) WHICH POLICY REGARDING RETURN CALCULATION METHODOLOGIES MOST LIKELY REQUIRES REVISION
Section 3.2
3.) Which policy regarding return calculation methodologies most likely requires revision?
A.
Policy 5
B.
Policy 4
C.
Policy 6
Answer = C
The GIPS standards require cash and cash equivalents to be included in total return
calculations for all asset classes.
“Overview of the Global Investment Performance Standards,” by Phillip Lawton
Sections 3.3–3.5
4.) Inclusion of which portfolio reviewed by Westley in the large-capitalization equity
composite would least likely be compliant with the GIPS standard?
A.
Portfolio A
B.
Portfolio B
C.
Portfolio C
Portfolio C is required to hold cash at 15%, which is too much for the portfolio manager
to execute his strategy effectively. The unanticipated nature of the contributions and
withdrawals that can occur daily makes it difficult to invest the funds in equities. This
large cash balance implies the portfolio is nondiscretionary.
“Overview of the Global Investment Performance Standards,” Phillip Lawton