56. WCM’s methodology for calculating performance, as disclosed in Note 1, is least likely
consistent with GIPS standards for:
A. external cash flows.
B. geometrically linked returns.
C. frequency of return calculations.
Answer = C
“Global Investment Performance Standards,” Philip Lawton
2013 Modular Level III, Vol. 6, Reading 43, Section 3.2
Study Session 18–43–e
Discuss the requirements of the GIPS standards with respect to return calculation
methodologies, including the treatment of external cash flows, cash and cash equivalents, and
expenses and fees.
C is correct. WCM’s return calculation is not GIPS compliant. GIPS requires that returns are
calculated on a monthly basis for periods beginning on or after 1 January 2001.
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