Bad5shah

Which of the following is an incorrect representation of requirements needed to meet the Global Investment Performance Standards (GIPS)?

A) A firm is required to present at least five years of annual investment performance that is in compliance with GIPS. If the firm has been in existence for less time, then the performance must be presented since inception.

B) Dollar-weighted rates of return should be used for the return calculations.

C) Benchmarks and composites should be created on an ex ante basis.

---

Time-weighted rates of return must be used for the return calculations.

Bad5shah

Which of the following statements about the Global Investment Performance Standards (GIPS) is CORRECT?

A) The GIPS Executive Committee endorses translating GIPS into languages other than English.

B) GIPS can be used by good investment management firms to create barriers to entry.

C) GIPS allows firms to select which portfolios to include.

---

Countries are allowed to translate GIPS to improve local acceptance of the standards, though the English version of GIPS is the controlling version. If management firms use GIPS to create barriers to entry, then the firm has violated one of the objectives of the standard (to promote global competition). Firms are not allowed to present only the results of select (best performing) portfolios.