CIPM LEVEL I All Key Areas PRACTICE EXAM Q & A 2026 (Complete And Verified Study material) (21pages) LEARNEXAMS

1. You are a performance analyst at ABC Investment

Management, a firm that follows the GIPS standards. You

are preparing a compliant presentation for a composite that

includes all discretionary portfolios invested in US equities.

You notice that one of the portfolios has a large cash

allocation that is not typical for the composite. You decide

to exclude this portfolio from the composite to avoid

distorting the performance results. Is this action consistent

with the GIPS standards?

 A) Yes, because the portfolio is not representative of the

composite's investment mandate.

 B) Yes, because the portfolio has a material difference in

its asset allocation.

 C) No, because the portfolio is discretionary and meets

the definition of the composite.

 D) No, because the portfolio has a similar risk profile as

the other portfolios in the composite.

 *C) No, because the portfolio is discretionary and meets

the definition of the composite.*

 Rationale: The GIPS standards require that all actual, feepaying, discretionary portfolios must be included in at least

one composite defined by investment mandate, objective,

or strategy. The cash allocation of a portfolio is not a valid

reason to exclude it from a composite.

2. You are a performance analyst at XYZ Asset

Management, a firm that claims compliance with the GIPS

standards. You are responsible for calculating and reporting