Which of the following statements least accurately describes a key characteristic of the Global Investment Performance Standards (GIPS)?

A) All fee-paying, discretionary portfolios must be included in at least one composite.

B) A firm may not claim compliance with GIPS until it has recorded at least five years of GIPS-compliant performance data.

C) The distinct business entity that is claiming compliance with GIPS must be defined.

Which of the following statements regarding Global Investment Performance Standards (GIPS) is most accurate?

A) GIPS exists as a best or maximum worldwide standard where local or country specific law for investment performance measurement does not exist.

B) GIPS is intended to foster the notion of a world-wide regulatory body to oversee investment performance and measurement on a global scale.

C) GIPS requires that all fee-paying discretionary portfolios be included in composites defined according to investment objective or similar strategy and firms must show GIPS compliant history for a minimum of five years or since inception if a composite has existed less than five years.

Which of the following is NOT an objective of the Global Investment Performance Standards (GIPS)?

A) To obtain worldwide recognition by securities regulators of a standard for the calculation and presentation of investment performance in a fair, comparable format that provides full disclosure.

B) To encourage self-regulation.

C) To encourage full disclosure and fair global competition without barriers to entry.

Which of the following statements is a key characteristic of Global Investment Performance Standards (GIPS)?

A) GIPS exist as a minimum worldwide standard where local or country-specific law, regulation, or industry standards may not exist for investment performance measurement and/or presentation.

B) GIPS require firms to show GIPS-compliant history for a minimum of ten years, or since inception of the firm or composite if in existence less than ten years.

C) GIPS require managers to include all actual fee-paying and non-fee-paying discretionary portfolios in composites defined according to similar strategy and/or investment objective.

Which of the following is NOT a key characteristic of the Global Investment Performance Standards (GIPS)? GIPS:

A) require managers to include all actual fee-paying and non-fee-paying discretionary portfolios in composites defined according to similar strategy and/or investment objective.

B) require firms to use certain calculation and presentation methods and to make certain disclosures along with the performance record.

C) do not address every aspect of performance measurement, valuation, attribution, or coverage of all assets.

Longhorn Investments prepares its performance presentations in accordance with Global Investment Performance Standards (GIPS). As part of its employee benefits package, Longhorn does not charge a fee to its employees for managing their portfolios. When calculating total firm assets for the purpose of GIPS compliance, Longhorn should:

A) include these employee portfolios.

B) only include those employee portfolios that are in discretionary accounts.

C) not include these employee portfolios because they are in non-fee-paying accounts.

Assume that on January 1, 2005, a 15-year old firm with no Global Investment Performance Standards (GIPS) compliant performance history wishes to claim compliance with the GIPS standards. Which of the following accurately reflects the appropriate action for the firm to take?

A) Comply with GIPS for the year beginning January 1, 2004, and report four additional years of performance history (five total) and disclose why the earlier years are not GIPS compliant.

B) Comply with GIPS for the year beginning January 1, 2004, and report nine additional years of performance history (ten total) and disclose why the earlier years are not GIPS compliant.

C) Comply with the GIPS standards for the 5-year period January 1, 2000, through December 31, 2004, and report five additional years of non-GIPS-compliant performance and disclosure of why the performance in the earlier years is not GIPS compliant.

Which of the following is least likely to be a requirement for a firm claiming compliance with Global Investment Performance Standards (GIPS)?

A) List discontinued composites for at least five years.

B) Provide a compliant presentation only to prospects who request one.

C) When jointly marketing with a noncompliant firm, make sure the compliant firm is clearly defined as separate from the noncompliant firm.