Reading 3: Introduction to the Global Investment Performance black, Investment, class

mayanfang1

Q6. In 1995, the CFA Institute sponsored and funded the Global Investment Performance Standards (GIPS) in response to:

A)   an increase in insider trading.

B)   a need to address issues, such as portability of investment results.

C)   both of the reasons listed here.

Q7. Which of the following statements regarding the Global Investment Performance Standards (GIPS) is TRUE? The GIPS standards:

A)   are considered to be the minimum global standard for historical performance presentation.

B)   represent the highest performance measurement and presentation practice worldwide.

C)   are designed to supplement local standards of historical performance presentation in countries around the world.

Q8. As countries adopt the Global Investment Performance Standards (GIPS), which of the following is least likely to occur?

A)   Existing and potential clients will be able to make fair and unambiguous comparisons among investment firms.

B)   The trend toward cross country investments will decline.

C)   Competition in the global investment industry will be enhanced.

Q9. A good way to describe the Global Investment Performance Standards (GIPS) is a:

A)   common yardstick for means of comparison.

B)   screening mechanism for determining appropriate international investments.

C)   legal doctrine with criminal penalties.

mayanfang1

答案和详解如下：

Q6. In 1995, the CFA Institute sponsored and funded the Global Investment Performance Standards (GIPS) in response to:

A)   an increase in insider trading.

B)   a need to address issues, such as portability of investment results.

C)   both of the reasons listed here.

Correct answer is B)

The GIPS were created to address the portability of investment results, varying time periods, and survivorship biases. Insider trading was not an issue.

Q7. Which of the following statements regarding the Global Investment Performance Standards (GIPS) is TRUE? The GIPS standards:

A)   are considered to be the minimum global standard for historical performance presentation.

B)   represent the highest performance measurement and presentation practice worldwide.

C)   are designed to supplement local standards of historical performance presentation in countries around the world.

Correct answer is B)

GIPS are envisioned as being “the” standard worldwide, and would eliminate the need for separate local standards. The CVG approach is currently utilized, but the goal is to converge all standards globally and eliminate the need for CVGs.

Q8. As countries adopt the Global Investment Performance Standards (GIPS), which of the following is least likely to occur?

A)   Existing and potential clients will be able to make fair and unambiguous comparisons among investment firms.

B)   The trend toward cross country investments will decline.

C)   Competition in the global investment industry will be enhanced.

Correct answer is B)

There is no reason to expect the level of international investing to decline as a result of the adoption of a global set of performance standards. If anything, international investing will become more attractive as the credibility of reported performance results improves.

Q9. A good way to describe the Global Investment Performance Standards (GIPS) is a:

A)   common yardstick for means of comparison.

B)   screening mechanism for determining appropriate international investments.

C)   legal doctrine with criminal penalties.

Correct answer is A)

Just like the Presentation Performance Standards (PPS), the GIPS serve as a yardstick so the performance of one individual or firm can be properly compared to that of another.

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