QUESTION 11 HAS ONE PART FOR A TOTAL OF 15 MINUTES. The following five statements regarding presentation of investment p

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Question 11 Has One Part For A Total Of 15 Minutes The Following Five Statements Regarding Presentation Of Investment P 1 (430.24 KiB) Viewed 44 times

QUESTION 11 HAS ONE PART FOR A TOTAL OF 15 MINUTES. The following five statements regarding presentation of investment performance data were made by five separate portfolio managers who each claim that their firm complies with AIMR's Performance Presentation Standards (AIMR-PPS)™ t A itique each manager's statement in the context of the AIMR-PPS standards by discussing the discrepancies between the statements and the Standards: Manager A: "My firm's assets under management are divided between two composites. One composite is made up of all individual client portfolios, which have a variety of investment objectives. The other composite is composed of all institutional assets under management. This composite includes portfolios of defined-benefit retirement plans, college endowments, and trusts." Manager B: "Although we solicit and accept individual clients whose portfolios are less than $100,000, the majority of our clients are institutional investors with much larger portfolios. We do not include any portfolios with an asset value below $100,000 in our composites because their performance would not significantly affect the reported composite performance." Manager C: "Our firm is ten years old. For simplicity, we present the performance record for each composite using three numbers: total return since inception, average annual return for the latest five-year period, and annual return for the latest one-year period." Manager D: "Our firm is six years old. To create a longer performance history, we use the historical performance record that our six portfolio managers compiled while they were with their former employers. The ten-year record shown in our presentation materials links this performance with the performance of our existing composites." Manager E: "In the past three years, we have lost several clients who have moved their portfolios to other investment management firms. Because we no longer manage their portfolios, we have removed their portfolios from historical composites. We believe it would be misleading to report performance results for accounts we no longer manage." (15 minutes)