) 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