CFA® Level 1: CFA® Level 1 - AIMR-PPS International Composites

Subsectors and Carve-Outs of Larger International Composites

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Question

According to the AIMR-PPS, subsectors or carve-outs of larger international composites

Answers

A. may be used to create stand-alone composites only if the subsectors are actually managed as separate entities, they need not have their own cash allocations or currency management.

B. may be used to create stand-alone composites only if the subsectors are actually managed as separate entities with their own cash allocations and currency management.

C. may never be included in the composite with the parent company.

D. may never be used to create stand-alone composites under any circumstances. B

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Explanations

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A. B. C. D.

Explanation

Subsectors or carve-outs of larger international composites may be used to create stand-alone composites only if the subsectors are actually managed as separate entities with their own cash allocations and currency management. Portfolios must not be switched from one composite to another unless documented changes in client guidelines make switching appropriate. This is a requirement for creation and maintenance of composites.

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