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Reading 49: Global Investment ....mance Standards-LOS q

CFA Institute Area 3-5, 7, 12, 14-18: Portfolio Management
Session 18: Global Investment Performance Standards
Reading 49: Global Investment Performance Standards
LOS q: State and explain the provisions of the GIPS standards for private equity.

The GIPS provisions for private equity require the vintage year to be presented. Which of the following best describes the vintage year? The vintage year is the year in which:

A)the composite was created.
B)
capital is first drawn down from investors.
C)the first material investment was made.
D)the year in which the greatest time-weighted average capital was invested.


Answer and Explanation

By definition, the vintage year is the year in which capital is first called from or drawn down from investors.

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Which of the following items is NOT required to be included as part of a private equity performance presentation?

A)Net-of-fees since inception internal rate of return.
B)Gross-of-fees since inception internal rate of return.
C)
Capital drawn down from partners during the year.
D)Total invested capital.


Answer and Explanation

The SI-IRR must be presented both gross and net of fees. Total invested capital must also be shown.

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Which of the following ratios is least likely to be shown in a performance presentation under the GIPS provisions for private equity?

A)Cumulative distribution to paid-in capital.
B)Total value to paid-in capital.
C)
Total value to residual value.
D)Paid-in capital to committed capital.


Answer and Explanation

The required ratios for presentation are: total value to paid-in capital, cumulative distributions to paid-in capital, paid-in capital to committed capital, and residual value to paid-in capital.

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