- CFA Exams
- 2021 CFA Level I Exam
- Study Session 1. Ethical and Professional Standards
- Reading 5. Global Investment Performance Standards (GIPS)
- Subject 2. The Scope of GIPS Standards with Respect to Definition of the Firm, Historical Performance Record, and Compliance
CFA Practice Question
According to the Global Investment Performance Standards (GIPS), which of the following statements are correct when a firm starts to comply with the GIPS?
II. The firm, when starting to comply with the GIPS, must present at least ten years of historical performance.
III. If the firm has not been around for the correct time period, it must show its performance since its inception.
IV. After it has disclosed its results for a five-year period, the firm must then disclose results for the next five-year period as well.
I. The firm, when starting to comply with the GIPS, must present at least five years of historical performance.
II. The firm, when starting to comply with the GIPS, must present at least ten years of historical performance.
III. If the firm has not been around for the correct time period, it must show its performance since its inception.
IV. After it has disclosed its results for a five-year period, the firm must then disclose results for the next five-year period as well.
Correct Answer: I and III
IV is incorrect: After it shows GIPS-compliant history for a minimum of five years, a firm must subsequently build toward a 10-year compliance track record.
II is incorrect: Performance of five years must be presented.
IV is incorrect: After it shows GIPS-compliant history for a minimum of five years, a firm must subsequently build toward a 10-year compliance track record.
User Contributed Comments 6
| User | Comment |
|---|---|
| cbb1 | IV: after a firm has shown its five year period, GIPS requires adding each year until 10 years is available. |
| sunilcfa | its not just disclosure but compliance |
| Khadria | I think III is incorrect because in the notes it says "...except for composites which have been in existence for less than five years in which case composite performance since inception must be presented". So its the COMPOSITES and not the FIRM which can be considered if it is less than 5 yrs old. What do you think? |
| studyprep | III is correct and so does I. You need a firm first. And when firm makes a claim then firms to need to produce its performance records since the inception of each composite universes it manages. |
| Gooner7 | good point sunilcfa |
| MapherRdz | But it says COMPOSITES so, you can't infer that for the Firm is the same. |