CFM Investor Relations & Reporting 4

Question 1

A fund manager wants to claim GIPS compliance. Which of the following is a prerequisite before making this claim?

Accepted Answer

Adopting and implementing all required GIPS provisions firm-wide

Answer

GIPS compliance is a firm-wide obligation; a firm must adopt all required provisions before claiming compliance, though verification is recommended but not required.

Question 2

Which of the following best describes the 'since inception IRR' (SI-IRR) metric commonly reported to private fund LPs?

Accepted Answer

The annualized return calculated from the fund's first drawdown to the current date using actual cash flows

Answer

SI-IRR is the money-weighted internal rate of return calculated from the fund's inception using all capital calls and distributions to date.

Question 3

Under SEC Marketing Rule (Rule 206(4)-1), hypothetical performance presented to investors must include:

Accepted Answer

Policies and procedures for calculating and presenting such performance

Answer

The SEC Marketing Rule requires advisers presenting hypothetical performance to have policies and procedures governing its calculation and presentation.

Question 4

An LP notice of withdrawal states a 90-day redemption notice requirement with a quarterly liquidity window. If an investor submits notice on February 15, what is the earliest redemption date?

Accepted Answer

June 30 (first quarter-end after a full 90-day period)

Answer

90 days from Feb 15 is May 16; the next quarterly window after that is June 30, making June 30 the earliest redemption date.

Question 5

A fund's financial statements classify an investment in a private company using ASC 820's three-level fair value hierarchy. An input derived from observable market data for similar assets would be classified as:

Accepted Answer

Level 2

Answer

Level 2 inputs are observable market data other than quoted prices (Level 1), such as prices of similar assets or market-corroborated inputs.

(CFM) Certified Fund Manager Practice Test

(CFM) Certified Fund Manager Practice Test

CFM Investor Relations & Reporting 4