Bad5shah

The Global Investment Performance Standards (GIPS) are necessary for all of the following reasons EXCEPT to:

A) enhance competition in global markets by creating a universal set of standards that places managers from all countries on an equal footing in soliciting clients.

B) enhance investor confidence and allow investors to make more meaningful comparisons.

C) broaden the application and acceptance of the performance presentation guidelines of foreign and domestic regulatory entities.

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GIPS are necessary for the following reasons:

• Enhancing consistency in performance presentation for inter-country holdings. The financial markets are becoming increasingly more global in nature. Because of extensive inter-country holdings, standardization of presentation is vital for meaningful and consistent performance presentations to occur.
• Enhancing consistency in the use of standards: Return calculation and performance presentation guidelines, if present, vary greatly among countries. Even when guidelines exist in a county, they may not be extensively followed.
• Enhancing competition in global markets: The establishment of global standards places managers from all countries on an equal footing in soliciting clients. Managers from countries that previously had inferior standards will be taken more seriously when presenting their performance, while managers from countries with stronger standards will not be penalized when competing in markets where inferior standards prevail.
• Enhancing investor confidence: Global standards increase the confidence that prospective and existing clients have in the industry and allow them to make more meaningful comparisons.

Bad5shah

All of the following are reasons why the Global Investment Performance Standards (GIPS) are necessary EXCEPT to enhance:

A) the application of global accounting standards.

B) competition in global markets.

C) consistency in performance presentation for inter-country holdings.

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GIPS are necessary for the following reasons:

• Enhancing consistency in performance presentation for inter-country holdings. The financial markets are becoming increasingly more global in nature. Because of extensive inter-country holdings, standardization of presentation is vital for meaningful and consistent performance presentations to occur.
• Enhancing consistency in the use of standards: Return calculation and performance presentation guidelines, if present, vary greatly among countries. Even when guidelines exist in a county, they may not be extensively followed.
• Enhancing competition in global markets: The establishment of global standards places managers from all countries on an equal footing in soliciting clients. Managers from countries that previously had inferior standards will be taken more seriously when presenting their performance, while managers from countries with stronger standards will not be penalized when competing in markets where inferior standards prevail.
• Enhancing investor confidence: Global standards increase the confidence that prospective and existing clients have in the industry and allow them to make more meaningful comparisons.

Bad5shah

Which of the following lines of argument has/have been put forth to justify the establishment of the Global Investment Performance Standards (GIPS)?

A) Both of these statements are correct.

B) Enhancing competition in global markets.

C) Enhancing the consistency in performance presentation for inter-country holdings.

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The GIPS are needed are to enhance consistency in performance presentation for inter-country holdings, consistency in the use of standards, competition in global markets, and investor confidence.