Could someone elaborate Option C
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The question is asking what were the reaons that GIPS standards were created? There were 3 main reasons for the GIPS standards to be introduced-
1. Many investment professionals were showing only top performing funds in the industry and were not disclosing about the poor performing funds. They were cherry picking. This is called Representative Accounts. So, this was one of the main reasons that why GIPS standards were created. Hence, Option A is correct.
2. Prior to when GIPS was introduced, investment managers were including only those portfolios that were a part of their composites. They were not disclosing about the portfolios or accounts that were no longer a part of their company and were showing only Survivors. This is called Survivorship Bias. So, if asset managers were including the performance of the funds that were no longer a part of the portfolio that they manage, they are eliminating Survivorship Bias and that’s wat Option B says. Hence, it is inconsistent with the question.
3. Varying Time Periods was the 3rd reason for the creation of GIPS. Prior to GIPS, asset managers were only showing accounts in a specific time period in which they performed excellent. Hence, they did not show the complete picture by including a longer time period.
Option C is generally correct. I mean to say, the last statement is not a reason that why GIPS was created. It is one of the objectives of GIPS i.e The GIPS standards should ensure that the data is accurate and consistent.