CFA Level 1 – Introduction to the global investment performance standards (GIPS) MCQs
A variety of misleading reporting procedures are used. Some of these misleading practices include representative accounts, survivorship bias, varying time periods. Here in MCQs.club we have made easy and useful exams focus Multiple-Choice Questions (MCQs) on global investment performance standards gips cfa that fully cover MCQs on cfa institute gips, gips cfa, cfa gips standards. Mastering gips for your level 1 CFA exam is made easy withs the practice questions, which helps you to test Your gips standards knowledge. These free analyst notes are also useful for competitive exams, other professional accountancy exams and business management exams.
- A variety of misleading reporting procedures are used. Some of these misleading practices include:
- Representative accounts
- Survivorship bias
- Varying time periods—showing performance for selected time periods with outstanding returns.
- All of the above
- Introduction to the Global Investment performance Standards (GIPS) are a set of ethical principles based on a standardized, industry-wide approach.
- True
- False
- Which of the following is correct?
- Investment firms can voluntarily follow GIPS in their presentation of historical investment results to prospective clients.
- GIPS standards seek to avoid misrepresentations of performance.
- Both A&B
- None
- Composite – is a grouping of individual discretionary portfolios representing a similar investment strategy, objective, or mandate. Examples of possible composites include:
- Large Capitalization Growth Stocks
- Investment Grade Domestic Bonds
- Both A&B
- None
- Which of the following is correct?
- Firms are encouraged to pursue independent verification.
- Verification applies to the entire firm’s performance measurement practices and methods, not a selected composite.
- Both A&B
- None
- GIPS Objectives include:
- To ensure consistent, accurate investment performance data in areas of reporting, records, marketing, and presentations.
- To promote global “self-regulation.”
- To obtain global acceptance of calculation and presentation standards in a fair, comparable format with full disclosure.
- All of the above
- Key Characteristics of GIPS include:
- There will be no partial compliance and only full compliance can be claimed.
- GIPS contain both required and recommended provisions—firms are encouraged to adopt the recommended provisions.
- GIPS are ethical standards for performance presentation which ensure fair representation of results and full disclosure.
- All of the above
- Firm fundamental responsibilities requirements include:
- Firms are encouraged to comply with recommendations and must comply with all requirements.
- When jointly marketing with other firms, if one of the firms claims GIPS compliance, be sure it is clearly defined as separate from noncompliant firms.
- Provide a composite list and composite description to all prospects that make a request.
- All of the above
- The definition of the firm, for purposes of GIPS compliance, must be the____________ that is held out to clients as a business entity.
- Corporation
- Subsidiary
- Division
- All of the above
- A firm must initially present a minimum of ___________ years of compliant performance presentation for the firm and each composite.
- Six
- Five
- Three
- None
- For firms or composites in existence less than five years, compliant performance since inception must be presented in order to claim compliance.
- True
- False
- Where country-specific regulations conflict with GIPS, firms must follow the applicable country-specific regulations but must also disclose the nature of the conflict with GIPS.
- True
- False
- The major sections of the GIPS standards include:
- Fundamentals of Compliance, Input Data, Composite Construction
- Disclosures, Presentation and Reporting
- Wrap Fee/Separately Managed Account (SMA) Portfolios
- All of the above
- The fundamental issues involved in complying with GIPS include:
- definition of the firm
- documentation of firm policies and procedures with respect to GIPS compliance
- complying with GIPS updates, claiming compliance in the appropriate manner
- All of the above
- To claim GIPS compliance, a firm must:
- Apply GIPS on a firmwide basis.
- Define the firm as the distinct business entity that is held out to clients or prospective clients.
- Make reasonable efforts to provide all prospective clients a GIPS-compliant presentation.
- All of the above
- A GIPS-compliant firm must NOT:
- State that a specific calculation is in compliance with GIPS.
- Choose which prospective clients will receive a GIPS-compliant presentation.
- State that a specific calculation is in compliance with GIPS.
- All of the above
- Input Data – Input data should be consistent in order to establish full, fair, and comparable investment performance presentations.
- True
- False
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