CFM Investor Relations & Reporting 2

Question 1

Under SEC Rule 206(4)-7, registered investment advisers must review their compliance policies and procedures at minimum how often?

Accepted Answer

Annually

Answer

SEC Rule 206(4)-7 requires RIAs to review their written compliance policies and procedures at least annually.

Question 2

A fund manager sends investors a tear sheet showing a 3-year annualized return of 18.2%. Which GIPS standard provision is most directly relevant?

Accepted Answer

Composites must include all fee-paying discretionary accounts

Answer

GIPS requires that composites include all actual fee-paying discretionary portfolios managed to a similar strategy.

Question 3

Which document typically governs the frequency and format of capital account statements sent to limited partners in a private fund?

Accepted Answer

The Limited Partnership Agreement (LPA)

Answer

The LPA is the governing contract between the GP and LPs that specifies reporting obligations, timing, and format.

Question 4

An investor requests side-letter provisions granting most-favored-nation (MFN) status. What does this primarily entitle the investor to?

Accepted Answer

Access to any more favorable terms granted to other investors

Answer

MFN clauses entitle an investor to elect any more favorable terms granted to other LPs in their side letters.

Question 5

A hedge fund's capital account statement shows a beginning NAV of $10M, contributions of $2M, withdrawals of $1M, and an ending NAV of $12.5M. What is the fund's investment gain for the period?

Accepted Answer

$1.5M

Answer

Investment gain = Ending NAV − Beginning NAV − Contributions + Withdrawals = $12.5M − $10M − $2M + $1M = $1.5M.

(CFM) Certified Fund Manager Practice Test

(CFM) Certified Fund Manager Practice Test

CFM Investor Relations & Reporting 2