Free CFA-Level-I Exam Braindumps (page: 3)

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Which of the following is/are true about the Performance Presentation Standards?

  1. A member who complies with the mandatory requirements of the PPS but does not follow the recommended requirements can publicly claim compliance with the PPS.
    II. The PPS are designed to be primarily a performance measurement framework.
    III. The Standards are not designed to enhance or detract from the presentation of historical results.
  2. III only
  3. II and III only
  4. I, II and III
  5. I and III only

Answer(s): D

Explanation:

The PPS are designed to be primarily a performance presentation system, not a performance measurement system. The Standards are not designed to enhance or detract from the usefulness of the information in historical results, though it does restrict the way they are to be presented. The PPS are voluntary standards and are not necessarily binding on AIMR members. Some standards are mandatory while others are recommended. To claim compliance, members must abide by the mandatory requirements, at the very least.



If a firm uses non-discretionary leverage, it must present performance using:

  1. both actual returns and all-cash basis.
  2. all-cash basis i.e. removing leverage effects.
  3. actual returns.
  4. none of these answers.

Answer(s): B

Explanation:

According to Section B of the PPS standards - "Calculation of Returns" - for non-discretionary leverage, performance must be presented on an all-cash returns basis.



________ and other hybrid securities must be treated consistently across and within composites.

  1. Portfolios
  2. Convertibles
  3. Assets
  4. Bonds

Answer(s): B

Explanation:

This is one of the requirements which is mandatory in order to be in compliance with the PPS.



Standard IV (B.8), Disclosure of Referral Fees, includes ________.

  1. referral fees paid in cash
  2. referral fees paid "in kind"
  3. soft dollar referral fees
  4. all of these answers

Answer(s): D

Explanation:

Under Standard IV (B.8), appropriate disclosure involves disclosing the nature of the consideration or benefit given or received for the recommending of services. Consideration includes all fees, whether paid in cash, in soft dollars, or in kind.






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