Ethical And Professional Standards MCQ - Ethical And Professional Standards Section 2

56 Who can most likely claim compliance with GIPS Standards?

Only investment management firms can claim compliance. Individuals, charterholders, and software to implement the Standards cannot claim compliance.

57 Assume there are three parties who play different roles in the investment industry: Party 1: Calsoft Inc. is an investment management firm that manages assets worth $900 million. Party 2: Stan Inc. sponsors pension plans for its employees and encourages its employees to become participants. The money is professionally managed by an investment company. Party 3: Caltech Corp. is involved in the development of software for performance calculations that aids in achieving GIPS compliance. Which of the following parties can claim GIPS compliance?

Only investment management firms that actually manage assets can claim compliance. The other two cannot.

58 IDC Asset Management Company has three funds: Premium Equity, Dynamic Bond Fund, and Small-Cap Growth Opportunities. The company claims GIPS compliance for Dynamic Bond Fund. IDC is defined as the firm. Assuming there is no distinction in the investment process or client type, is the claim for compliance accurate as per GIPS Standards?

Since there is no distinction in the market or client type (institution/retail investors) and the investment process, partial compliance is not allowed. GIPS encourages firms to use the broadest definition of the firm.

59 Which of the following statements is most likely true? A firm can claim GIPS compliance for:

A single product or a single fund cannot claim compliance.

60 Claiming compliance with GIPS Standards is:

It is voluntary, but it increases the competitiveness of a GIPS-complaint firm, while competing for bids on a global platform against non-compliant ones. It increases the trust among prospective clients.