LOS o: Identify the types of investments that are subject to the GIPS standards for real estate and private equity.

Q1. Which GIPS provisions would apply to the following types of investments: a closed-ended private equity fund, an open-ended private equity fund, and an evergreen fund?

          Closed-ended                    Open-ended                                 Evergreen

A)   Private equity                         General                                       General

B)   Private equity                         General                                       Private equity

C)   Private equity                         Private equity                             General

Q2. A portfolio consists of three approximately equal investments: some retail property, a large commercial loan and some common stock in a construction company. Which of the following best describes how the GIPS provisions would be applied?

A)   The carve-out provisions would apply; with the retail property using the real estate GIPS provisions, and the loan and common stock using the general GIPS provisions.

B)   The carve-out provisions would apply; with the retail property and the loan using the real estate GIPS provisions, and common stock using the general GIPS provisions.

C)   Since only part of the portfolio is comprised of real estate investment, the general provisions of the GIPS would apply to the entire portfolio.

Q3. Which of the following investments is most likely to be covered by the real estate provisions of the GIPS?

A)   A commercial mortgage-backed security on a new office block.

B)   A commingled investment in a group of residential properties.

C)   A real estate investment trust.

LOS o: Identify the types of investments that are subject to the GIPS standards for real estate and private equity. fficeffice" />

Q1. Which GIPS provisions would apply to the following types of investments: a closed-ended private equity fund, an open-ended private equity fund, and an evergreen fund?

          Closed-ended                    Open-ended                                 Evergreen

A)   Private equity                         General                                       General

B)   Private equity                         General                                       Private equity

C)   Private equity                         Private equity                             General

Correct answer is A)

Open-ended and evergreen private equity funds are covered by the general GIPS provisions. A closed-ended private equity fund is covered by the private equity GIPS provisions.

Q2. A portfolio consists of three approximately equal investments: some retail property, a large commercial loan and some common stock in a construction company. Which of the following best describes how the GIPS provisions would be applied?

A)   The carve-out provisions would apply; with the retail property using the real estate GIPS provisions, and the loan and common stock using the general GIPS provisions.

B)   The carve-out provisions would apply; with the retail property and the loan using the real estate GIPS provisions, and common stock using the general GIPS provisions.

C)   Since only part of the portfolio is comprised of real estate investment, the general provisions of the GIPS would apply to the entire portfolio.

Correct answer is A)

With this mixed portfolio, the carve-out provisions apply. Note that only the retail property falls under the real estate GIPS provisions.

Q3. Which of the following investments is most likely to be covered by the real estate provisions of the GIPS?

A)   A commercial mortgage-backed security on a new office block.

B)   A commingled investment in a group of residential properties.

C)   A real estate investment trust.

Correct answer is B)

The general provisions of the GIPS would apply to REITs, any common stock, CMBSs and many private debt investments. The residential properties are the only investment listed that would fall under the real estate provisions.