt it was “ok” > to continue using material that was sourced from a > previous GIPS iteration. > > Third – and here’s the kicker – the answer sheet > for the 2011 exam READILY ACKNOWLEDGES that the > Modified Deitz method is no longer > permitted/required under GIPS. As yourself: If you > know something is no longer applicable to the > curriculum, why would you including it as testable > material? The Modified Dietz formula is still presented in the curriculum, so it’s fair game.
The approximated method that adjust for daily cash flow such Modified Dietz is the minimum required GIPS standard for performance calculation from 1 Jan 2005 to 31 Dec 2009. It is only after 1 Jan 2010 that firms must use a more precise method of calculating. This means that in the exam, it is possible to see a question regarding portfolio return calculation if the data happens to fall within 1 Jan 2005 to 31 Dec 2009. Hence Modified Dietz will always be relevant due to legacy reason.
bell is correct. CFAI has included it in GIPS reading . For firms reporting performance after 2005 but before 2010 Jan , they can use the looser standard of Mod Dietz, instead of valuing the portfolio at each cash flow event. You have to know that and CFAI might even test you on this by creating scenarios before 2005 , after 2010 etc.
good points janakisri and bell99–can’t help but think of a famous Vince Lombardi quote: “Details lose ball games”
Modified Dietz is my favorite part of the curriculum, they better test that 'ish!!
didn’t all the dietz stuff say “describe” or something like that…
I haven’t looked through the CFAI Practice Exams yet. Is GIPS or ethics tested in the Morning Session?
thepinkman Wrote: ------------------------------------------------------- > I haven’t looked through the CFAI Practice Exams > yet. Is GIPS or ethics tested in the Morning > Session? Based on previous years, it’s been tested in the afternoon. But who’s to say they won’t change it this year?
I don’t think it’s right for CFAI to put GIPS in the LIII material. It’s just an attempt to make their GIPS compliance standard more relevant.