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NISM Certifications · NISM-Series-XV: Research Analyst · Qualities of a Good Research Report

A research report on an FMCG company uses a single optimistic revenue growth scenario and does not discuss what happens if raw material prices rise. Which quality of a good research report is most clearly lacking?

The report lacks a balanced treatment of risks and sensitivity analysis. By using only an optimistic scenario and ignoring raw material price risk, it hides how the conclusion could change if key assumptions fail, which a good research report should disclose.

  1. ABalanced treatment of risks and sensitivity of the conclusions to key assumptionsCorrect
  2. BUse of a clear font and layout
  3. CMention of the analyst's registration number
  4. DInclusion of the company's address

Explanation

Ignoring adverse scenarios and input cost risk means the report is one-sided. A good report discusses risks and shows how the valuation changes if key assumptions change. Layout, registration number and address are formal items and do not address this gap.

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