NISM Certifications · NISM-Series-XV: Research Analyst · Qualities of a Good Research Report
A research report on a company states: 'Revenue will certainly double in two years and the stock cannot fall below Rs 500.' Which feature of a good research report does this statement violate most directly?
The statement violates the principle of avoiding guarantees or assurances. Research reports must present forecasts as reasoned estimates, not certainties, and must not promise a price floor or assured growth, since such claims are unsupported and can mislead investors.
- AUse of historical data
- BSegmentation of the business into divisions
- CAvoiding guarantees or assurances of returns and unsupported promisesCorrect
- DInclusion of a company overview
Explanation
A research analyst should present opinions as estimates with reasoning and not make assurances or guarantees of returns or price floors. Statements of certainty are unsupported and misleading. The other options are normal, acceptable report features.
Did you get it right without looking?
One question tells you little. A timed set on Qualities of a Good Research Report shows your real accuracy, how long you take and where you lose marks.
More Qualities of a Good Research Report questions
- Which of the following is a feature of a well-structured research report on a company?
- Which of the following best describes a research report that gives a clear 'Buy' recommendation but does not mention any risks to the invest…
- Which feature most clearly makes a research report's conclusion well supported rather than merely persuasive?
- An analyst's report recommends 'Buy' on a stock. Her firm's proprietary desk holds a large position in it, and she has no personal holding. …
- Which disclosure in a research report most directly addresses a possible conflict of interest of the research analyst?
- A research report gives a target price of ₹600 for a stock quoted at ₹500, but does not state the time horizon, the valuation method or the …