Q a schweser self test 10 global investment performance standards answers

Question #1 of 6 B is in compliance with GIPS standards.. Explanation The table headings are in compliance with GIPS standards.. To be in compliance with GIPS standards, the presentation

Question #1 of 6

B) is in compliance with GIPS standards

Explanation

The table headings are in compliance with GIPS standards To be in compliance with GIPS

standards, the presentation can list either the total firm assets or percent of firm assets represented

by the composite Returns must be after actual transaction costs but can be gross or net of

management fees and a fee schedule must be attached

Question #2 of 6

C) the valuation method used for the junk bonds is in compliance with GIPS standards but for international bonds is not in compliance with GIPS standards

Explanation

An average of three independent bids for securities not regularly traded is acceptable But using cost basis is not acceptable

Question #3 of 6

C) not in compliance with GIPS standards because the partial-year returns for terminated portfolios should not be annualized

Explanation

The handling of returns for terminated portfolios is not in compliance with GIPS standards because the partial-year returns for terminated portfolios should not be annualized However, the historical record for terminated portfolios must be included in the record of performance for the composite up

to the last full monthly measurement period

Question #4 of 6

B) 36 months of data

Explanation

The table must include annualized standard deviation for the composite and benchmark computed from 36 monthly returns for each This requirement began for 2011 so this data must be shown for

2011, 2012, 2013, and 2014

Question #5 of 6

B) the benchmark description is not and composite creation date is in compliance

Explanation

At the very least, a more full disclosure of the kinds of fixed income assets included in the composite must be given to provide meaningful comparison If it is not a custom benchmark but a benchmark from a recognized vendor, the name should be given The composite is more than 10 years old but only a rolling 10-year record of results is required so that reporting is acceptable

Question #6 of 6

B) 12.6%

Explanation

GIPS requires weighted monthly returns Within the month, sub period returns must be time-weighted with sub periods defined by the date of large ECFs

For September, the return through 9/18 is: (920 - 780)/780 = 17.95% Through 9/30, the return is (910 - 888) / 888 = 2.48%

This makes the September return for GIPS:

(1.1795)(1.0248) - 1 = 20.88%

The return for the quarter is:

(1.0750)(0.8661)(1.2088) - 1 = 12.55%

While they were given in the question, the July and August return calculations are shown below July

is simple because there was no ECF:

July = (860 - 800)/800 = 7.50%

With an ECF, the August return must also be computed from the sub period returns:

Through 8/8: (890.7 - 860) / 860 = 3.57%

Through 8/31: (780 - 932.7) / 932.7 = -16.37%

Therefore August = (1.0357)(0.8363) - 1 = -13.39%

Note that 60.5% is the annualized quarterly return but annualizing periods less than one year is not allowed for GIPS