The advisor should follow internal procedures to address and resolve the breach, ensuring the firm can take appropriate action.

GIPS requires firms to follow its specific guidelines on how performance should be calculated and presented to ensure consistency and comparability.

While accepting reasonable gifts is generally permitted, it must be disclosed to the employer to ensure transparency and avoid conflicts of interest.

This follows the standard regarding material non-public information, which requires members to not act or cause others to act on such information.

Alpha measures the excess return of an investment relative to its expected return. Standard deviation measures the dispersion of returns around the mean return, indicating the investment's volatility. Beta measures the systematic risk of an investment relative to the market. R-squared indicates the proportion of variability in one investment's returns explained by another investment.

Active management involves frequent trading and attempts to outperform the market. Tactical asset allocation involves adjusting the portfolio's asset allocation based on short-term market outlook. Strategic asset allocation sets long-term target allocations and maintains them through periodic rebalancing. Market timing involves making investment decisions based on predictions of future market movements.

A) Systematic risk, also known as market risk, cannot be diversified away. B) Unsystematic risk, also known as specific risk, can be diversified away by holding a well-diversified portfolio. C) Market risk is systematic and cannot be eliminated through diversification. D) Interest rate risk is a component of systematic risk and cannot be fully diversified away.

A) EMH acknowledges that markets are not always perfectly efficient but are efficient in reflecting available information. B) EMH argues that it's difficult for investors to consistently outperform the market due to market efficiency. C) EMH states that market prices reflect all available information, making it difficult to gain an edge through analysis. D) Market prices can deviate from rationality in the short term, but EMH focuses on information efficiency.

A) Alpha measures the excess return of an asset compared to its expected return. B) Beta measures the systematic risk of an asset, reflecting its sensitivity to market movements. C) R-squared indicates the proportion of variability in one asset's returns explained by another asset. D) Standard deviation measures the total risk of an asset's returns.

A) Past returns are not a component of CAPM's expected return calculation. B) Standard deviation represents total risk, but CAPM focuses on systematic risk. C) CAPM states that the expected return of an asset is proportional to its systematic risk, often measured by beta. D) CAPM assumes away unsystematic risk through diversification.