Q & A Database

The GIPS Standards Q&A database contains questions and answers (Q&As) on various searchable topics that provide additional interpretation on an issue. Q&As are considered to be authoritative guidance and must be followed in order to claim compliance with the GIPS standards.

Content from prior Q&As was included in the GIPS Standards Handbook as much as possible and many Q&As were archived. Change the Status drop-down filter to "Archived" to see the archived Q&As.

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1 Result

Archived

Effective: 1 December, 2013 - 31 December, 2019

Categories: Leverage/Derivatives

Source: GIPS Executive Committee

Do the GIPS standards include an example of how to value a portfolio that includes margin borrowing? Please provide an example for how to calculate a return for a portfolio that includes margin borrowing.

Portfolio consists of $100 long stocks and additional $50 long stocks bought on margin. Valuation of long stocks and the long stocks bought on margin is $170 at the end of the period. Interest expense for margin borrowing is $0.20. Value of the portfolio that belongs to client at the beginning of the period is $100 (= $150 – $50). It becomes $119.80 (= $170 – $50 – $0.20) at the end of the period.

R = {(119.8 – 100) / 100} = 19.8%

Please also see original Q&A
Please also see updated Q&A